Elon Musk's companies are fueled by government subsidies(latimes.com)
latimes.com
Elon Musk's companies are fueled by government subsidies
http://www.latimes.com/business/la-fi-hy-musk-subsidies-20150531-story.html
107 comments
Regarding Space... SpaceX's primary competitor in the US (when it comes to government launches) is a joint venture between Boeing and Lockheed Martin called ULA. ULA receives a _billion_ dollars a year just to maintain their ability to launch rockets (they still get paid enormous sums of money for each launch on top of the subsidy).
On top of that, they were recently awarded an 11 billon dollar 'block buy' contract covering launches over the next five years. The award occurred suspiciously just before SpaceX was supposed to be certified to launch DoD payloads (and therefore would have been eligible to compete for those launches).
Note: That 11 billion figure doesn't include the 5 billion dollars worth of annual subsidies they will receive over the duration of the contract
On top of that, they were recently awarded an 11 billon dollar 'block buy' contract covering launches over the next five years. The award occurred suspiciously just before SpaceX was supposed to be certified to launch DoD payloads (and therefore would have been eligible to compete for those launches).
Note: That 11 billion figure doesn't include the 5 billion dollars worth of annual subsidies they will receive over the duration of the contract
There's also this:
> Nevada at first offered its standard package of incentives, in this case worth $600 million to $700 million
Considering that there is such a thing as a "standard package of incentives" from a single state and it already amounts to about half of the largest listed bullet points in this article makes this sound almost ordinary.
> Nevada at first offered its standard package of incentives, in this case worth $600 million to $700 million
Considering that there is such a thing as a "standard package of incentives" from a single state and it already amounts to about half of the largest listed bullet points in this article makes this sound almost ordinary.
Regarding your comment on energy - I hadn't thought about that but the worst of the fossil fuel subsidies has to be turning large portions of the corn crop into ethanol then ruining the performance (and sometimes internal parts) of our internal combustion engines. It's truly the worst of both worlds!
In my opinion, the worst by far is the implicit subsidy where fossil fuel users are allowed to pollute without paying for the damage caused by that pollution. If you accounted for that fully, renewables would be cheaper today. Coal pollution alone causes something like one million deaths per year. It's like a big war that never stops. That's not even counting the potential deaths and disruption from climate change.
Fossil fuel users poison our land, air, and water without consequence and without paying for the damage, but somehow it's the guy making solar panels and electric cars that everybody complains about.
Fossil fuel users poison our land, air, and water without consequence and without paying for the damage, but somehow it's the guy making solar panels and electric cars that everybody complains about.
Until the late '60s or early '70s, no one worried about the pollution so long as the economic engine was running strong. There were clear days that you couldn't see half a mile in Pittsburgh PA [1], and entire rivers of volatile chemicals catching fire [2]. We've done a lot to curb those excesses but I agree with your primary sentiment. Why pollute at all if we can avoid it?
Interestingly, China's current economic growth is also fueled without consideration of the environment. You can still travel on coal-fired steam locomotives ... and they're not historic excursions but rather new technology.
We also have to look at renewable combustibles as some people will claim they're not dependent on fossil fuels but they're still contributing to carbon release when burning wood (or wood pellets) as fuel.
[1] https://www.google.com/search?q=pittsburgh+steel+mill+smog&b...
[2] https://www.google.com/search?q=cleveland+river+fire&sa=X&bi...
Interestingly, China's current economic growth is also fueled without consideration of the environment. You can still travel on coal-fired steam locomotives ... and they're not historic excursions but rather new technology.
We also have to look at renewable combustibles as some people will claim they're not dependent on fossil fuels but they're still contributing to carbon release when burning wood (or wood pellets) as fuel.
[1] https://www.google.com/search?q=pittsburgh+steel+mill+smog&b...
[2] https://www.google.com/search?q=cleveland+river+fire&sa=X&bi...
That's so true. It's called an externality in the economics jargon: http://en.wikipedia.org/wiki/Externality
In terms of Cars, I'd argue the true subsidy is the highway system and every other governemnent built road.
True. And closer to our space, years ago I started an online/offline school with a dream of becoming what General Assembly is now. The marketing costs made my venture less palatable. GA was smart to get a $200K grant from NYC to get over that hump.
http://techcrunch.com/2011/01/24/nyc-general-assembly-200k-g...
http://techcrunch.com/2011/01/24/nyc-general-assembly-200k-g...
>>that the three companies has benefited from subsidies.
More to the point, America has benefited tremendously from subsidizing these companies. Elon Musk was a South African born Canadian (before he took American citizenship). He could have probably based these companies in any country of his choosing. Now America has at least 2 more private companies that are breaking new ground in their respective fields, and adding to America's GDP (and befitting the world in the process). Even if govt. funding played only a small part in the success of these companies, I would say this makes a strong argument for govt. subsidies.
More to the point, America has benefited tremendously from subsidizing these companies. Elon Musk was a South African born Canadian (before he took American citizenship). He could have probably based these companies in any country of his choosing. Now America has at least 2 more private companies that are breaking new ground in their respective fields, and adding to America's GDP (and befitting the world in the process). Even if govt. funding played only a small part in the success of these companies, I would say this makes a strong argument for govt. subsidies.
Don't forget agriculture, aerospace/defense, banking. Hard to get bent out of shape when someone gets a slice of the pie that is trying to improve things.
E&P companies are effectively subsidized through wildly favorable tax treatment that allows them to expense all capital costs upfront which are usually not deductible. Most independent E&P's (ie the ones who are almost entirely responsible for the shale boom) pay virtually no cash taxes whatsoever.
