Multibillionaire Elon Musk made his first billion as the inventor of PayPal — and, as we all know, the first billion is the hardest.
Musk once showed he knew how to fill a market niche, but lately he has specialized in taking the easy way to more wealth, bilking taxpayers out of billions of dollars through various crony socialist schemes requiring generous state and federal subsidies doled out to his high tech money-losing efforts.
The amount of money the government gives to Musk is a truly shameful, indefensible example of welfare for the well-to-do.
Musk invested the money he made in PayPal in companies making electric cars (Tesla Motors), selling solar panels (SolarCity Corp.), and making and flying rockets (SpaceX).
Together, Tesla, SolarCity, and SpaceX have benefited from more than $4.9 billion in subsidies, tax credits, grants, and payments, according to the Los Angeles Times.
Musk has continually promised Tesla and SolarCity are moving toward self-sufficiency. That’s a lie. They are creatures of and supported by government largesse.
The stocks of both companies have soared, making Musk billions thanks to hard-earned taxpayer dollars. Musk owns 27 percent of Tesla, and his stock has risen 157 percent, to more than $250 per share, over the past two years due in large part to government assistance. This is all despite losing $294 million in 2014 alone.
Musk promised, with a little government support up front, that Tesla would produce a high tech car the average person could afford, resulting in reductions of major pollution and carbon dioxide emissions. After more than a decade in business, however, Tesla’s cars—and SolarCity’s solar panels—remain niche products for well-heeled customers.
Tesla’s first car sold for more than $100,000 per vehicle. Despite promising in 2008 Tesla would produce a sedan costing half the price of its first model, seven years later the second model also sells for more than $100,000 on average. When and if a less expensive model aimed at the middle class will ever be produced is an open question, but in any case it is years from introduction.
The Hollywood glitterati, the Wall Street fat cats, and the inside-the-beltway power brokers tooling around in Teslas are also milking taxpayers. Tesla buyers receive a $7,500 federal income tax credit and a $2,500 rebate from the State of California. In all, wealthy Tesla owners have qualified for an estimated $284 million in federal tax incentives and collected more than $38 million in California rebates.
All this for a car even Musk admits has done little to nothing for the environment.
“Some may question whether this actually does any good for the world,” Musk said. “Are we really in need of another high-performance sports car? Will it actually make a difference to global carbon emissions? Well, the answers are no and not much.”
SolarCity is an even worse boondoggle than Tesla. New York State is spending $750 million to build a solar panel factory in Buffalo for SolarCity, which the company will lease for the princely sum of $1 a year. SolarCity will also avoid paying property taxes for a decade, giving it an additional taxpayer funded windfall of $260 million.
Nevada taxpayers have also been taken to the cleaners by Musk and his legislative sycophants. The state government is giving Tesla $1.3 billion to build a factory for batteries to power Tesla’s cars and provide off-grid power to homes with SolarCity solar panels on their roofs. In still another sweetheart deal, Musk’s company won’t pay property taxes on its Nevada factory for 10 to 20 years.
In a scam John Ponzi would envy, SolarCity offers to put solar panels on people’s homes free of charge on the condition they sign a 20-year lease to purchase the solar power generated from the panels. Musk’s sales force tells homeowners their power bills will decrease, but in many cases people’s electric bills rise after the panels are installed, reports show. In addition, the panels affect the homes’ insurability, and SolarCity takes out liens on the homes, making it difficult to get refinancing or to sell the property.
The federal government contributes to this scheme by providing tax credits to SolarCity to cover 30 percent of the cost of solar installations, netting the company approximately $1.5 billion since 2006, including $497.5 million in grants the U.S. Treasury paid to directly to SolarCity.
In response to the Times’ exposé, Musk told CNBC’s Power Lunch, “None of the incentives are necessary, but they are all helpful.”
I agree that the subsidies aren’t necessary, but they are helpful only to Musk and his investors and wealthy Tesla owners. They are not helpful to the environment or to taxpayers. It’s time for Musk to get off the government teat and earn an honest living in the marketplace again.