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Can Elon Musk Be Weaned Off Government Support? (thehill.com)

Posted by BeauHD on from the pros-and-cons dept.

mi shares an opinion piece written by Jenny Beth Martin via The Hill: A study published in 2015 by The Los Angeles Times revealed that just three of Musk's ventures -- SolarCity Corp. (which manufactured and installed solar energy systems before its 2016 merger with Tesla Motors Inc.), Tesla Motors Inc. (which manufactures electric vehicles), and Space Exploration Technologies Corp., known as SpaceX (which builds rocket ships) -- had received $4.9 billion in government subsidies to that point in time. By now, Musk's various ventures have sucked well over $5 billion from government coffers. Worse: in order to induce car buyers to spend their money on electric vehicles, the federal government offers a $7,500 rebate on the purchase price. Some states enhance that rebate with rebates of their own. In California, for instance, purchasers of electric vehicles get a state-funded rebate of $2,500 more.

Slashdot reader mi asks: "Why are you and I subsidizing Elon Musk's products and when will his businesses be able to compete on their own?"

21 of 270 comments (clear)

  1. Slashdot user mi by Anonymous Coward · · Score: 5, Insightful

    is an idiot. Many companies receive subsidies from the US Government.

    1. Re:Slashdot user mi by Rei · · Score: 5, Informative

      This is one of the dumbest articles I've ever seen on Slashdot, and that's saying a lot.

      1) SpaceX has been saving the US government a huge amount of money versus its formerly monopolistic competitor, ULA, which even still gets paid even when it doesn't launch anything. SpaceX charges a tiny fraction as much per launch as ULA does, and this before they get to widespread rocket reuse.

      2) The federal EV credits were basically designed by GM, for the Volt. The credit is per-kWh and maxes out precisely at the pack capacity of the Volt (gee, what are the odds of that?). Furthermore, it expires on a per-manufacturer basis. This has the perverse effect that manufacturers of popular EVs - such as Tesla - get no credits (Tesla's phaseout starts next year), but their competitors who make less popular EVs will continue to be subsidized for years to come.

      3) Tesla's reservations are in place despite the fact that its US customers know that most of them will be getting a partially-phased-out credit if any at all. That's because even without credits and without accounting for savings in energy and maintenance costs, the Model 3 outcompetes other vehicles in its class (BMW 3-Series, Audi A4, etc) on performance and features for its price point.

      (Cue the Slashdotters rushing to pretend that there's no difference between standard features and performance in a midrange sedan and, say, a base-model Yaris. Because that's what these conversations usually devolve to ;) )

      4) Tesla Motors did get - like the Big Three - government loans during the auto bailout. But unlike some of the Big Three, they paid theirs back 100% with interest - and more to the point, years before they were due.

      In large part, the subsidies that affect Tesla's products have had the perverse effect of hurting the company, giving them artificially supported competition. Musk frequently complains about them.

      --
      He's really very... gentle... and fuzzy. We're becoming fast friends.
    2. Re:Slashdot user mi by david_bonn · · Score: 5, Insightful

      All good points.

      I think the historical analogies have a lot of weight, though.

      Probably the most pertinent, and controversial at the time, was the enormous land grants given to transcontinental railroads. The land grants worked out to approximately ten square miles of land for every mile of track. That was on top of generous subsidies for actually laying the track. When the land grants were extended to mineral rights as well it became an even better deal for the Union Pacific. Plus, there was a requirement that these railroads be built with American steel -- which was a boon to Andrew Carnegie and others.

      A little bit later, the early electric lighting companies, most notably Edison's, were given generous contracts by local governments to provide lighting for their cities. Much later on, the federal government got into the game and subsidized a great local public power companies.

      Early development of aircraft was largely subsidized by nearly every government who could get into the game, Aside from the obvious military applications there was enormous demand for mail service and to a lesser extent for passenger service -- largely supported by governments.

      You could argue that the early (post WWII) computer industry was largely subsidized by the US government.

      I just have to conclude that the article referenced here sets some kind of world record for abysmal ignorance and willful blindness. It doesn't surprise me that thehill.com would publish such tripe.