Its even more common for companies to prove their business models without making taxpayers pay for it.
It's generally easier to influence politicians to give away other people's money than it is to convince customers to use their own. EVERY business should have to do that without special help.
It's generally easier to influence politicians to give away other people's money than it is to convince customers to use their own. EVERY business should have to do that without special help.
Don't forget:
#agriculture Monsonto
#agriculture Monsonto
What does this have to do with Musk's businesses?
It doesn't. His point is that subsidies are common in other industries and that it is framed as unique in reference to Musk's businesses.
IIRC,
- Tesla re-paid a 495 million government loan 10 years early.[0]
- Musk personally invested $100 Million in SpaceX
- Musk personally invested $275 Million in Tesla[1]
[0]http://money.cnn.com/2013/05/22/autos/tesla-loan-repayment/
[1]http://www.businessinsider.com/elon-musk-borrows-150-million...
I don't consider Musk to be mooching off of the government. He's put everything on the line.
- Tesla re-paid a 495 million government loan 10 years early.[0]
- Musk personally invested $100 Million in SpaceX
- Musk personally invested $275 Million in Tesla[1]
[0]http://money.cnn.com/2013/05/22/autos/tesla-loan-repayment/
[1]http://www.businessinsider.com/elon-musk-borrows-150-million...
I don't consider Musk to be mooching off of the government. He's put everything on the line.
The entreprenurial government takes risks, and once in a while succeeds so wildly that the company can pay off the loans quickly.
"Tesla’s management knew that if they couldn’t get the government’s money at 3 or 4 percent interest, their next cheapest source of capital would cost 10 times more, a whopping 30 to 40 percent annually. [...] And if the government had wanted to bargain like a real venture capitalist, Tesla’s desperate need for cash gave the feds the power to demand options on half the company’s stock, or more." (http://www.slate.com/articles/business/moneybox/2013/05/tesl...)
Important to deflate startup myths: corporate moochers love how government welfare "socializes the risks and privatizes the rewards." (http://www.project-syndicate.org/commentary/government-inves...)
"Tesla’s management knew that if they couldn’t get the government’s money at 3 or 4 percent interest, their next cheapest source of capital would cost 10 times more, a whopping 30 to 40 percent annually. [...] And if the government had wanted to bargain like a real venture capitalist, Tesla’s desperate need for cash gave the feds the power to demand options on half the company’s stock, or more." (http://www.slate.com/articles/business/moneybox/2013/05/tesl...)
Important to deflate startup myths: corporate moochers love how government welfare "socializes the risks and privatizes the rewards." (http://www.project-syndicate.org/commentary/government-inves...)
Well Elon would be more inclined to invest his own money the less risk that existed. Government subsidies definitely reduce risk. (Just pointing out that this doesn't refute the articles claim)
> He's put everything on the line.
I don't think that justifies it. Every business has investors. Some also receive large amounts of government subsidy. Per the article, some of Musk's businesses are in the latter category, for good or ill.
(I won't try to define or debate "mooching".)
I don't think that justifies it. Every business has investors. Some also receive large amounts of government subsidy. Per the article, some of Musk's businesses are in the latter category, for good or ill.
(I won't try to define or debate "mooching".)
Any mixed economy is riddled with subsidies. Together with taxation, it skews incentives from whatever they were without, and redistributes resources in a way the market would not. (Whether you think that's a good thing is political.)
- How many people would be getting degrees without government grants of some sort?
- Tax relief on debt is huge for corporations.
- Tax relief on mortgages is huge for individuals in many countries.
- Government itself has to spend money in one place and not another.
Of course there is the question of whether he gets more benefit that your average Joe from the largesse of the government. To that I'd say he does, but the benefits to everyone else of what he's up to are wide ranging but thinly spread.
- How many people would be getting degrees without government grants of some sort?
- Tax relief on debt is huge for corporations.
- Tax relief on mortgages is huge for individuals in many countries.
- Government itself has to spend money in one place and not another.
Of course there is the question of whether he gets more benefit that your average Joe from the largesse of the government. To that I'd say he does, but the benefits to everyone else of what he's up to are wide ranging but thinly spread.
TL;DR: "Subsidies are handed out in all kinds of industries, with U.S. corporations collecting tens of billions of dollars each year [...] and the incentives for solar panels and electric cars are available to all companies that sell them.
[...]
But public subsidies for Musk's companies stand out both for the amount, relative to the size of the companies, and for their dependence on them."
[...]
But public subsidies for Musk's companies stand out both for the amount, relative to the size of the companies, and for their dependence on them."
And? So is gasoline and petroleum products. And so is corn products through ethanol, which is legally mandated to be in fuel at 10% for no good reason.
Not a great comparison.
The US doles out $15 to $20 billion annually toward subsidies for fossil fuels. $4 to $5 billion goes to the oil industry.
Exxon and Chevron paid $120 billion in income taxes in just the last three years. US oil majors pay among the highest corporate tax rates on earth. Exxon and Chevron are getting about $1.3 billion in tax breaks per year combined.
The US doles out $15 to $20 billion annually toward subsidies for fossil fuels. $4 to $5 billion goes to the oil industry.
Exxon and Chevron paid $120 billion in income taxes in just the last three years. US oil majors pay among the highest corporate tax rates on earth. Exxon and Chevron are getting about $1.3 billion in tax breaks per year combined.
