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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.
Employing mainly Americans, manufacturing in America.
"Because that's where the money is."
Duh....
Faster! Faster! Faster would be better!
They forgot the benefit that it gets us out of the Middle East. That sandtrap is a massive waste of resources that I hate is being subsidized.
So we have a brilliant industrialist creating new pathways that we will all benefit from. In this case I hope the government gives him even more money. We need these technologies and a support system to actually conquer some of the issues that now confront us.
A grant, yes, but not a tax break. Just because you are getting fucked by taxes doesn't mean the other guy who isn't is being subsidized.
Big companies get subsidies in the form of tax breaks all the time.
They bitch about taxes, get a deal, then they bitch because the schools aren't churning out worker robots with the necessary skills- schools that would be funded by the taxes the big corps aren't paying.
Governments should support future growth business. It promotes the economy and improves mankind. If Musk is taking advantage of that and taking on the risk of being the first; that to me sounds like good business. Good for Musk, good for the globe.
We want him to succeed. That's why those incentives exist.
If you want to complain about government largess to corporate America, there is no shortage of other, far more dubious, targets...
If the people pass laws to promote businesses investing in developing new capabilities (e.g. space flight) then we WANT companies to do that work and thus get those grants, tax breaks, etc. That's how the airline industry got launched in the US, for example - huge government subsidies (airports, air traffic control system) and contracts (for mail delivery) that jump started the US airline industry, which was IMO a brilliant investment, because transportation doesn't just benefit the company providing transportation, it benefits everyone who uses transportation. Highways were another brilliant investment, funding construction companies and thus jobs, and creating a national road system that everyone benefits from.
The subsidies/grants/tax breaks that I object to are the ones that go to mature, profitable industries that don't need any support because they should be able to survive on their own. Oil companies and sports teams are just the most blatant examples. Agri-business corporations don't need subsidies, either - the farming grants should be reserved for the few percent of farmers who are independent, small family farms, and right now the money all goes to huge, profitable corporations that have huge resources and don't need the money, and relatively little to the small farms that need the support to survive the ups-and-downs of farming.
Enable 3D printed prosthetics!
The oil industry periodically requires wars to secure its supplies, and a lot of its profits accrue to countries with interests inimical to those of the U.S. To give you an idea, Operation Desert Storm cost $104 billion in nominal 2014 dollars. From a strictly cost/benefit perspective, the U.S. is underfunding these companies.
Stop learning! Only you can prevent esoterrorism.
Loans that were fully paid back (e.g. the one Tesla got). Space launches for the government that are *cheaper* than the other launch services the government is using. You can't call it a subsidy when they are selling the government a service.
Most of the other clean tax subsidies are given to the clients (e.g. SolarCity, Tesla) not to Musk's companies directly. If they are that rich, as the author claims they are, I think they would still buy the cars to make a kind of fashion statement even if there was no tax break at all.
As for the tax breaks he gets for building that factory its no different from what any other company doing a similar activity would get. Yes I know its crap but its the world goes.
Rather spending that type of money on the bazillions pointless DOD contract where it doens't trickle down but simply trickles away, it goes to a guy and his various crews that actually get shit done. And manufactures mostly domestically. I don't see a problem here.
We suffer more in our imagination than in reality. - Seneca
I'm sure they did.
And the evidence is that they were right, by the by. Note that sans railroads, the USA would probably be five or six nations now. Running a nation that requires literally months to cross isn't practical....
"I do not agree with what you say, but I will defend to the death your right to say it"
Those tax breaks and subsidies were set up to encourage advancement in those areas by offering an economic incentive. Musk just did exactly what the government was handing out money for people to do... advance those areas.
while(1) attack(People.Sandy);
In a 2008 blog post, Musk laid out a plan: After the sports car, Tesla would produce a sedan costing "half the $89k price point of the Tesla Roadster and the third model will be even more affordable."
In fact, the second model now typically sells for $100,000, and the much-delayed third model, the Model X sport utility, is expected to sell for a similar price. Timing on a less expensive model — maybe $35,000 or $40,000, after subsidies — remains uncertain.
The Roaster cost more than $89k. That was the value without subsidies. The article is comparing the price of the cheapest model of the Roaster (with subsidies) to the price of the most expensive Model S (without subsidies). Well DUH.
The Model X isn't the third model Musk was talking about. The third model SEDAN is supposedly to be called the Model 3 and unlike what the author said it's planned to be launch in 2017. YMMW. They need the battery factory to be finished so they'll have batteries cheap enough for the Model 3.
OK, I bet there is an image of a crowd of thousands of men with their lunch pails all walking into their shift at the plant who then jump on the line and build cars.
No.
At best it's a couple of dozen people working in the back office and some techs to walk around and monitor the automated plant.
Tesla has 6000 employees
But go ahead and keep undermining your arguments with such unnecessary hyperbole, mister Anonymous Coward.
I'm a leaf on the wind. Watch how I soar.
At best it's a couple of dozen people working in the back office and some techs to walk around and monitor the automated plant.