    3. Re:Slashdot user mi by Areyoukiddingme · · Score: 5, Informative

      To your first point, does the government save more than they pay out in subsidies or tax credits?

      The US federal government gives neither tax credits nor subsidies for rockets. They buy launch services. There's a bunch of laws requiring it. A ULA launch costs $480 million. A SpaceX launch costs $62 million. Subtract the latter from the former and that's the straight up savings. SpaceX has already launched one national security payload, saving the US government in the form of the NRO hundreds of millions of dollars.

      If you're asking about saving money with SpaceX vs spending tax credits with Tesla, ultimately yes, the government will save money. As the post you replied to pointed out, Teslas will be ineligible for the federal tax credit very soon. Projections were Tesla would hit the ceiling late this year, with Model 3 production. If not, they'll definitely hit it next year. After that, no more tax credits for Tesla vehicle purchases in the US. Meanwhile, SpaceX will continue saving hundreds of millions of dollars with every single launch the government buys.

      NASA has booked no less than 26 resupply launches to the International Space Station with SpaceX. Every single one of those launches saves a fortune in tax money. Next year, NASA's contract with Russia for Soyuz launches of American astronauts to the ISS runs out. SpaceX is pushing hard to finish the Commercial Crew NASA contract, which would get them certified to take over from Russia late next year. That won't save quite as much money: Soyuz launches cost NASA $81.6 million per seat for six launches in three years. SpaceX will probably come in under that, but not by much. More importantly, that money will go to an American company with American employees, instead of a Russian "company".

      More abstractly, the existence of Tesla is making electric cars a reality. The usual suspects can no longer lie to Congress and say it's impossible for them to build a product acceptable to consumers because there's now a company doing it. Electric cars reduce emissions, move emissions, and change the nature of emissions. Rather than hundreds of millions of vehicles spewing toxic fumes from gasoline combustion at ground level everywhere people live, we'll have merely thousands of power plants spewing toxic fumes from coal combustion hundreds of feet into the air far outside of cities. It's not a great win (yet), but it's still a win. The net result will be fewer lung disorders Medicaid has to pay for, saving the government money.

      The Medicaid savings are a lot harder to quantify. Easier to just point to the rocket launch savings, which will add up to many many billions over time. Still, there will be more than just rocket launch savings from Elon Musk companies.

    4. Re:Slashdot user mi by bareman · · Score: 4, Insightful

      This BeauHD user must be losing their ass on their short selling position. Their posts here today reek of desperation.

    5. Re:Slashdot user mi by ColaMan · · Score: 4, Insightful

      The grants aren't "free money". They're money to develop stuff that might not work out. Eg. the USAF grants to develop a new rocket engine.

      You can't call them contracts, because the results aren't a fully delivered product with solid specs behind it. But there's R&D attached to them that is returned to whoever's handing out the money.

      And NASA / USAF / DOD and government in general does this all the time - they basically gamble a little bit of their budgets and spread it about in the commercial/academic world to try and advance the state of the art, because the payoff is that those advances make things cheaper in the long run for them.

      --

      You are in a twisty maze of processor lines, all alike.
      There is a lot of hype here.
  2. googled the author, tea party patriots group by Anonymous Coward · · Score: 5, Informative

    lol

  3. Replace 'Tesla/Elon' with Oil by Anonymous Coward · · Score: 5, Insightful

    Do Oil companies need approx. $4Billion/year of tax payer dollars? When can we wean them off government support?

    1. Re:Replace 'Tesla/Elon' with Oil by Anonymous Coward · · Score: 5, Insightful

      Don't Forget the Corn Ethanol Industry.

  4. What a BS by Cyberax · · Score: 5, Informative

    Tesla does not receive subsidies apart from zero-emission credits. Tesla's _customers_ receive them ($7500 federal tax rebate) until Tesla sells 100000 cars. Other automakers also receive them - I claimed it for my Chevy Volt, for example. And Tesla is going to do just fine without it.

    For SpaceX it's even more disingenuous - they counted governmental launch contracts as "subsidies".

