A question that has been on many people’s minds lately, is should smaller auto technology startup with promising cars get a slice of that taxpayers $25 billion the government has set aside?
The gist, you all know it, until a two weeks ago all eyes were on the Detroit Trio when considering the allocation of the $25 billion fund. However, companies like AFS Trinity and Tesla are also asking for a break. After all, they need extra funds to provide tomorrow’s future. So should this fund only be given to companies that have ignored looming changes, have bloated management and heavy union contracts burdens? Or should entrepreneurship be also given a push, considering they are already working on tomorrow’s technology?
The Pros And Cons. Obviously, there are plenty here and all attract much heated and passionate arguments. But emotional arguments don’t lead anywhere. The pros for only funding the Detroit Trio is that they an important part the economy of the country and would not only need $25 billion, but likely twice if not more. However the cons with that argument is that, what would they do with it? Would it really only go towards building greener cars when they desperately need cash flow to keep their doors open. This means paying bills and continuing building cars that sell now, low fuel consumption ones. In other words, what strings can Congress attached to force Detroit to align itself with its competitors? Surely the CEOs would like nothing more but we wonder how the auto unions would perceive losing some rights.
Another argument against the bailout was that many companies, both local auto-technology start up and alternative companies have already expressed a desire to buy parts or entire plants for the flailing giants, thus negating the loss of jobs catastrophic predictions. SolarWorld wants to buy some of GM’s German Opel plants, AFS Trinity has told us they would like to acquire a plant to produce their incredible technology until mainstream makers lease it.
Should Congress allocate some of that fund to startups? It depends. Some have already provided impressive working and produced platforms, such as Tesla’s Roadster, AC Propulsion’s electric drive train that powers many electric cars today successfully, AFS Trinity’s incredible 150 mpg SUVs, etc. After all, why not since more than likely their technology will make the U.S. competitive again in the automobile industry. So why not push what makes America’s strength, entrepreneurs and small businesses so that it can once again be competitive, since they have already done a lot of work? While Detroit have some hybrids, HEV they are not maximized for efficiency, especially considering AFS Trinity’s 150 mpg SUVs. Will the Volt be enough to save one company, most likely not.
Detroit could also file for Chapter 11 but that raises questions. Who would take care of car warranties while the rearrange their management and renegotiate union labors to be more competitive? A few companies have stepped up to take care of the warranty issues.
In conclusion, the pros and cons are pretty evenly stacked. Bailout Detroit and you will assist bloated companies run themselves down the ground, unless carefully thought-of stipulations are worked into the bailout. And even then, how can they turn around in such short notice when they are that big? Of course, many believe filing for Chapter 11 would be the answer. One thing is for sure, Congress treads on very thin ice. As consumers are hurt by a dodgy economy, many don’t see the bailout as the best use of their taxpaying money. After all, small businesses cannot get financed easily, why should bloated big ones with a history of losing money should?
Darned if you do, darned if you don’t. This was a well crafted scenario that will cost taxpayers a lot of money.