By on July 16, 2014

Tesla Supercharger Night Party

Hyundai’s head of U.S. product planning Michael O’Brien may have written a check his mouth can’t cash when he claimed Tesla’s Supercharger network was paid with taxpayer dollars.

Green Car Reports says during a discussion of his employer’s view on hydrogen fueling infrastructure, O’Brien stated that Hyundai has not received any funding from the federal government for its hydrogen vehicles, while Tesla’s Supercharger network was paid with “grants and loans from the government.”

In turn, this assertion infuriated Tesla’s vice president of business development Diarmuld O’Connell:

Those sites have been paid for entirely by Tesla Motors — which continues to spend money in expanding the network. This stands in stark contrast to certain foreign carmakers, including Hyundai, who have no manufacturing presence in California but expect the state’s taxpayers to spend up to $200 million to set up hydrogen stations.

For his part, O’Brien did acknowledge hydrogen would only take off “when other states start investing in infrastructure.”

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32 Comments on “Hyundai, Tesla In Spat Over Funding Of Supercharger Network...”

  • avatar

    Your government handouts are more than my gorvernment-caused trade deficits- is what I’m saying.

  • avatar

    I love this photo of the UAE wanker party.

    And nice to include the Model X concept there on the left.

  • avatar

    Hyundai is probably right. In some way or another, taxpayers have helped this POS company build and support their electric boondoggles. Which will turn out to be another huge waste of money when Tesla goes under.

    It’s like when ignorant people say Ford didn’t take a bailout. They sure did, a $5.9 billion dollar bailout.

    • 0 avatar

      Yeah, down with American innovation and success in fields that don’t meet your personal approval.

    • 0 avatar

      I thought Tesla already repaid their government loans.

      • 0 avatar
        Dr. Kenneth Noisewater

        They did, early, and with interest.

        “The terms of the original loan agreement required Tesla to pay off the loan by 2022 and gave the government the right to exercise the warrants between 2018 and 2023. But in March, Tesla renegotiated the deal and agreed to pay back the loan by 2017, according to its financial filings. The government in turn agreed not to exercise the warrants if Tesla paid off the loan early.

        By wiring the government $451.8 million yesterday from the proceeds of a billion-dollar sale of stock and convertible notes, Tesla voided not only that obligation and the political scrutiny that comes with being the recipient of government largesse. The company is now also free from restrictions the government placed on Tesla, such as limiting capital expenditures and requiring chief executive Elon Musk to own a certain amount of stock.”

        And TSLA bonds, while rated “junk”, are more expensive than US treasuries. Does that say more about TSLA or the US’ creditworthiness?

        “In an offering that was bigger than initially estimated, the company sold $800 million of 0.25 percent, five-year notes and $1.2 billion of 1.25 percent, seven-year securities, according to data compiled by Bloomberg. Both coupons are lower than the median for similar deals since 2009. A conversion premium of 42.5 percent more than Tesla’s share price before the sale for each portion of debt exceeds the median for comparable transactions.”

        In comparison, the 5y UST yields ~1.7% and the 7y UST yields ~2.18% . The conversion price is ~$360 per share, which is currently over 63% of a premium.

        • 0 avatar

          Tesla did repay its loans early AND with interest…

          Which is more than I can say for the average college student, homeowner or car owner.

          • 0 avatar

            Then there’s the money that SpaceX is going save us by breaking the ULA monopoly on EELV launches. SpaceX is also breaking our dependence on the Russians, and you can’t put a price tag on that. Could even dare more sanctions on Russia without SpaceX. It’s a different company I know, but still.

    • 0 avatar

      You must enjoy tasting your feet, because time and time again you fail to do any type of research before opening your mouth.

      Case in point, it wasn’t a waste of taxpayer money as Tesla repaid the loans COMPLETELY.

  • avatar

    Samsung trashing Apple, now Hyundai trashing Tesla. Why are these foreign companies treading on genuinely American companies and why are we letting them by buying their products?

    Boycott Korea!!!

    • 0 avatar

      They’re trying to drive a wedge between these companies and their target markets because their own shitty products can’t compete on a level playing field.