    1. Re:What a BS by MightyYar · · Score: 5, Insightful

      For SpaceX it's even more disingenuous - they counted governmental launch contracts as "subsidies".

      Agreed. Author is doing the typical semantics game where they attempt to redefine common vocabulary to make you see just how bad it all is because they aren't contracts for goods and services, but really just SUBSIDIES - big ugly SUBSIDIES. Both left and right play this ridiculous game because they get no traction when they use regular language to describe things that people are pretty OK with. They want to stoke outrage.

      Anyway, these launch "subsidies" are saving the government quite a bit of money over the old ways, so I'm okay with these "subsidies".

      --
      W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
  5. Re:Why Indeed... by TiberiusKirk · · Score: 5, Insightful

    Yes! Why did the government spend hundreds of BILLIONS on concrete pathways all across the fucking country? And hundreds of billions more to build the oil/gasoline infrastructure? My horse got along just fine without all that shit! Fucking morons.

  6. Tax breaks are government support as well... by lpq · · Score: 5, Interesting

    Can people/businesses get by with out any government handouts in the form of tax breaks (incentives, rebates, credits, etc).

    How about "non-profits", or government support of churches by not requiring religions to pay property tax on their holdings?

    If I don't go to a mainstream church, and worship in my home, why should the mainstream churches get tax breaks and not me?

    The government is always "meddling" by creating tax breaks for "behaviors" that it "desires". I.e. tax free donations, etc.

    In 2007-2008, Bush gave a huge government bailout to the Investment Banks -- should we ask if they could have survived w/o the handout?

    So Musk's companies are taking advantage of areas where the government offers tax benefits -- why is anyone asking about "Musk" (personally) or his company, when he's exercising the same tax benefits available to MANY other companies, organizations and people.

    Why not go after ALL the tax breaks for "everything" and not just single out "Musk" for his businesses benefiting from government policy?

    Many companies and businesses would FAIL bigtime without government financing. Think of the military industrial complex -- can they exist w/o government benefits?

  7. Can big Oil be weaned off USGovernment Support? by OFnow · · Score: 5, Insightful

    You would think that 100 years of US Government support that the Oil companies could be weaned off of the billions in special tax and other benefits give them every single year. The benefits should go to companies taking us to the 21st century OFF of oil. Such as Tesla and Elon Musk's other ventures. Oops. DL;DR

  8. lol. this cracks me up by WindBourne · · Score: 5, Informative

    ULA, a competitor to SX, gets 1B / year subsidy. Boeing recently got 4B to develop a human rated space craft and fly it 3x. SX got less than 3B for doing it AND flying it 6x. SX continues to under bid all other rocket launchers for NASA, and the DOD while having 2/3 to 3/4 of their flights be commercial work, not gov.
    So very little subsidy for SX, and massive ones for its competitors.

    Tesla got a .5B loan that they paid off early. In addition, customers get 7500 / EV that Tesla sells.
    GM, Ford, and Chrysler were bailed out by the gov partially with payoffs and partially with loans that STILL ARE NOT PAID OFF. All of the cars sold in America get 7500 for being hybrid or EV. In addition, back in 2008, America bought a large number of used cars to subsidize car sales for Ford, GM, and Chrysler. So, very little to no subsidy on Tesla's part, but HUGE ones for its competitors.
    Oil companies and coal are MASSIVELY subsidized. Worse yet, ICE vehicles are not paying anywhere close to what it takes to maintain the roads. We need to increase taxes on diesel and gas by another .25/gal MINIMUM.

    Then we have solar city. CONgress continues to push subsidies for Solar. Yet, SC has the LOWEST costs in America and are about to go even lower later this year.

    To read idiots that claim that Musk is living on subsidies is just a FUD POS from kock bros and other idiot far right wingies.

    --
    I prefer the "u" in honour as it seems to be missing these days.
  9. Re:Why Indeed... by Jeff+DeMaagd · · Score: 5, Informative

    All car companies can access the subsidies for electric cars. You can say Elon benefits more since he's only building electric cars, most of the big automakers have only been building half-assed compliance cars. Because Elon didn't start out with a huge car company he couldn't start out building a cheap car because it takes an enormous amount of money to develop a vehicle and everything needed to build it. Roadster proved an electric car can be interesting. Model S & X was needed to help scale up and develop the next thing. Model 3 is not *cheap* but it's getting closer to what the "average person" can afford. I suspect whatever follows Model Y will be even more accessible. He needed the Gigafactory battery plant to help push the cost of batteries down faster.