They pay their way, but they also transfer indirect costs to the rest of society which are not accounted for in the sort of calculations made in the linked article. For instance, in London electric cars are exempt from road tax, and the congestion charge. These would be counted as subsidies, but without taking into account the indirect costs which the subsidies in fact aim to at least partly price in - that is, the impact on health from vehicle internal combustion engines in the city. For instance, exposure to particulate matter is one of the major risk factors for heart attack and cardiovascular disease, and it alone is responsible for over 3000 premature deaths each year, just in London:
https://www.gov.uk/government/uploads/system/uploads/attachm...
Then add in the effects of Nitrogen and Sulphur oxides on asthma, emphysema, bronchitis and general respiratory illness. These have direct costs, of loss of productivity and increased hospital admissions, and also impacts on people's lives which cannot be priced into calculations.
None of this is taken into account when you attempt to directly compare one thing to the other based purely on the market price.
https://www.gov.uk/government/uploads/system/uploads/attachm...
Then add in the effects of Nitrogen and Sulphur oxides on asthma, emphysema, bronchitis and general respiratory illness. These have direct costs, of loss of productivity and increased hospital admissions, and also impacts on people's lives which cannot be priced into calculations.
None of this is taken into account when you attempt to directly compare one thing to the other based purely on the market price.
Exxon and Chevron paid those taxes on actual earnings. As soon as Tesla starts profiting, then they will owe taxes as well.
Of course, and the point is that the fossil fuel industry in the US more than pays its own way.
Should the US Govt. stop subsidizing fossil fuels? I think so. However, many of the subsidies that companies like Exxon or Chevron claim, are general industrial / manufacturing tax breaks, that are available to any industrial firms. Those two are doing $600 billion in sales, and claiming $1.3 billion in tax breaks, it's an almost comically small number compared to the taxes they pay and the scale of their businesses. I don't think there's any legitimate gripe to be had with the weight the US oil industry is carrying in terms of paying a fair sum in taxes.
Should the US Govt. stop subsidizing fossil fuels? I think so. However, many of the subsidies that companies like Exxon or Chevron claim, are general industrial / manufacturing tax breaks, that are available to any industrial firms. Those two are doing $600 billion in sales, and claiming $1.3 billion in tax breaks, it's an almost comically small number compared to the taxes they pay and the scale of their businesses. I don't think there's any legitimate gripe to be had with the weight the US oil industry is carrying in terms of paying a fair sum in taxes.
[deleted]
> US oil majors pay among the highest corporate tax rates on earth.
How much do you know about this? I've heard this statement, and I've heard it's a myth, that it only refers to one tax of many and that overall the overall tax rate in the US is relatively low for corporations. However, I have no independent knowledge would like to learn more.
Also, they don't pay for two enormous externalities: The military and wars in the Middle East, and climate change.
How much do you know about this? I've heard this statement, and I've heard it's a myth, that it only refers to one tax of many and that overall the overall tax rate in the US is relatively low for corporations. However, I have no independent knowledge would like to learn more.
Also, they don't pay for two enormous externalities: The military and wars in the Middle East, and climate change.
So, what is the environment worth? Cause that seems awfully cheap.
The US environment overall is doing extraordinarily well in fact. And it's not cheap, the EPA is one of the toughest environmental regulators, which has helped lead to a dramatic improvement in US environmental quality in the last 40 years.
What's having a functioning economy worth? Are we going to pretend that we could have had a US economy, with ~50% of global manufacturing in 1965, running on solar and wind?
No? Then it's obviously understood that the renewable shift inherently requires vast, prior energy systems. What was battery technology like in 1965 or 1985? Let's say we had deployed an all-nuclear infrastructure (built courtesy of what? fossil fuels of course). What would that have done for electric cars? Nothing, we haven't had the ability to build practical electric cars until the last decade, due to huge improvements in batteries.
We still have horrible batteries for the home. Even Tesla's Powerwall does not (yet) work as a practical battery for the home, according to their own statements on the matter.
The US could have done a lot better. There's just no sense in pretending that you get from there to here, without a massive fossil fuel industry.
What's having a functioning economy worth? Are we going to pretend that we could have had a US economy, with ~50% of global manufacturing in 1965, running on solar and wind?
No? Then it's obviously understood that the renewable shift inherently requires vast, prior energy systems. What was battery technology like in 1965 or 1985? Let's say we had deployed an all-nuclear infrastructure (built courtesy of what? fossil fuels of course). What would that have done for electric cars? Nothing, we haven't had the ability to build practical electric cars until the last decade, due to huge improvements in batteries.
We still have horrible batteries for the home. Even Tesla's Powerwall does not (yet) work as a practical battery for the home, according to their own statements on the matter.
The US could have done a lot better. There's just no sense in pretending that you get from there to here, without a massive fossil fuel industry.
> The US environment overall is doing extraordinarily well in fact
I strongly disagree; climate change is likely on track to be catastrophic, and the United States is the biggest cause.
I strongly disagree; climate change is likely on track to be catastrophic, and the United States is the biggest cause.
> The US environment overall is doing extraordinarily well in fact.
Record draughts in California. Mild drought on East Coast.
Sea Level Rising.
World Temp Rising.
11 inches of Rain in Texas in one day.
inb4 these are not conclusive. Sure they aren't. The environment is an unpriced externality, and it is very difficult to measure the effects that humans have on it. Let's keep running uncontrolled experiments here until we have a problem.
Luckily the Mars colonial transporter will be built by the time we do real damage.
/Somewhat snide and sarcastic. Somewhat.
Record draughts in California. Mild drought on East Coast.
Sea Level Rising.
World Temp Rising.
