Billion in subsidies to Tesla, the biggest corporate bludgers in the world

Any business that relies on corporate welfare and subsidies for its customers is no business at all. The shame is that Elon Musk has gotten wealthy off the back of billions of subsidies.

Los Angeles entrepreneur Elon Musk has built a multibillion-dollar fortune running companies that make electric cars, sell solar panels and launch rockets into space.

And he’s built those companies with the help of billions in government subsidies.

Tesla Motors Inc., SolarCity Corp. and Space Exploration Technologies Corp., known as SpaceX, together have benefited from an estimated $4.9 billion in government support, according to data compiled by The Times. The figure underscores a common theme running through his emerging empire: a public-private financing model underpinning long-shot start-ups.

“He definitely goes where there is government money,” said Dan Dolev, an analyst at Jefferies Equity Research. “That’s a great strategy, but the government will cut you off one day.”

This is why subsidies are wrong.

Everyone has been wowed by Tesla booking 185,000 orders for a car that hasn’t even been built yet, but it isn’t surprising when for every single car that Tesla sells the average Americans are on the hook for at least $30,000 in federal and state subsidies.

Tesla Motors general counsel Todd Maron said: “We make money from one thing: car sales and car sales alone.” In reality, electric vehicle (EV) manufacturer Tesla Motors loses more than $4,000 on every car it sells on a “full-cost” basis (keep in mind that some of Tesla’s costs are heavily subsidized). Tesla’s losses per vehicle are even greater using generally accepted accounting principles. CNBC and Reuters explained:

Tesla reports its finances in a different way from the Detroit automakers. Using the generally accepted accounting principles, or GAAP, used by GM or Ford, Tesla’s operating losses per vehicle have steadily widened to $14,758 from $3,794 in the second quarter of 2014.

Tesla, instead, largely survives on government handouts.

They are corporate bludgers.

Charles Lane of the Washington Post said: “Tesla owes its survival to subsidies from taxpayers, who are usually less well-heeled than its plutocratic customers.” The average household income of Tesla owners is $320,000, according to Strategic Visions, a consumer research company.

Tesla buyers have also raked in $38 million in California government rebates (they receive a $2,500 rebate for each Tesla bought) and $284 million in federal tax incentives (they receive a $7,500 federal tax credit for each purchased Tesla).

The Los Angeles Times calculated that Elon Musk’s three companies, Tesla Motors, SolarCity, and SpaceX, combined have received a staggering $4.9 billion in government support over the past decade. As Kerpen noted: “Every time a Tesla is sold . . . average Americans are on the hook for at least $30,000 in federal and state subsidies” that go to wealthy Tesla owners. This is crony capitalism at its worst.

Yes it is. Any business reliant on subsidies isn’t really a business. They are just reacting to market forces set by stupid politicians.

Ordinary taxpayers are subsidising rich people’s cars so the wealthy can drive around in a cloud of smug.


– LA Times and Independent Institute.


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  • Disinfectant

    I didn’t want to know this as I thought that this time an entrepreneur had come along and done it without any taxpayer subsidy.
    But then I should not have been so naïve, as all the major Aerospace companies in the States receive massive taxpayer inputs for Defence Force contracts.
    And the likes of Boeing and General Dynamics then complain about the subsidies that the European Aerospace industries receive in developing competing aircraft.
    When will it all end. Only the shareholders should take the hit if those companies can’t design and make aircraft that a competing market wants.
    Edit: spelling.

  • Dan

    If we assume that the reason for the uptake of Tesla cars is because they are heavily subsidised, (they do appear cheap for the technology) and if the demand is there, then inevitably how can the subsidies themselves be sustainable in the long run?

    Or is this thing designed to one day be cut off and then the whole house of carss comes crashing down leaving thousands of unemployed coal miners and coal powered generators rusting up.

    I bet if these cars were charged at the full price, no one would be interested except for wealthy diehard greenies and quirky car enthusiasts.

  • Richard

    “Introducing… the Tesla, powered by (cough) coal…”
    67% of US electricity is generated from fossil fuels

    • Gladwin

      33% coal in US
      Oz was 73% coal in 2014

      • Richard

        ya, and fossil fuels include natural gas :-)

      • Mark156

        Good,there’s loads of it just laying around