    • 0 avatar

      Totally agreed. Try buying a foreign car in Korea. It’s close to impossible due to ridiculous tariffs. Japan is still blocking Korean car manufacturers from their market partly because they’ll steal and run on technology, duplicate and come back to sue for patent infringement . I hate buying products from countries that do business unethically.

  • avatar

    I’ll keep this short but unless the government willfully builds either electric or hydrogen infrastructure it won’t be built. Call it what you will but the market is monopolistic and gas companies have no reason to reinvest in a new technology that would cut into their profitable monopoly. Especially as neither of the alternative power sources would or could be controlled by their system (desalination plants are primed to crack water, electricity from various sources).

    • 0 avatar

      On the other hand, Tesla IS investing in infrastructure–at least to get the ball rolling if not to support the 40,000 Tesla cars already on the roads.

    • 0 avatar

      Yep Xeranar, and that would only happen if the margins justify it. Never will happen in a mass market.

    • 0 avatar

      Did Government build gas station infrastructure or railroads? Why Government should build electric car infrastructure, because it is not profitable?

      • 0 avatar

        The guys who built the two infrastructures were not called robber barons for nothing. Try that in modern society. Sorry, but LOL.

      • 0 avatar

        Seriously? You used railroads? The government gave huge swaths of land away for free which railroads sold for profit. Not to mention speculators drove the railroad industry into financial collapse a dozen times before monopolization by a few magnates who relied on federal concessions of land and taxation to create it. It’s a very solid ideal of indirect federal investment.

        Gas stations in contrast arose from general stores and hardware stores that sold gasoline and kerosene by the jar or bucket. Government road paving and creation drove the market for fueling stations as you could go farther from the local store on a pail of fuel. Infrastructure is infrastructure, Japan is now investing in hydrogen while we complain loudly. The western world is slowly pulling away from us whether we want to admit it or not.

        • 0 avatar

          Sheez, Xeranar. You’ll bust these guys’ bubbles. Gov=bad; priv=good and we hold these truths to be self-evident and all that.

          • 0 avatar

            I’m always appreciative of getting some positive feedback. I’m not actually anti-private business, I just don’t believe it has any interest in solving our problems. Human greed cannot be channeled for good purposes without a tight leash of control

          • 0 avatar

            “I’m not actually anti-private business, I just don’t believe it has any interest in solving our problems.” — There are exceptions, but they tend to prove the rule BY their exception. They get accused of being the worst of the lot despite the fact that they offer the better product.

            “Human greed cannot be channeled for good purposes without a tight leash of control.” — And this is why those few companies are the exception. Despite popular opinion, they put a tight leash on the “greed” and look far enough ahead to say, “we can make more by taking our time and doing it right.” Tesla is one of these exceptions because there is no legislation REQUIRING them to build out that infrastructure–they’re doing it on their own. Yes, I’ll acknowledge that they’re taking advantage of available benefits, but its the exact same benefits that all other EV producers have available. If a city says, “we want a Supercharger location and we’ll give you the real estate”, that’s not a regulator saying, “you have to put one here”.

            You see, Tesla knows that to make a BEV truly practical, it has to be able to go anywhere in the country that’s served by proper roads. As such, the Supercharger stations are currently placed so that over 90% of the nation’s population is within the listed range of the base Model S from their homes. Within the next year that figure is supposed to reach 99%. What that means is that TESLA has strategically chosen certain locations specifically to reach those more remote people you’re talking about. It does mean that some of those locations seem out of the way if you’re planning to drive cross country, but several Tesla owners have already proven it’s possible to drive from Boston to Los Angeles using nothing but the Supercharger stations and Tesla themselves drove LA to NY this past winter through a dust storm and two blizzards in just 4 days using only Supercharger stations. In fact, one of Tesla’s ICE support vans had to be abandoned in one of those blizzards while the cars kept on going.