11 inches of Rain in Texas in one day.
inb4 these are not conclusive. Sure they aren't. The environment is an unpriced externality, and it is very difficult to measure the effects that humans have on it. Let's keep running uncontrolled experiments here until we have a problem.
Luckily the Mars colonial transporter will be built by the time we do real damage.
/Somewhat snide and sarcastic. Somewhat.
Don't you think it's a bit disingenuous to compare worldwide taxes and worldwide revenue with US subsidies? How much did they pay in income taxes to the US government?
[deleted]
A thousand wrongs don't make a right.
This is just daft.
Supermarkets are fueled by 'government subsidies'; the poor get welfare and go off and spend there.
Freight companies are fueled by 'government subsidies'; the roads are hardly paid for by them solo. Oh, and the supermarkers they are delivering to are fueled by 'government subsidies'.
My grandfather was a truck driver. He was fueled by...
And so on. The government is supposed to support Good Things (or at least get out of the way of them). The way that the media seem to be obsessing over spending recently is really rather silly.
Supermarkets are fueled by 'government subsidies'; the poor get welfare and go off and spend there.
Freight companies are fueled by 'government subsidies'; the roads are hardly paid for by them solo. Oh, and the supermarkers they are delivering to are fueled by 'government subsidies'.
My grandfather was a truck driver. He was fueled by...
And so on. The government is supposed to support Good Things (or at least get out of the way of them). The way that the media seem to be obsessing over spending recently is really rather silly.
It turns out that when the government draws a bunch of taxes and then spends it, markets get distorted. Then the government takes credit for anything good that the markets do with the money, and opportunity cost is ignored because it's incalculable.
One man's market distortion is another man's pricing in of manifest but indirect costs.
To take an obvious case, it might be very cheap for my neighbour to heat his house with coal. Then one day laws are introduced which say he has to abide by emissions standards, and in order to do that, buy an expensive clean-burning stove, and expensive specially refined low-sulphur coal. If that ends up making it cheaper to use natural gas instead, no doubt the coal company (and the neighbour) will say the rules represent an artificial distortion of the market. But I would say the rules are there prevent him transferring the true costs of burning cheap coal onto my family (and the other families nearby) and their health.
To take an obvious case, it might be very cheap for my neighbour to heat his house with coal. Then one day laws are introduced which say he has to abide by emissions standards, and in order to do that, buy an expensive clean-burning stove, and expensive specially refined low-sulphur coal. If that ends up making it cheaper to use natural gas instead, no doubt the coal company (and the neighbour) will say the rules represent an artificial distortion of the market. But I would say the rules are there prevent him transferring the true costs of burning cheap coal onto my family (and the other families nearby) and their health.
Government spending distorts the market towards 'things that are good for citizens' and away from 'things that are good for the owning class', you mean. And your second phrase is exactly backwards; the government funds research no corporation would ever be able to fund because it isn't profit-maximizing, and when all that public funding inevitably reaches a breakthrough that's good for businesses and people alike the profits are subsequently privatized giving the public sector no credit.
This thread's lack of comments by libertarians is striking. It gives the impression that some of them (I don't know who) are not opposed to government taxes and spending in principle, as they often claim, but to government taxes and spending on things they don't like -- which isn't a principle or argument, it's just a self-centered complaint.
It reminds me of people who talk about freedom as a principle, but what they mean is freedom for themselves.
It reminds me of people who talk about freedom as a principle, but what they mean is freedom for themselves.
Exactly. On the one hand they condem the government for spending and on the other salivate at the business 'genius' of Musk.
Because it's a pointless argument. The government is so involved in the economy that marking the point of entry for subsidies is arbitrary and losing game for libertarians, because a progovernment argument can get as no true Scotsman on any libertarian position
For example take this jerk Bolden who turned the nasa-spacex relationship into a measuring contest
http://gizmodo.com/nasa-says-nobodys-getting-to-mars-without...
Now we know what he means, that he thinks there's no way that musk will sink the acrued capital of spacex and go to mars.
But even if he's wrong and elon does just that he's already won the argument because spacex is a government contractor and there has been government help nevermind that spaceX has saved NASA so much money
http://gizmodo.com/nasa-says-nobodys-getting-to-mars-without...
Now we know what he means, that he thinks there's no way that musk will sink the acrued capital of spacex and go to mars.
But even if he's wrong and elon does just that he's already won the argument because spacex is a government contractor and there has been government help nevermind that spaceX has saved NASA so much money
Libertarianism is fundamentally about self interest. If the government is doing something in their interest, you can be pretty sure that they won't complain.
Libertarian (mostly) here - I don't think Musk or anyone else should be getting subsidies or sweet loan deals.
If the government wants to run a federally funded research lab for say, battery tech, fine. But I'm not on board with them picking the winning businesses, and putting the public's money at risk in the process.
If the government wants to run a federally funded research lab for say, battery tech, fine. But I'm not on board with them picking the winning businesses, and putting the public's money at risk in the process.
Because liberatrians are self-centered, they just look for a moral narrative to justify it to others.
Socialists are self-centered. They demand things that they want from other people. To the extent that they want government to pay to take care of others, it's because they don't want to reach into their own pockets and pay help out themselves and "rich people" are seen as a collective resource to which somehow they are morally entitled to.
Libertarians, by contrast, are permissive to selfishness, which means they tolerate, say objectivists, but when they act in pro-social fashion they mean it because its their time and their money they're putting forward. Perhaps I experience selection bias, but I know many libertarians who volunteer to build homes for the needy, feed the poor, and have set up organizations to support homeless camps. By contrast, a smaller fraction of the liberals I know would ever do such things; that's the provenance of the state.