A quick look at Wikipedia says Tesla had 10,000 employees in November of 2014 and SpaceX had 3,500 employees in April of 2015.
You didn't even bother with that much fact checking about what you 'know', though, did you. Your entire post is a demonstration of idiocy in action.
If you're so sure, why don't you rent a Tesla and try out the nice little "fake" battery swap station?
Oh, right, because that would go against your theory.
SourceForge, the code repository site owned by Slashdot Media, has apparently seized control of the account hosting GIMP for Windows on the service, according to e-mails and discussions amongst members of the GIMP community—locking out GIMP's lead Windows developer. And now anyone downloading the Windows version of the open source image editing tool from SourceForge gets the software wrapped in an installer replete with advertisements.
Link to original source
The GIMP developers aren't happy at all about this. They say that Sourceforge impersonated the GIMP developers, and abused the trademarks owned by the GNOME foundation
How large were the bail outs to failures such as LTCM and recently to the all banks and car companies after the last financial crash?
Tritium
Compared to the shenanigans of the coal and oil businesses, even if it is true, this 5 billion is nothing. But most likely it is a hit piece commissioned by the same people who brought you the Iraq war. That one was expansion attempt. Now they are defending the home turf, public utilities using gas and coal. Entrenched monopolies who have never faced competition, lightly regulated by revolving door politicians, lobbyists and company men.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
So, it turns out that John Galt is kind of a moocher.
Who could have guessed?
You are welcome on my lawn.
Tesla has opened their patents up. So, no, these are not Tesla-specific and not of fleeting usefulness.
Ask Warren Buffet. He's the modern railroad baron. He owns the lines that the oil tankers run on. He has a vested business interest in supporting politicians who block the pipeline.
How funny.
Tesla employed over 6000 full-time last sept. That does not include ppl working on gigafactory.My guess is that with model X gearing up that it will jump to 10,000 by Jan.
Solar city employs full time over 8000 as of Dec, 2014. And they doubled last year They are still hiring like mad. Again, that does not include those working on the new 1gw/year solar plantS. On a side note , it turns out that solar employs more ppl than coal.
spacex employed more than 3000 last summer when they cleaned house of 150. In addition, they said that they would be at 3600 by 2015.
So, musk employs conservatily, 25,000 ppl and it is growing very fast. OTOH, the fossil fuel industry is subsidized more than 8b PER year in America. In fact, we pay 1 B / year to cover coal miners health. I would suggest that we look to kill a number of subsidies, esp in the fossil fuel arena.
I prefer the "u" in honour as it seems to be missing these days.
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
Mit der Dummheit kämpfen Götter selbst vergebens
... is that there's so many to choose from. Noam Chomsky even makes a pretty plausivle case that big business in US depends on the government $$$ since, like, forever. Without comparing subsidies and their spread over various industries, this article ranges from stating the obvious to a hit piece .
And that comes to what, over $360,000 per employee?
Here is the problem. Most of this subsidy money is not given to anyone or any companies. It is a waiver of future costs that wouldn't likely be collected anyways. Some is in the format of direct payment but those are generally to share the costs of getting people and companies to do what they wouldn't do already. So its pointless to really argue about it outside of whether we want someone or companies to act in certain ways while remaining free people.
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.
I prefer the "u" in honour as it seems to be missing these days.
Subsidies are policy implementation devices. When people take the subsidies under the condition the subsidies are offered the result is that something the government wants to happen happens. Theoretically its an inexpensive way to get things done without the government doing it and assuring private investment in the outcome. (so there's vested interest in successes and usually commercialization).
Just because one guy happens to feed at the trough isn't a problem neccessarily. It could be. But that's why you have oversight.
Some drink at the fountain of knowledge. Others just gargle.
Another way to descript this would be:
Elon Musk structures his businesses to support government priorities.
The real "Libtards" are the Libertarians!
And this is a problem how? Don't those subsidies exist precisely to encourage the development of these sorts of technologies? The government (and theoretically, by extension: the people) decided that to encourage the development of greener technologies and/or space technologies, they would provide various bits of assistance to companies, as well as consumers buying into said technologies. Musk appears to be successful in developing these technologies. Now people are complaining that he got government subsidies? Bah. We, the people get the benefit of these new emerging technologies, and Musk gets to make some money doing it so that these emerging technologies exist. Win-win scenario. The subsidies will go away at some point as the technologies become more mainstream.
...he fossil fuel industry is subsidized more than 8b PER year in America...
Not to mention that the Internet was started by the government. And companies like Lockheed Martin rely almost completely on government military subsidies. This article was a hit piece. The American media really is shockingly corrupt.
This and no other is the root from which a tyrant springs; when first he appears as a protector - Plato (423 to 327 BC)
So all of Elon's companies get $5b in subsidies? The oil industry in the US get $37.5 billion in subsidies a year, including $21 billion for production and exploration. That's a far worse proposition for this country.
----- obSig
unfettered capitalism is all about?
