Tesla In Nevada: New World Of Energy

Certain corporate announcements explode across the headlines and shock us all with the realization that we are entering a new world. The emergence of McDonald’s in the old Soviet Union, for instance, embodied the triumph of capitalism over communism. And Steve Jobs’ introduction of the iPad, for example, epitomized the emergence of the mobile internet.

Although it received far less publicity, Tesla’s announcement of the construction of a $5 billion battery “gigafactory” in Nevada (USA) last week may be recognized, eventually, as another such announcement. After all, on several different levels, it exemplifies the emergence of a new world of energy.

How does it do so? Well, Tesla itself is a creature of the age of clean energy. Although electric automobiles were first built in the 1800s, Tesla was formed a decade ago to address environmental concerns like climate change by replacing gasoline powered vehicles with zero carbon emission cars. Elon Musk, its founder and owner, also launched SolarCity with the same goal in mind.

Furthermore, Tesla’s decision to built the gigafactory was necessitated by its plans to introduce its first mass market all-electric automobile, the Model 3. The firm’s senior officers are convinced that environmental concerns will compel middle class buyers to embrace automobiles with zero carbon emissions.

Perhaps most significant, though, is Tesla’s decision to build the factory in Nevada, a state with a very limited manufacturing footprint because of its distance from traditional carbon based energy sources. Nevertheless, the site was chosen because of its ability to generate renewable solar, wind, and geothermal power.

A gigantic factory powered by renewable energy sources, producing massive numbers of batteries for mass market vehicles that emit no carbon pollutants? That is certainly a project that can serve as a harbinger of the emerging new world of energy, one that may be remembered for years to come.

The Auto Bailout: Was It Worth The Cost?

Do you remember the great American bailout of the automobile industry? Following in the footsteps of the retiring President George Bush’s bailout of the financial industry, the auto bailout represented one of the first major decisions of the Obama Presidency.

A variety of reasons and reassurances have been offered by the President and his administration officials in defense of their decision to spend billions of dollars on resuscitating General Motors and Chrysler. They were saving thousands of American jobs. Iconic American firms would remain under American ownership. The federal government would (eventually) be repaid in full. And while under governmental control, the firms would aggressively support a socially desirable transition towards electric vehicles and renewable fuels.

Five years have now passed since the time of the bailout. How many of these four goals have been achieved?

On the one hand, General Motors and Chrysler continue to employ over 200,000 and 70,000 workers, respectively. Their networks of suppliers and dealers continue to employ thousands of additional workers as well. Many of these individuals would have undoubtedly lost their jobs if the firms had been permitted to fail.

In addition, when General Motors emerged from bankruptcy three years ago with an Initial Public Offering on the New York Stock Exchange, it resumed its historic role as an American firm with a corporate headquarters in the United States.

On the other hand, though, earlier this week, the Italian automobile company Fiat announced that it was completing its full acquisition of Chrysler. And last month, the federal government of the United States announced that it was closing the books on its investment in General Motors by writing off a $10.5 billion loss.

Furthermore, based on the 2013 annual vehicle sales totals that were announced this week, it appears that the American automobile industry remains as reliant on gas guzzling SUVs and pickup trucks — as opposed to fuel efficient small cars — as ever. Meanwhile, the General Motors electric Volt vehicle posts meager sales, struggling to remain ahead of electric vehicle competitors like the Nissan Leaf.

So how many of the bailout’s four goals (i.e. saving jobs, maintaining American corporations, getting repaid in full, and transitioning to renewable fuels) were actually achieved during the past five years?

Well, the first goal was certainly achieved via the bailout. The second can be deemed a partial success. But the third and fourth goals? It’s very difficult to declare victory about either one of them.

It’s impossible to know, of course, what would have occurred in the absence of the government bailout. On the one hand, 2012 Presidential candidate Mitt Romney may have been proven correct when he asserted that the free market would have continued to serve America’s need for motor vehicles. But on the other hand, it’s just as possible that Detroit’s total failure might have provided the “tipping point” to sink the global economy into a second Great Depression.

If you were the Chairman of the White House’s Council of Economic Advisors in 2009, and if you could foresee the results of the automobile industry bailout, would you have recommended it to the President?