Libertarians, by contrast, are permissive to selfishness, which means they tolerate, say objectivists, but when they act in pro-social fashion they mean it because its their time and their money they're putting forward. Perhaps I experience selection bias, but I know many libertarians who volunteer to build homes for the needy, feed the poor, and have set up organizations to support homeless camps. By contrast, a smaller fraction of the liberals I know would ever do such things; that's the provenance of the state.
No, it's because, honestly, educated people who understand how governments work know that economies of scale are necessary to implement effective policies that help the poor.
Charity is nice and all, but most charity is tremendously inefficient, and cannot, sustainably, work on the sorts of multi-decade efforts that are needed by people with real issues to create effective change.
It's great that people volunteer on home building and feeding, but again: if you want to end child malnutrition, have effective school lunches in poor areas. There's not enough volunteers in the planet to do that effectively.
Charity is nice and all, but most charity is tremendously inefficient, and cannot, sustainably, work on the sorts of multi-decade efforts that are needed by people with real issues to create effective change.
It's great that people volunteer on home building and feeding, but again: if you want to end child malnutrition, have effective school lunches in poor areas. There's not enough volunteers in the planet to do that effectively.
> Charity is nice and all, but most charity is tremendously inefficient
Have you ever even been to a welfare office? A paragon of inefficiency.
Have you ever even been to a welfare office? A paragon of inefficiency.
The entrepreneur who most closely resembles a Rand hero couldn't have done it without government loans and subsidies. That should tell you something.
Markets do some things very well. Hard core innovation isn't among those things. If anything, really deep and difficult innovation requires shelter from market forces, since market forces always pull toward short term thinking and delivering what people already want. There is never a market for something genuinely new-- such markets must be bootstrapped.
Markets do some things very well. Hard core innovation isn't among those things. If anything, really deep and difficult innovation requires shelter from market forces, since market forces always pull toward short term thinking and delivering what people already want. There is never a market for something genuinely new-- such markets must be bootstrapped.
I hear a lot of sour grapes in this article ... the only part worth discussing is whether SolarCity and Tesla Motors can reach self-sufficiency before the funding is removed.
Governments provide these sort of grants specifically to encourage certain behaviors. I don't think Musk is the only one pursuing these credits, etc., but perhaps he's better at it than most? His only real advantage is that he doesn't have the baggage (bureaucracy, history, etc) of the entrenched players ... they could, in theory, partake of the same government largess.
Governments provide these sort of grants specifically to encourage certain behaviors. I don't think Musk is the only one pursuing these credits, etc., but perhaps he's better at it than most? His only real advantage is that he doesn't have the baggage (bureaucracy, history, etc) of the entrenched players ... they could, in theory, partake of the same government largess.
Well the question is, can Tesla survive to make the affordable EV they promise? Do they even have the cash to build out the factory to support that car in any volume? Can they find new tax credits to shore up the bottom line; its been suspected the battery swap station was only for a specific tax credit and there still is only one station and its operational status is questionable.
Love Space X, think Solar City is a great idea, but not keen on Tesla simply because they seem hell bent on having EVs that are not affordable and each improvement seems aimed at speed performance numbers instead of distance. I was really hoping the D was going to be for increased range but instead it was 0-60 first and AWD second.
edit: after reading up on the home battery offerings they really aren't that impressive... I need to dig up the articles that revealed all of its short comings
Love Space X, think Solar City is a great idea, but not keen on Tesla simply because they seem hell bent on having EVs that are not affordable and each improvement seems aimed at speed performance numbers instead of distance. I was really hoping the D was going to be for increased range but instead it was 0-60 first and AWD second.
edit: after reading up on the home battery offerings they really aren't that impressive... I need to dig up the articles that revealed all of its short comings
Tesla needs to raise money to make the affordable EV in high volume. Many of the companies we discuss here are in the same situation.
Subsidies are sometimes the only way that amazing things like this can happen. Extremely rare opportunities are often expensive to take advantage of. Without spreading the cost the way a nation-state can, there might not be enough people willing to support efforts to, say, get GPS satellites into space and enable entirely new industries and technologies.
Sure, it might not be with the explicit support of every taxpayer who contributed, but that will happen in every government just as it will happen in a family trying to decide where to vacation.
I, for one, hope that subsidies continue to go to those who can take us new places. As long as it's not purely because it's some congressman's nephew's new company.
Sure, it might not be with the explicit support of every taxpayer who contributed, but that will happen in every government just as it will happen in a family trying to decide where to vacation.
I, for one, hope that subsidies continue to go to those who can take us new places. As long as it's not purely because it's some congressman's nephew's new company.
I don't think it's a surprise that Tesla would not exist without government subsidies (I say this as someone who thinks the Model S is an excellent car). From a piece in today's WSJ:
http://www.wsj.com/articles/the-savior-elon-musk-1432938547
...Tesla likely might not even exist without a former State Department official whom Mr. Musk hired to explore “what types of tax credits and rebates Tesla might be able to drum up around its electric vehicles,” which eventually would include a $465 million government-backed loan...
In 2017, he plans to introduce his Model 3, a $35,000 car for the middle class. He expects to sell hundreds of thousands a year. Somehow we doubt he intends to make it easy for politicians to whip away the $7,500 tax credit just when somebody besides the rich can benefit from it—in which case the annual gift from taxpayers will quickly mount to several billion dollars each year...
http://www.wsj.com/articles/the-savior-elon-musk-1432938547
...Tesla likely might not even exist without a former State Department official whom Mr. Musk hired to explore “what types of tax credits and rebates Tesla might be able to drum up around its electric vehicles,” which eventually would include a $465 million government-backed loan...
