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A Bailout for Tesla?



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The New York Times on Sunday entertained the possibility of $400 million in low-interest federal loans to Tesla Motors.

Tesla’s backers in Silicon Valley can be forgiven for hoping for a miraculous technical breakthrough, because Moore’s Law makes miracles appear in the Valley every day: costs drop by half every two years, again and again and again. The law is actually a rule of thumb, not a scientific law, and is based on the recurring doubling of transistors placed on an integrated circuit.

Unfortunately for Tesla, batteries are based on chemistry and have nothing to do with Moore’s Law. Lawrence H. Dubois, chief technology officer at ATMI, a semiconductor industry supplier, said, “With batteries, you can’t just squeeze more energy into a smaller and smaller space the way you can squeeze more transistors.”

Elon Musk, the chief executive of Tesla, said his company would benefit from what he called “a weak Moore’s Law,” referring to the 8 percent annual improvements in the price performance of lithium-ion batteries. But 8 percent, compounded, would bring too few benefits, too late to Tesla: it would take nine years to halve the price of its battery pack. . . .

I wonder how Tesla’s course has been influenced by at least some of its investors being helplessly smitten by the world’s quietest dragster.

Mr. Musk said: “I’m not doing this because I think the world has a shortage of sports cars.” But his customers must be loaded with green in order to go green.



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