Elon Musk: visionary technologist. His projects shoot for the moon or literally
Mars. Across space travel, energy, and of course transportation. His companies have
propelled him to a net worth of almost 20 billion, but how have government
policies and taxpayer money boosted his businesses? His major companies have all
had significant government support in one form or another. Let's start with
Tesla. Tesla has inked north of $2 billion in federal and state subsidies in recent
years. For a company that is yet to turn a yearly profit in almost a decade as a
public company the number is significant. On the Tesla side, which now includes Solar City
obviously some of the biggest deals have been both in Nevada, and also in upstate New York in Buffalo
In Nevada the state gave Tesla nearly $1.3 billion in tax breaks to build their
first Giga factory in 2014. Tesla will be sales tax free for 20
years, exempt from property tax for ten years, and will receive millions in
other incentives, that is if they keep up their end of the bargain by investing
billions into the facility and employing thousands of people.
I think that any other city or local government that's considering getting into
this massive tax subsidy game should take a hard look at Reno and ask
if the costs are worth the benefits Fulkerson says that Nevada's
infrastructure is unable to accommodate Elon Musk's plan for massive expansion.
We want Tesla to succeed I mean we really want electric cars and we really
want to get off fossil fuels and we want you know this economic region to succeed,
but this kind of growth is just not sustainable here.
And that 2 billion
dollar number doesn't include the federal electric vehicle tax credit that
consumers get. The $7,500 credit has made Tesla's
electric cars about $1.5 billion cheaper in aggregate for consumers in
the U.S. Some states even have extra incentives on top of that. The Federal
credit is phasing out for Tesla starting in 2019. To be clear other companies
making electric cars benefit from this as well
and Tesla isn't the only company to get direct government subsidies. Billions of
dollars in incentives have been given out in states across the country to
attract economic development. Not a new problem
and we've never had any federal leadership trying to stop the race to the bottom
Tesla's competitors GM, Ford, and Chrysler all received more than a billion dollars
in subsidies in the state of Michigan according to a New York Times
investigation. Of course Tesla sells fewer cars and has far fewer employees
also federal fuel economy standards have helped Tesla's bottom line. Automakers that
sell gas-guzzling cars can buy credits from electric vehicle makers like Tesla
to comply with regulations. Tesla said it made more than $830 million in revenue
from 2015 to 2017 selling these credits. A Tesla spokesperson told CNBC:
While Tesla is helped by some incentives other
government policies has held the company back for example they aren't allowed to
set up shop to sell their cars directly to consumers in every state. Of course
government subsidies and tax incentives are not necessarily bad by default if a
government decides to invest in an industry for the good of its citizens it
has the power to do so. Many countries ,including the US, have been subsidized
and clean energy in the face of climate change. That is the crux of Elon Musk's
mission in fact on the Tesla website there is even a constantly updated
tracker that displays a total CO2 saved by Tesla vehicles. In 2015 Elon Musk
responded directly to an LA Times report saying his company has received almost
five billion dollars in government support he called the report misleading
and deceptive and defended taxpayer subsidies. By adding up everything
that's ever happened and and including things that will take the next 20 years
to happen and then summing that into a single number and paying today it makes
it sound as though my company's getting some huge check which is fundamentally
false the reason these incentives are put in place is because the voters want
a particular thing to happen and they want just happen faster than it might
otherwise occur. None of them are necessary they are all
they're all helpful. Government subsidies aren't the only way Tesla's
got support from the government. Before Tesla went public in 2010 it received a
substantial government loan. Elon Musk took advantage of an entirely new
government initiative called the Advanced Technology Vehicle
Manufacturing Loan Program. Tesla received a 465 million dollar loan
and paid it back with interest in 2013 nine years ahead of schedule. While
addressing the American taxpayer Musk said, I hope we did you proud
Ford and Nissan also got larger loans with this program along with Fisker
Automotive which went bankrupt. Musk's solar company also benefits from federal
policy supporting solar energy. He helped start Solar City in 2006 and it was
bought by Tesla ten years later it's now called Tesla Energy "Nobody with a
brain cell would want to put these two together but Solar City desperately
needed a bailout" People who invest in solar energy can get a 30 percent tax
credit on their costs of installation. Tesla energy also goes after state
incentives aggressively. In fact recently it had to pay back millions to the state
of Oregon for overstating the cost of large-scale projects in order to qualify
for higher tax credits. Tesla told CNBC it provided the state with accurate
information and was entitled to every dollar of tax credits it received
however it settled for $13 million and finally: SpaceX
The rocket company receives very little in the way of government subsidies instead
relying upon government contracts from NASA, the military, and satellite
companies. NASA helped SpaceX off the ground by awarding SpaceX with a key
400 million dollar contract in 2006. Since then
SpaceX has won over four billion in additional awards from NASA launching many
critical missions for the U.S. space agency. SpaceX has also won over $600 million
in military contracts it has been on the government's list of top
federal contractors since 2013. While that may sound like a lot of government
money these contracts are competitive bids against other aerospace companies
like United Launch Alliance and Boeing. Launching with SpaceX often cost
taxpayers half as much as the money competitors requested. Elon Musk has
repeatedly tweeted thanks to NASA recently saying SpaceX would not be
where it is today without NASA. Basing business off government contracts can be
a risky strategy, but former PayPal founder Reed Hoffman
thinks Musk has made it work. "Then I was I think the second person Elon pitched
SpaceX to and I was like oh you're gonna be doing this thing that comes off you
know national government subsidies and so forth and thought it was a disaster he was
right I was wrong. So while Tesla is not alone in going after government dollars
to support its business Elon Musk has certainly gotten some help from
taxpayers along his rise to stardom