In 2017, he plans to introduce his Model 3, a $35,000 car for the middle class. He expects to sell hundreds of thousands a year. Somehow we doubt he intends to make it easy for politicians to whip away the $7,500 tax credit just when somebody besides the rich can benefit from it—in which case the annual gift from taxpayers will quickly mount to several billion dollars each year...
That part about the $7,500 tax credit is rather ignorant. As currently structured, it's limited in the number of times it can be applied to vehicles from any given manufacturer. After 200,000 vehicles sold, the credit drops off rapidly and then disappears altogether. If Tesla succeeds in their goal of selling hundreds of thousands of Model 3s per year then the credits will quickly expire for them and the ongoing cost to taxpayers will be zero.
The law could conceivably be changed, but the odds of that seem remote.
The law could conceivably be changed, but the odds of that seem remote.
It looks like the government is getting value for money then, compared to where it usually parks its cash. Thumbs up, good job, carry on.
In regards to SpaceX that is simply a mischaracterization, they do not receive subsidies they have contracts with the government. SpaceX received money from NASA to help develop its Falcon 9 rocket, but this is little different than other procurement programs, and was just a component of a large ISS cargo delivery contract, the bulk of which is a straightforward deliver cargo get paid / don't deliver cargo don't get paid system.
And SpaceX has been profitable for the last 6 years.
Good. I hope he gets as much help as possible.
Then shouldn't his companies become public where we get the profits instead of him?
In an ideal world, there wouldn't be companies, we would all work together. We don't, and our society is instead organized along capitalist premises. As such, the government support parts of the market that we feel need encouragement, and ostensibly stays out of the way otherwise.
You can agree or disagree with the premise, but that's how we do things. There are many, many vastly more egregious cases of privatizing gains and socializing losses than electric cars and reinventions of the energy network.
You can agree or disagree with the premise, but that's how we do things. There are many, many vastly more egregious cases of privatizing gains and socializing losses than electric cars and reinventions of the energy network.
Yep, thank god the government (state and federal) are actually investing in something positive. I am glad there are subsidies for clean energy (production and consumption) and the development of cost effective space transportation.
When one looks at the Gov't balance sheet, the opportunity cost of these investments is amazing. The outflow is such a drop in the bucket vs. the potential (and current) value that is is a fucking no-brainer.
When one looks at the Gov't balance sheet, the opportunity cost of these investments is amazing. The outflow is such a drop in the bucket vs. the potential (and current) value that is is a fucking no-brainer.
A lot of the time "subsidies" aren't actually money or help given to companies but rather what they have decided to not tax.
That's basically saying we could charge you infinity, but since we didnt, you have infinity subsidy.
Edit: To the downvoters: this is what "incentives" are when considered in tax terms.
That's basically saying we could charge you infinity, but since we didnt, you have infinity subsidy.
Edit: To the downvoters: this is what "incentives" are when considered in tax terms.
I think a tax advantage can be considered a subsidy only when others are actually taxed more due to not receiving it. Nobody is taxed at infinity, so nobody who isn't charged infinity has received infinity subsidy. On the other hand, it might make sense to consider things like the mortgage tax deduction as a subsidy for home ownership, because people without mortgages really are charged more. All of this is arguable of course, but I think it's in line with the spirit of the word "subsidy" to think of it this way.
> I think a tax advantage can be considered a subsidy only when others are actually taxed more due to not receiving it.
Wouldn't that be everyone? Unless you mean they increase the tax rate for the others while reducing yours... but net comes out the same.
My point is that there usually isn't a standard to these, the government can claim all kinds of subsidies because it's saying that's the amount they aren't charging (even if that amount was never to be charged to begin with).
Wouldn't that be everyone? Unless you mean they increase the tax rate for the others while reducing yours... but net comes out the same.
My point is that there usually isn't a standard to these, the government can claim all kinds of subsidies because it's saying that's the amount they aren't charging (even if that amount was never to be charged to begin with).
There is also a matter of finance. When that money is given and with what strings attached. But even if you are right, if the competition is taxed more than you it brings into question how competitive you actually are.
Shocking, government uses tax payer money to invest wisely in the future.
"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."
I don't know. It seems that Tesla is missing an opportunity for building an empire like Ford did.
I don't know. It seems that Tesla is missing an opportunity for building an empire like Ford did.
Notice how the price of a Tesla car roughly halves at each major iteration? Now project the line out into the mass-market price range.
Tesla cars are still comparing to BMW serie 3 and AUDI serie 4, but those are cheaper and easier to refuel.
And an affordable car like the Ford Model-T in today's world market would be like a Dacia Logan at just over 31k LEI (http://www.dacia.ro/) or a FIAT Palio at just over 27k BRL (http://www.fiat.com.br/carros.html).
And an affordable car like the Ford Model-T in today's world market would be like a Dacia Logan at just over 31k LEI (http://www.dacia.ro/) or a FIAT Palio at just over 27k BRL (http://www.fiat.com.br/carros.html).
I'm not an expert on the history of Ford, but I imagine that their cars also started off as a luxury item and only after obtaining some market share were they able to build the massively efficient production lines that they are famous for?
True. Apparently Ford started his first car company as a luxury product (that was at the very early 20th century) and it was later purchased and renamed Cadillac. But I would argue that a convergence of event allowing Ford to become a major car manufacturer include the introduction of an affordable model early in the history of the company.
Considering the opposition to Tesla from the top 10 world car manufacturer, there will be no significant market share gain until the price can make the cheaper Tesla model an alternative to equivalent market leaders, and possibly introducing a compact car with the same aim.
