The Business section of the NYTimes.com site has an article about Tesla Motors, the Silicon Valley electric car start-up backed primarily by Elon Musk and a list of other high profile investors (including the Google guys).  The article centers around Tesla's recent request for a low interest loan of $400 million from the US Government as part of a fund whose goal is to improve US automakers' fuel efficiency.  Randall Stross, the reporter who wrote the article, has a very clear message as it relates to Tesla.  His argument is that Tesla is not a truly viable company and that tax payers shouldn't pony up for what he amounts to a boutique automaker that caters to the rich.  Tesla is behind schedule on its delivery of the $100K+ Roadster and even farther behind schedule on its plans for the more affordable $60K Model S sedan.  However, the bigger question to me, as a tax payer, is whether I think the future of America's auto industry is in the Big Three US automakers or somewhere else... say Silicon Valley?

When our family immigrated to the US in the 70's, the first car we owned was an old Mustang.  After a short trist with a VW Beetle and VW Vanagan (they were cheap), we next owned a Buick Skylark Wagon and a Ford Taurus.  My first car was a Dodge Colt.  From the Taurus my parents went to a Nissan Sentra, then a Honda Accord, and finally a Toyota Camry and Corolla.  After my Dodge Colt (I totalled it, but that's another story), my wife and I inherited a Maxima and a Camry.  Our first new car purchase ever was a Toyota Prius.  I remember the pride my dad had in being able to buy the Taurus which was considered at the time to be one of the better quality cars available.  However, since those days of the 80's and early 90's, the quality of American made cars has slowly declined while that of foreign brands from Japan and Europe have continued to increase.  It wasn't necessarily for lack of features/power/design but more for lack of reliability that forced us to move away from American made cars to Japanese.  Today, American cars have the perception of unreliability, whether true or not.  Given the issues that the Big Three face, I don't have much confidence that they'll be able to turn that around nor keep up with innovative companies like Tesla to deliver us the next generation of automobiles.  For that reason, I choose to cast my vote with the new unknown than the old unreliable.

UPDATE:  Jason Calacanis writes a very good response to Randall Stross' article.  It's posted on the Huffington post.

I'm reading the details of the Big 3 automaker's recent request for a $25 billion bailout.  Specifically, I'm referring to high salaries for executives in the midst of multi-billion dollar losses.  It's not the amount of the pay that bothers me.  CEOs and executives of multi-billion dollar companies are entitled to compensation above and beyond what normal folk should get.  What really gets my goat is that the domestic automobile industry has been lagging behind foreign players for years now yet none of these CEOs really seemed to care.  Instead of innovating, they decided to ask for a handout.  And I'm afraid that the government will give them this bailout for fear that tens of thousands of rank and file employees will lose their jobs.  The problem is that it will continue to perpetuate a philosophy of mediocrity amoung the employees of the automakers.  Do you think if Yahoo was given a bailout that Jerry Yang would have stepped aside?  It took the dramatic act of Yang leaving Yahoo for that company to finally move forward.  I doubt any of these CEOs would do the same.

On a side note, Toyota's chief makes about $1 million a year and his company generated close to $15 billion in profits last year.  I guess I should be a little upset.