An Investment That Wasn’t A Lemon

Andrew Sullivan —  May 24 2013 @ 4:19pm

Connor Simpson is impressed by Tesla’s early repayment of their Department of Energy loan, which has earned the government a $20 million profit:

It’s quite an accomplishment considering the fates that have befallen other green energy companies. The Department of Justice seized $21 million from electric car maker Fisker before the company went into bankruptcy after it received a $529 million loan guarantee in 2009. Battery maker A123 Systems spent $132 million of its $250 million guarantee from the Department of Energy before they bit the dust. That does not sound great, but the Department of Energy guarantees are actually creating jobs.

Peter Eavis notes that “Tesla has not fully weaned itself from government support” because buyers “of Tesla cars can get substantial tax credits that reduce the purchase price.” Yglesias defends this tax credit:

Now it’s quite right to say that current policy is not exactly optimal. A $20 per ton carbon tax with the funds used to lower other taxes would be much better nudge than a regressive tax credit initiative. But you rarely get optimal policy, and the course we’re taking is a reasonable and practical one.