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
