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Remember Tesla

In all of the hoopla about Eclipse, people seem to forget that the last few years in New Mexico have seen quite a few government “investments” that didn’t quite pan out. You remember Tesla don’t you (subscription)?

Monday’s announcement ended two weeks of speculation as various states, including California, Michigan and Arizona, scrambled to put together incentive packages for Tesla’s first manufacturing plant.

The package was put together by nonprofit business recruiters Albuquerque Economic Development and the New Mexico Economic Development Partnership with help from various government agencies.

The state will make two $3.5 million capital outlay appropriations, one this year and one next, to Bernalillo County, which will use the money to build infrastructure such as roads and other necessities at Tesla’s planned Cordero Mesa location. Albuquerque will contribute $600,000 for infrastructure improvements.

The plant will be built by Albuquerque-based Rio Real Estate Investment Opportunities and leased to Tesla, which plans to invest about $35 million in tooling and other equipment.

That was the “good news.” The “bad news” followed shortly after:

Tesla Motors, once a poster child for a green manufacturing revolution in New Mexico, will not break ground in the state.

The San Carlos, Calif., electric car start-up, which had agreed to build a $35 million plant on Albuquerque’s Westside to build the $60,000 four-door, five-passenger Model S sports sedan, announced Monday that the vehicle would be manufactured in California.

The news follows by a week the California Alternative Energy and Advanced Transportation Financing Authority’s program to encourage the manufacture of zero-emission vehicles, which will provide Tesla with $100 million in tax-free financing for manufacturing equipment. Tesla also will be eligible for at least $1 million in Employment Training Panel Workforce Development Funds through the program.

Toni Balzano, spokeswoman for New Mexico Economic Development, said none of the once-decisive $7 million infrastructure incentives from the state of New Mexico — $4.5 million of it approved in the last legislative session — had been spent

Ah well, easy come, easy go… Although, in this case we might have gotten off cheaply. This Tesla investment could very well have turned out the same way as the state’s Eclipse investment:

THE Tesla Roadster is an electric car that goes fast, looks sensational and excites envy. The seductive appearance, however, obscures some inconvenient truths: its all-electric technology remains woefully immature and don’t-even-ask expensive. If enough billionaires step forward to inject additional capital to keep the doors of its manufacturer, Tesla Motors, open, I’m happy for all parties.

If investors pass up the opportunity, however, why should taxpayers fork over the capital that Tesla needs? The Roadster is not much more than a functioning concept car that sells for $109,000. The company is requesting $400 million in low-interest federal loans as part of the $25 billion loan package for the auto industry passed by Congress last year.

The program is intended to encourage automakers to improve fuel efficiency, but should it be used for a purpose like this, as the 2008 Bailout of Very, Very High-Net-Worth Individuals Who Invested in Tesla Motors Act? Can you conceive any way that federal dollars could be put at greater risk — and for no equity in return, keep in mind — to benefit fewer people?

Tesla Motors, a privately held company based in San Carlos, Calif., has spent almost all of the $145 million in capital it has raised to date. It says it will soon receive another round of $40 million from its private investors to sustain operations.

It’s that last line that really caught my attention: “It says it will soon receive another round of $40 million from its private investors to sustain operations. ” Gee, that sounds awfully familiar. In the current economy any company looking for capital to “sustain operations” is in real trouble. The federal government should not invest $400 million of OUR MONEY in this company – nor for that matter should they bailout GM or any other car manufacturer.

But, most importantly, New Mexcio should take this as a wake up call. We need to stop this habit of providing special incentives and funding for individual companies and industries.