Considering the opposition to Tesla from the top 10 world car manufacturer, there will be no significant market share gain until the price can make the cheaper Tesla model an alternative to equivalent market leaders, and possibly introducing a compact car with the same aim.
The figure compiled by The Times 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.
Right. Along this kind of thinking, we can also add the Iraq war and the unmentioned trillions in subsidies that accrue when you would actually charge a market price for environmental damage and add all that to Shells liabilities.
Right. Along this kind of thinking, we can also add the Iraq war and the unmentioned trillions in subsidies that accrue when you would actually charge a market price for environmental damage and add all that to Shells liabilities.
"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."
As opposed to military spending, where persistent hundreds of billions are spent without anyone giving a damn.
As opposed to military spending, where persistent hundreds of billions are spent without anyone giving a damn.
I don't see any reason to get offended by the accusation, regardless of whether you agree or disagree.
Could anyone make more effective use of tax dollars than Elon Musk? If anything, allocate more public funds to him.
Could anyone make more effective use of tax dollars than Elon Musk? If anything, allocate more public funds to him.
[deleted]
[deleted]
[deleted]
see this post.
https://news.ycombinator.com/item?id=9622250
News flash: Policies meant to encourage growth in high-tech clean energy are encouraging growth in high-tech clean energy!
This isn't the first time this has been trotted out as an indictment of Musk, and it certainly won't be the last, but it's really goddamned stupid.
This isn't the first time this has been trotted out as an indictment of Musk, and it certainly won't be the last, but it's really goddamned stupid.
If they actually properly price the negative externality into objects like gasoline, there wouldn't be needs for government subsidies of clean energy.
That solution is more elegant, but it requires more political finesse. Measuring the external costs raises many difficult questions. What to do with that money raises many more (hopefully not as difficult) questions. It is also a more general solution, which naturally threats more interests. All this makes it take longer to implement and makes a lot more people interested in prolonging it even further. Which raises costs and drives the best talent away, and makes it more likely the project gets killed.
Throwing some pocket change to a few talented individuals and hope for the best is nasty hack, but sadly we lack skilled and properly motivated politicians to do much better.
And in that magical world I probably have a mansion in the Hamptons.
Don't forget the prison labor too.
http://thefederalist.com/2015/03/04/not-content-with-enormou...
http://thefederalist.com/2015/03/04/not-content-with-enormou...
This is a very poor interpretation of what actually happens. Elon explained it better himself in an interview. The gov isn't exactly signing a blank check for them, instead it's subsidising by allowing tax credit on land, assets and revenue.
First and foremost, do you really think the American tax payer is doing a greater favour to Elon than Elon is doing to the entire world by moving the whole lot of purely eletrical power?
This reporter is an absolute imbecile to use such titles, market pleasing as they are. If Elon wanted to get rich he would buy an island and sunbathe for the next 40 years. He's already rich.
With respect to the amount of good done, I urge this reporter in particular to join TMZ and keep up with the Kardashians.
First and foremost, do you really think the American tax payer is doing a greater favour to Elon than Elon is doing to the entire world by moving the whole lot of purely eletrical power?
This reporter is an absolute imbecile to use such titles, market pleasing as they are. If Elon wanted to get rich he would buy an island and sunbathe for the next 40 years. He's already rich.
With respect to the amount of good done, I urge this reporter in particular to join TMZ and keep up with the Kardashians.
It's fascinating because literally every single thing you have said is a lie.
Tesla is not profitable and is massively subsidized by its competitors and the taxpayers. They make a product that causes massive devastation to the environment through toxic lithium mining, and which is astonishingly expensive and can only be afforded by the ultra rich, and then only with subsidies paid for by the poor and middle class. Furthermore, these so-called cars have off the shelf Panasonic batteries that only last a few years before they have to be replaced at extravagent cost.
You call the reporter of the truth an "absolute imbecile" because using ad hominem arguments is the last refuge of a brain dead moron with no facts.
Tesla is not profitable and is massively subsidized by its competitors and the taxpayers. They make a product that causes massive devastation to the environment through toxic lithium mining, and which is astonishingly expensive and can only be afforded by the ultra rich, and then only with subsidies paid for by the poor and middle class. Furthermore, these so-called cars have off the shelf Panasonic batteries that only last a few years before they have to be replaced at extravagent cost.
You call the reporter of the truth an "absolute imbecile" because using ad hominem arguments is the last refuge of a brain dead moron with no facts.
Wow, I really hope this is satire. I don't want to live in a world where somebody can write that last paragraph seriously.
- How does toxic lithium mining fair to the countless oil spillage disasters that happen every few years? It doesn't. Lithium mining is now a rising industry in the dawn of the electric era, and it is nonetheless a limited resource which will very shortly need to start being synthetical, simply out of practical necessity.
- Tesla has been profitable for numerous financial quarters, although not consistent. On that basis, neither has been GM for many quarters after the crisis, after causing an $11.2 billion loss to the American tax payer.
- Tesla is funded mostly by competitors and revenue, not by the tax payer. Read the above sentence again for contrast: GM caused a direct loss of $11.2 billion to the tax payer. Tesla only borrowed and then repaid in full.
- The subsidy granted to Tesla by the US gov, only a minuscule percentage of the GM bailout, was repaid in full with interest by Tesla, with the tax payer making a profit. The loan was around $450 million, not $11 billion.
- Does the fictional subsidy working in the favour of the so called ultra rich really work out better than the oil barons of the world? Which is really the strongly monopolised industry with price strictly regulated in favour of private interest? Does the name Rockefeller or Saud ring a bell?