    The article saying the same about SpaceX is pretty fuzzy if you're talking about subsidies. NASA contracted companies to ship cargo and (soon) people to the space station rather than developing it in house. The original commercial cargo contract was helpful for developing SpaceX's commercial satellite launch business. If it weren't for the Commercial Cargo & Commercial Crew programs, all the US ISS launch business would have gone to ULA's even more expensive rockets and Russia for expensive rides to the space station.

  10. Worse? by HeckRuler · · Score: 4, Insightful

    Worse: in order to induce car buyers to spend their money on electric vehicles, the federal government offers a $7,500 rebate on the purchase price.

    Is that bad? Because not too long ago our national security was at risk since OPEC had us by the balls over a resource that we depended upon but could not produce ourselves. And as gas prices rose and applies economic pressure on everyone it bust bubbles causing a massive financial econopocalypse. The sort that hadn't been seen since the great depression.

    We launched TRIllion dollar WARS over this shit.

    Last I checked, there was a temporary spike in US oil production as we squeeze the last few drops out of old wells via fracking, and unlocked some oil from shale. Yay technological improvement. But that doesn't change the fact that cars are running on fossil fuels and ultimately this is not sustainable.

    So what do we do? We encourage investment into alternatives. Like electric cars. Which can be powered off of grid power which can, in turn, be powered by renewable sources. So we subsidize electric cars. Would you rather we ban ice cars? Add an ice-tax? Tax fuel prices? Because raising fuel prices worked out so well for us last time.

    All that said. If a company specifically targets hoovering up government subsidies, that's generally a bad thing. And there WILL come a time when such encouraging subsidies go away. But you have to examine each program on it's merits or flaws rather than on the whole. Everyone likes to bitch about taxes until you start suggesting programs to cut to reduce them.

  11. Re:Why Indeed... by Jeff+DeMaagd · · Score: 5, Insightful

    Also, I'll believe the author is earnest about killing subsidies, I would have expected a mention of the fossil fuel subsidies too, including sweetheart resource extraction deals on federal lands. Or say Ford's still-unpaid bailout loan from the US government. Or ULA's expensive military satellite launch business. It just strikes me as an easy hit piece rather than an honest means to do away with subsidies.

    Elon's gone on record several times saying he'll give up subsidies if everyone else gives up theirs.

  12. You forgot to mention... by l0n3s0m3phr34k · · Score: 5, Insightful

    "Jenny Beth Martin is the co-founder and national coordinator of the Tea Party Patriots". So, I'm assuming she doesn't want any government subsidies for anything at all, and wants to reduce our government down to just doing "mutual defense" of the individual states. She also makes around 15K per month for "strategic consulting" and $272,000 salary as President of said Tea Party Patriots...for a total of over $450,000 a year. That's quite a bit of "tea".

  13. The People's teet by sdinfoserv · · Score: 4, Informative

    So what?
    The 5 richest people in the US (the Waltons, owners of Walmart), get 17% of every food stamp dollar
    Government aid to Farmers will be $23+ billion in 2017
    When Dick Cheney, the former CEO of Halliburton, convinced "W" to start a war in Iraq, Halliburton was awarded $8B in no bid contracts
    The oligarchy in the country have always enriched themselves with "the peoples money" - how do you think they got there?

  14. Re:Slashdot user mi - want to talk subsidies? by barc0001 · · Score: 5, Interesting

    https://www.theguardian.com/environment/climate-consensus-97-per-cent/2017/aug/07/fossil-fuel-subsidies-are-a-staggering-5-tn-per-year

    According to new information compiled, 6.5% of the global GDP goes into fossil fuel subsidies. You want to stop subsidies? I agree. Let's stop ALL of them. Electric cars will be a no brainer when gas is $8 a gallon.