Fed Energy Plan Good Car-ma for Tesla Boss
Monday January 7th, 2013 • Posted by K. Lloyd Billingsley at 7:54am PDT • 10 Comments
Millions of Americans are bracing for fiscal cliff fallout, looking for jobs, postponing purchases and cutting back on spending. Not so Elon Musk, CEO of Tesla Motors. As the Los Angeles Times noted, Mr. Musk just plunked down $17 million for a 20,248-square-foot Bel-Air mansion with a gym, seven bedrooms, 10 bathrooms, tennis court, motor court and a swimming pool. You can buy a crib like that when your company gets $465 million in stimulus funds as part of President Obama’s green-energy plan.
Tesla Motors is named after brilliant inventor and scientist Nikola Tesla, who came up with the alternating electric current that powers appliances in every American household. But few Americans will be driving Tesla automobiles any time soon. The lowest price for Tesla’s Model S is $52,400 – after the $7500 tax credit. The high-end model is $72,400 and even if buyers have the money not many are available. Tesla produced only 359 cars last quarter. In 1914, nearly 100 years ago, the Ford Motor Company produced 300,000 cars, more than 299 other companies combined.
Tesla makes cars in the United States but that is not the case for the Fisker Karma electric vehicle. The company got loan guarantees of $529 million from the federal government as part of a package with Tesla. Vice President Joe Biden touted U.S manufacturing jobs but the Fisker Karma is made in Finland and shipped to the United States through the port of Newark, where 16 of the luxury vehicles blew up during Hurricane Sandy.
The Fisker Karma has been described as “Solyndra on wheels” and together with Tesla suggests that the federal energy stimulus, though advantageous for Elon Musk, is something of a bust for taxpayers and motorists. Not all electric cars are as expensive as Tesla and Fisker models but federal regulatory policy obscures some of their hidden costs.
For example, the EPA requires new-car labels to list the miles per gallon of gasoline the cars achieve. But the EPA does not require electric cars to quantify the environmental costs of the charging source. Neither does the EPA require electric cars to quantify the distance drivers get from charging the vehicle. The charging service is not “free” and the federal government does not pay for it.
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Richard Matthews says:
Good grief! And there is no money that can be cut from the ghost budget. We have over 50% of the population that voted to continue this crony capitalism. Because of inflation brought on by the actions of the Federal Reserve, everyone is getting a hidden tax. I guess Obama and the regime won’t tell the public this fact. Actually, neither will the majority of the Republicans. When does the country collapse?
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[...] Among the vast number of government expenditures that ought to be immediately axed to stop the gusher of red ink are the subsidies for “green” companies like Tesla Motors, owned by the plutocratic Obama supporter Elon Musk. K. Lloyd Billingsley explains here. [...]
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Agreed that the government should not have lent money to either Tesla or Fisker.
But still, this article is a biased smear-job.
1) Musk is a multimillionaire, perhaps even a billionaire in net worth. The house he bought has little to do with Tesla’s government loan. He has many business ventures, not least of which is SpaceX.
2) The Federal loan made life easier for Tesla Motors, but savvy business dealings (such as buying their factory in Fremont CA for pennies on the dollar and designing a car that is genuinely competitive in the luxury market where it is price-competitive) are really what makes the company look likely to succeed.
3) “Tesla produced only 359 cars last quarter.” Yes, if by “last quarter you mean “the quarter ending in October.” It’s dropping the context to ignore the fact that Tesla was ramping-up production of its prize-winning Model S in October, and it is poor research to ignore the ample evidence that the company is nearing full production rates and will have shipping around 3000 cars by year-end and now is credibly on track to produce 20,000 in 2013.
Defend economic liberty by all means, but try to be objective and balanced. It’s a lamentable fact that our economy is rife with subsidies and prejudicial regulation. But it’s plain that Tesla’s business model is to sell cars, not live on government largesse.
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William, Thank you for your comment, but all of Musk’s businesses have received massive government subsidies, including SpaceX, which is also aimed to being funded by government contracts. In other words, SpaceX depends upon funding from the citizenry who are forced through taxation to support it. Musk is a neo-mercantilist (corporatist) who seeks and receives massive corporate welfare — hardly a free-market entrepreneur.
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Joel Cehn says:
It would nice to have a price list from my Congress member. A tax break bill costs so much in contributions. A one-time intervention with IRS costs less. Etc. They might as well come clean.
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de704 says:
I ATVM Program which Tesla received it loan through was singed into law by George W, Bush in 2008. (http://en.wikipedia.org/wiki/Advanced_Technology_Vehicles_Manufacturing_Loan_Program).
Reality... Is so inconvenient.
I’ve got a Tesla on order. Thanks Republicans
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richard says:
A fine example of a boondoggle for the ultra rich at the expense of the many. The car is a rich man’s toy; it has little resale value or any other value.
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George Roman says:
“SpaceX depends upon funding from the citizenry who are forced through taxation to support it.”
Just as our government has decided to outsource the building of road infrastructure, it has decided to outsource the launching of payloads into space. We may not like such policies, but I think we can agree this is a better alternative than the government trying to run these operations themselves (a la our public schools). What SpaceX has done is to promote competition where there were previously only layers of government bureaucracy. I think this is a step in the right direction.
http://www.charlesduelfer.com/blog/?p=79
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George, If SpaceX were interested in competition, it would refuse government subsidies that favor it against potential competitors. As it is, the SpaceX scheme is a way to privatize profits, socialize costs and risks, and prevent market competition. SpaceX as with other Elon Musk ventures is neomercantilism, exactly what Adam Smith Critiqued in his great book, The Wealth of Nations.
http://www.econlib.org/library/Enc/Mercantilism.html
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Re: “Fed Energy Plan.” When I first read the title, I thought that it referred to the Federal Reserve and I think most other readers would have had the same impression. To avoid such confusion, I suggest that the full word “federal” be used when speaking about the federal government.