            The point is that Tesla is not like Verizon or Starbucks–yet. They’re doing what they’re doing to ensure that they can develop the market for BEVs. Greed may be involved, but it’s a “smart” greed, that realizes you have to provide support for your product if you really want to sell that product. If you don’t, you’re just a flash in the pan.

          • 0 avatar

            Vulpine, you seem like a genuinely nice person, I’m really interested in buying the argument that Tesla isn’t just another company seeking to be greedy, but the supercharger strategy argument isn’t a great place to go with it. Not particularly because you can get to NY from LA by just using them but because their theoretical service range is within 90% of the population doesn’t make them effective.

            I’m fairly sure they’re right in a strictly scientific and mathematical sense, but just because I can drive to one location within a vast city doesn’t mean it actually is practical to charge there. This is why their plan is great because it is a self-perpetuating objective, their own greed dictates the need for supercharging stations nationwide for their cars to be successful as you pointed out. But they aren’t going to have the funds to double, triple, or quadruple the numbers of stations which is what is needed to make them practical places instead of mathematical.

            Tesla seems more ethical at this time which is a welcome change from our traditional businesses though, I’ll give you that.

          • 0 avatar

            @Xeranar: In response to your concern, “… but just because I can drive to one location within a vast city doesn’t mean it actually is practical to charge there…” I have to ask, Why the concern? Maybe I’m misunderstanding your question, but I have to remind you that under normal circumstances you would be recharging every night right in your own driveway–you simply don’t need to use a Supercharger or any other charging station unless you’re driving 200 miles or more in a given day. Unlike gasoline or diesel-powered cars, you can start every single day with a “full tank” and the base model Tesla sedan can go almost 200 miles comfortably on that charge. There’s almost no need to double, triple or quadruple the number of stations other than to ensure that you’re in safe cruising range of a station no matter what route you may choose to take as you travel the country.

            This is why so many anti-EV arguments puzzle me; it is as though they expect to HAVE to use a commercial charging location the same way they use a gas station–for everyday driving. To be quite blunt, it’s not only impractical, it’s wasteful.

            Yes, it is a change of habit for many drivers; they’re used to only being able to go to a gas station to refuel and simply can’t conceive that they no longer need to. Your primary gas station is now your home and you can cover well over a typical day’s driving without ever needing to stop for fuel. Of course, once they get into that habit, they’re going to be much more likely to run out of gas in their ICE vehicle, thinking they’re starting with a full tank every time.

        • 0 avatar

          I do not dispute your post about railroads and gas station infrastructure. But if I look at more recent examples in the US, private companies are at the forefront in building infrastructure, more than government.

          Example 1: Verizon, which built out their 4G network. True enough, they bought spectrum rights auctioned by the Federal government, and are closely regulated, but they built that on their own.

          Example 2: Starbucks, which put a coffee shop at every major intersection in most cities.

          In both cases, private companies built the infrastructure in a few years because they had a strong business case, i.e., the financial model was profitable.

          I think we are a ways from seeing a strong business case for hydrogen or battery charging for cars, so I am pessimistic that this happens on a large scale this decade.

          Solar energy, on the other hand, is looking ripe. The cost of solar panels has been steadily declining, and is now approaching parity with fossil fuel costs. Places with lots of sun and high electricity costs should expect to see a lot of solar panel installation in the next few years.

          • 0 avatar

            Don’t know the US case, but this kind of thing (Verizon) does involve tax breaks and government oversight of prices and qualities. Example of indirect government intervention. Plus, lots of all this stuff has as its backbone the internetm built by whom? The second case, Starbucks, is that really infrastructure?

          • 0 avatar

            Example 1 – Those Cell towers were erected as part of a federal grant and incentive program in depopulated areas. The only reason why a cell tower exists in half the country is because the US government paid for infrastructure to be put there otherwise your cell phone would stop working 30 miles outside of any major city.

            It doesn’t mean that private investment is bad, I’m not arguing that at all, I’m pointing out that monopolized industries aren’t going to build new innovative infrastructure from the ground up without major incentives. A hydrogen/supercharger grid would look EXACTLY like the cell tower network I described without the US government subsidizing random stations throughout depopulated zones. Major highways would get them for trucks and travel but anywhere off that would all be subsidized.

