How Elon Musk's Growing Empire is Fueled By Government Subsidies

theodp writes: By the Los Angeles Times' reckoning, Elon Musk's Tesla Motors, SolarCity, and SpaceX together have benefited from an estimated $4.9 billion in government support. The figure compiled by The Times, explains reporter Jerry Hirsch, comprises a variety of government incentives, including grants, tax breaks, factory construction, discounted loans and environmental credits that Tesla can sell. It also includes tax credits and rebates to buyers of solar panels and electric cars. "He definitely goes where there is government money," said an equity research analyst. "Musk and his companies' investors enjoy most of the financial upside of the government support, while taxpayers shoulder the cost," Hirsch adds. "The payoff for the public would come in the form of major pollution reductions, but only if solar panels and electric cars break through as viable mass-market products. For now, both remain niche products for mostly well-heeled customers." And as Musk moves into a new industry — battery-based home energy storage — Hirsch notes Tesla has already secured a commitment of $126 million in California subsidies to companies developing energy storage technology.

Comments

Re:A tax break isn't s subsidy

[MightyYar]

Money is fungible, but the word "subsidy" does imply a flow of government to someone. Tax break is the proper term to use unless you are deliberately trying to mislead people. See also "corporate welfare".

In this case, the "subsidy" flows to anyone in the same position as Musk. It's not a special favor or anything evil - it's just the government staying hands-off on a certain industry in order to encourage growth and an attempt to stem the flow of jobs overseas.

I actually like the idea of abolishing corporate taxes to extend this benefit to all businesses, and to simplify the costs of doing business - no need for a big expensive accounting department. The loss of revenue can be more than made up by closing loopholes and writeoffs in the personal income tax, raising the capital gains rate, and abolishing "qualified" dividends. This would make the US even more attractive to multinationals, which would somewhat mitigate the loss of accounting jobs.

Actually...

[denzacar]

so the early auto producers managed to get the US to redo all of it's roads.

Early auto producers exploited the decades of lobbying already done by cyclists.
http://www.theguardian.com/env...

Carlton Reid
19th century cyclists paved the way for modern motorists' roads
Car drivers assume the roads were built for them, but it was cyclists who first lobbied for flat roads more than 100 years ago

Wooden hobbyhorses evolved into velocipedes; velocipedes evolved into safety bicycles; safety bicycles evolved into automobiles.

It's well known that the automotive industry grew from seeds planted in the fertile soil that was the late 19th century bicycle market. And to many motorists it's back in the 19th century that bicycles belong. Cars are deemed to be modern; bicycles are Victorian.

Many motorists also assume that roads were built for them. In fact, cars are the johnny-come-latelies of highways.

The hard, flat road surfaces we take for granted are relatively new. Asphalt surfaces weren't widespread until the 1930s. So, are motorists to thank for this smoothness?

No. The improvement of roads was first lobbied for - and paid for - by cycling organisations.

In the UK and the US, cyclists lobbied for better road surfaces for a full 30 years before motoring organisations did the same. Cyclists were ahead of their time.

When railways took off from the 1840s, the coaching trade died, leaving roads almost unused and in poor condition. Cyclists were the first vehicle operators in a generation to go on long journeys, town to town. Cyclists helped save many roads from being grubbed up.

Roads in towns were sometimes well surfaced. Poor areas were cobbled; upmarket areas were covered in granite setts (what many localities call cobbles). Pretty much every other road was left unsurfaced and would be the colour of the local stone. Many 19th century authors waxed lyrical about the varied and beautiful colours of British roads.

Cyclists' organisations, such as Cyclists' Touring Club in the UK and League of American Wheelmen (LAW) in the US, lobbied county surveyors and politicians to build better roads. The US Good Roads movement, set up by LAW, was highly influential. LAW once had the then US president turn up at its annual general meeting.

The CTC individual in charge of the UK version of the Good Roads movement, William Rees Jeffreys, organised asphalt trials before cars became common. He took the reins of the Roads Improvement Association (RIA) in 1890, while working for the CTC.

He later became an arch motorist and the RIA morphed into a motoring organisation. Rees Jeffreys called for motorways in Britain 50 years prior to their introduction. But he never forgot his roots. In a 1949 book, Rees Jeffreys - described by former prime minister David Lloyd George as "the greatest authority on roads in the United Kingdom and one of the greatest in the whole world" â" wrote that cyclists paved the way, as it were, for motorists. Without the efforts of cyclists, he said, motorists would not have had as many roads to drive on. Lots of other authors in the early days of motoring said the same but this debt owed to cyclists by motorists is long forgotten.

The CTC created the RIA in 1885 and, in 1886, organised the first ever Roads Conference in Britain. With patronage - and cash - from aristocrats and royals, the CTC published influential pamphlets on road design and how to create better road surfaces. In some areas, county surveyors took this on board (some were CTC members) and started to improve their local roads.

Even though it was started and paid for by cyclists, the RIA stressed from its foundation that it was lobbying for better roads to be used by all, not just cyclists.

However, in 1896 everything changed. Motoring big-wigs lobbied for the Locomotives Amendment Act to be repeal

Re: We the taxayer get screwed.

[WindBourne]

Actually, Apple, Microsoft, and Google have taken billions in money from the feds.
In addition:
1) Solar City is only everybody's buildings. Also, we should stop the Solar subsidies since many companies no longer need them. Far better is to simply require that all new buildings below 6 stories to have enough on-site AE to equal their HVAC's energy usage.
2) SpaceX is the cheapest launch system going. Bar none. And they are about to be even cheaper. So far, SpaceX has actually SAVED the feds more money than it has costs them.
3) Tesla's Model S and X is currently for the upper middle class to wealthy. Probably it is the upper 1/3 that affords these. OTOH, in about 2 years, it will be the upper 2/3 that affords them.

Finally, claiming that it is the POOR that pay for these subsidies is a joke. Right now, in America, the bottom 50% pay NOTHING in the federal taxes. So, like the rest of your post, total BS.
And it would be irresponsible for Musk to NOT take the subsidies. Where the real problem is, that gov, feds and states, are giving these out. Hell, the fossil fuel industry gets 8B / year. That should be stopped NOW.

Re: We the taxayer get screwed.

[taiwanjohn]

This.

When you consider that there are now over 1600 billionaires, how many of them are "using their powers for good" to the degree that Musk does? Sure there's the Gates Foundation, and other philanthropic efforts, there's the Tata Motors guy in India... some VC guys like Khosla... But out of 1600 people, what a tiny percentage of them even show up on the radar screen, let alone those who are doing "cool stuff" with their immense wealth and power.

If every billionaire used his wealth like Musk does, I wouldn't mind this staggering inequality so much. Sadly, Musk is more an exception than the rule.