- How does the net time value of a Tesla fair to a normal middle class sedan? Well, it's only the higher upfront class you pay. On a 10 year span Tesla directly competes with most mid level sedans.
- Furthermore, iteration takes a long time and cost efficiency takes the longest time in manufacturing, if you weren't be a belligerent skeptical.
- I can see your finances do not buy you a Tesla just yet and that makes you angry. The secret to changing that is to stop blaming the "ultra rich" for your problems and take a real good look in the mirror.
Do you really not sense any irony in your "ad hominem arguments"? If must warn you that a brain dead moron might be dangerously close to you.
I don't particularly care you've found fault in my logic as being belligerent makes someone like you feel good, this is the Internet after all.
But if you are a third party reading this, don't get stuck on the fact that you can't yet afford a Tesla. And when you do the math, don't look at upfront cost only, that's the worst way to do it. Add up fuel cost for your average mileage, average maintenance, repairs, insurance premiums, tax credits over the number of years you plan to keep it for and workout the real value. You will be amazed to learn a Tesla isn't that expensive after all. A 70D starts at $57k and from thereon you can start decreasing tax credits, fuel savings and so forth. Is it really more expensive or are you unaware about what the net time value of a purchase is? Time to get your economics in order.
Lastly, every business starts out with an overpriced overbloated product, even if you're launching a stupid new social network for dogs, it always takes time to become efficient. Let alone with cars. People who haven't built things from scratch often lack this sense of continuous iteration that is necessary, but I would really re-consider my position against Elon and Tesla and all the great work they have been doing.
- Tesla has been profitable for numerous financial quarters, although not consistent. On that basis, neither has been GM for many quarters after the crisis, after causing an $11.2 billion loss to the American tax payer.
- Tesla is funded mostly by competitors and revenue, not by the tax payer. Read the above sentence again for contrast: GM caused a direct loss of $11.2 billion to the tax payer. Tesla only borrowed and then repaid in full.
- The subsidy granted to Tesla by the US gov, only a minuscule percentage of the GM bailout, was repaid in full with interest by Tesla, with the tax payer making a profit. The loan was around $450 million, not $11 billion.
- Does the fictional subsidy working in the favour of the so called ultra rich really work out better than the oil barons of the world? Which is really the strongly monopolised industry with price strictly regulated in favour of private interest? Does the name Rockefeller or Saud ring a bell?
- How does the net time value of a Tesla fair to a normal middle class sedan? Well, it's only the higher upfront class you pay. On a 10 year span Tesla directly competes with most mid level sedans.
- Furthermore, iteration takes a long time and cost efficiency takes the longest time in manufacturing, if you weren't be a belligerent skeptical.
- I can see your finances do not buy you a Tesla just yet and that makes you angry. The secret to changing that is to stop blaming the "ultra rich" for your problems and take a real good look in the mirror.
Do you really not sense any irony in your "ad hominem arguments"? If must warn you that a brain dead moron might be dangerously close to you.
I don't particularly care you've found fault in my logic as being belligerent makes someone like you feel good, this is the Internet after all.
But if you are a third party reading this, don't get stuck on the fact that you can't yet afford a Tesla. And when you do the math, don't look at upfront cost only, that's the worst way to do it. Add up fuel cost for your average mileage, average maintenance, repairs, insurance premiums, tax credits over the number of years you plan to keep it for and workout the real value. You will be amazed to learn a Tesla isn't that expensive after all. A 70D starts at $57k and from thereon you can start decreasing tax credits, fuel savings and so forth. Is it really more expensive or are you unaware about what the net time value of a purchase is? Time to get your economics in order.
Lastly, every business starts out with an overpriced overbloated product, even if you're launching a stupid new social network for dogs, it always takes time to become efficient. Let alone with cars. People who haven't built things from scratch often lack this sense of continuous iteration that is necessary, but I would really re-consider my position against Elon and Tesla and all the great work they have been doing.
[deleted]
The main problem of Tesla is that they are interested in creating luxury cars that happen to be electric. I don't have any good feelings towards companies that target the ultra-rich, specially when they use public money for funding. Now, I know they say that they plan to create popular car, but who knows if that will ever be real? Even the CEO has changed his mind about the business several times. I would rather buy a Prius or a Leaf than subsidize this luxury car company.
Indeed. I'd rather have billions go to Elon who will turn it into awesome technology, as his companies have, than have it go to defense contractors who will turn it into another plane that can't fly.
Things that have their origins in defense:
GPS
Siri
The Internet
Tor
Not saying pork isn't a huge problem but saying no awesome technology comes out of defense spending is untrue.
GPS
Siri
The Internet
Tor
Not saying pork isn't a huge problem but saying no awesome technology comes out of defense spending is untrue.
You had me at defense contractors. Successful or not it wouldn't create a net benefit for humanity or even the subset of it our government is ostensibly serving.
He's providing such extremely high value and he could make it without them. If anything he's redeeming government expenditures that generally have low returns into something that actually does something amazing.
# Cars
GM, Chrysler etc. bailed out for $85B. Sector subsidized in other ways too.
# Space
Most of the space industry is paid for by various governments (some satellites are the only exception). NASA is about half of SpaceX revenue, certainly a large chunk.
# Energy
IMF recently released a report[1], where fossil fuel subsidies are estimated at $1.9 trillion. Other types of energy are subsidized too, solar in China, nuclear in France, etc.
[1] http://www.imf.org/external/pubs/ft/wp/2015/wp15105.pdf