            Ex 2 – Starbucks? What are you even trying? Starbucks relies on no actual coffee-based infrastructure. The Federal and State governments built huge ports, docks, and roads to get their damn beans to them. It’s not like Starbucks had to erect some maglev coffee train of awesomeness to get those precious beans to their stores. They’re basically operating like a normal business chain system and considering starbucks didn’t become ubiquitous until nearly 30 years after it was founded is a sign that it acts just like a regular chain.

            Neither case is ‘built in a few years’ since the Verizon towers existed and putting up 4G antennas cost money but was more an issue of bandwidth allocation as Cell towers rely on burst technology unlike land lines. Never mind the fact that again, the backbone of the 4G network is actually getting your internet from the tower to a giant copper line in the ground already owned by Verizon. This is why the two land line telecoms have it far cheaper to build out because they’re not paying themselves for internet access while T-Mobile & Sprint need to put so much towards land line controls.

            Starbucks as previously stated spent nearly 20 years being a nobody coffee shop in Seattle and then 10 years getting huge by invading retail spaces that were empty or building out to serve populations that wanted an upscale coffee shop that didn’t exist from the late-50s until the 90s. They were re-entering an easily monopolized market at a price of a few dollars a cup. It didn’t involve a huge investment from a secondary industry to serve it.

            I’m pragmatic with you on Hydrogen and electric, but I’m merely pointing out nobody is going to bet a 500 billion dollar build out (currently worth more than all but a handful of companies and touching on 2-3% of our GDP) for profit. The Federal government or states will have to step in to get them started then the private investors will risk a much smaller portion on the system.

  • avatar

    On Verizon, yes the US government is deeply involved in the mobile telephony business, but I think that at the end of the day, it was Verizon that decided to build the network, they invested billions of dollars, and they are reaping the benefits. I think most people would concede that it was an infrastructure investment led by a corporation, rather than the government.

    On Starbucks, I wondered the same question as I wrote that. I chose Starbucks vs. most restaurant chains because Starbucks actually owns their stores – they don’t franchise in the US. And when you think about it, a coffee shop is similar to a gas station: lots of locations nationally, long supply chain, similar business continuity and product quality risks, etc.

    I am definitely open to other examples and continuing the dialog – I don’t have all the answers by any means. But my hypothesis is that there is very little appetite among the majority of Americans for the federal government to develop new types of infrastructure. If it is going to happen, visionary corporations will need to lead.

    • 0 avatar

      VoGo, thanks for the balanced and well written response. Lots of times this kind of debate drops to levels that leads to nothing.

      As to Verizon, I see your point and agree with you up to a point. But without your federal government’s intervention it wouldn’t happen so quickly or comprehensibly. This kind of investment is actually a partnership nowadays. Both governments and companies work together to get it off the ground. The government doing it by itself would lead to the inevitable inefficiencies, while if companies went at it alone, NYC would have a 10 G while most more isolated regions would be happy if they even got half a G (to exaggerate and make a point). The model would just not work were it not for tax breaks and the internet. BTW, it was your government and the UK’s that developed the model (that has run into great problems and backlash in less developed parts of the world as a private monopoly will be inherently more unfair than a state one). In other words, you need both and we are looking at the same thing from different angles. The scope and size of the US market frres up the government to let corporations run freer, while smaller markets will never get this kind of thing unless under government sponsorship.

      As to Starbucks it is a true private investment as it should be. I don’t really have much to comment on that.

      I don’t have all of the answers either. I just don’t believe that any extreme position has any merit whatsoever. As always, I believe the the truth is somewhere in the middle.

      • 0 avatar

        I have been a big fan of yours for quite a while — you offer a unique, sophisticated perspective, and always keep your cool. And, you really like cars!

        I think you are right about Verizon — a lot of my fellow Americans may not want to admit it, but the federal government plays an important role, often a critical role, in developing new markets or infrastructure.

        Boa noite!

  • avatar

    yeah, ’cause there’s so much war we could spend our money on …

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