Lol.. if that was all, you might have a point. Why do you believe the subsidies have stopped and no more will occure over the life of the company?
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.
XML is like violence. If it doesn't solve your problem, you're not using enough of it. --AC
That bottom 50% not paying anything in taxes is understandable if you look at the amount of wealth it represents in this country.
Graph here:
http://www2.ucsc.edu/whorulesa...
"It is widely believed that taxes are highly progressive and, furthermore, that the top several percent of income earners pay most of the taxes received by the federal government. Both ideas are wrong because they focus on official, rather than "effective" tax rates and ignore payroll taxes, which are mostly paid by those with incomes below $100,000 per year."
http://www2.ucsc.edu/whorulesa...
Wealth, Income, and Power
by G. William Domhoff
Do Taxes Redistribute Income?
Adam Smith, who wrote Wealth of Nations, said that those who have benefited more from society should pay a greater proportion of their income for the costs of running that society. In other words, Smith advocated progressive taxes.
Depends on how far back that wealth goes. For many wealthy, their first priority is to maintain the wealth in perpetuity for themselves and their family. It's no different then the priorities of typical royalty. Musk and Jobs were nouveau riche, were they not? If so, that would explain how their idealism carried over once they acquired the financial means to carry through.
Life is not for the lazy.
"Quite frankly, government subsidies for these are a waste until the fundamentals line up."
Are you suggesting that the government should only be subsidizing mature industries?
I am not a fan of any subsidies . . . especially for mature industries. If the economics do not line up for a mature industry then the industry creates a net economic drag on the economy and should not be subsidized.
The entire point of a subsidy should be to test and support the viability of new ideas that have the potential to create large economic benefits in the future. Instead what we have is a 100 years of subsidies for a handful of companies while pointing the finger at peanuts that should fundamentally change the world if allowed to compete on a level playing field.
-rd
However, two points:
I remember reading of Warren Buffet pointing out, as an anomaly, that his personal secretary pays proportionally more taxes than he does - and he wasn't even factoring in sales tax, iirc.
There's nothing like $HOME
Having rich and poor is an inevitable feature of any civilization that has ever existed or ever will exist. The societies that try to eliminate it (namely, communists) end up destabilizing quickly.
You mean, like Canada, that slum-ridden cesspit to the North?
Try dialing down the dogma a fraction, and accept that there are reasonable compromises that provide reasonable mitigation to the worst aspects of any economic system. You might find that it is indeed possible for sober public investment in private enterprise not only to work, but to work well. There's a whole sub-discipline in economics devoted to the study of it. Yes, there are downsides to Public/Private Partnerships (it even has a name!!), but with the proper checks, they can sometimes work better than either a purely public or a purely private undertaking.
Crumb's Corollary: Never bring a knife to a bun fight.
You have to be kidding.
Tesla has a supercharger that charges 80% in 40 minutes or less. Likewise, their batteries are not only, the cheapest per KW, but also lasting the longest of any li-ion in vehicles.
Spacex is working towards landing first stage as well as the capsule and re-using it quickly. Nobody had a pusher abort system that can be used for landing on earth as well as mars and the moon. In addition, nobody has done a full stage methane engine, but Tesla is testing theirs now.
now, we have solar city. At this time, I would not call them innovative, but that could change.
So, musk companies are adding massively to american economy, while others continue to outsource, while killing off R&D.
I prefer the "u" in honour as it seems to be missing these days.
How is it 'growing'? Tesla's factory runs under capacity and has been doing so since 2012.
http://en.wikipedia.org/wiki/T...
"In December 2012, Tesla employed almost 3,000 full-time employees.[3][26] By January 2014, this number had grown to 6,000 employees."
"Number of employees - 10,000 (Nov 2014)"
3000 to 6000 to 10000. Nope, that certainly doesn't sound like growth. But just in case any of those words were too big for you, here's a graphic:
http://www.statista.com/statis...
" In August 2014 the company announced it, in conjunction with Panasonic, would establish a "gigafactory" battery manufacturing plant in the Southwest or Western United States by 2020. The US$5 billion plant would employ 6,500 people, and reduce Tesla's battery costs by 30 percent."
So in additional to however many other employees they add over the next 5 years, they will then add another 60+% of today's employee count, and in doing so be able to greatly decrease the cost for the most expensive part of their car...the one part that is MOST responsible for pushing Tesla cars out of the price range of the average person. But I'm sure that won't result in any growth, either.
and they go out of their way to hire veterans: http://www.military.com/vetera...
And they doing their best to insure that most of the battery production in the world will be done in the U.S. in the future: http://www.teslamotors.com/gig...
And oh by the way they are the future of the car industry... and perhaps getting the U.S. energy independent in a sustainable way...
But yah, let's bitch about giving them tax breaks... because we need to save those for more worthy industries (sarcasm).
Pat
Agreed. Not to mention, most people don't realize how even automation requires human supervision. Someone has to be there to handle general maintenance, develop optimized layouts, handle specific deviations, etc, etc.