The entrepreneurial gift of Elon Musk is his ability to follow the government money and ride the taxpayers to riches—his own.
As regular readers will know, I have defended Tesla, a company started by Elon Musk, from Chris Christie, and from other state rulers. But whether or not a company should be crippled in order to help its competition is a different question than whether or not taxpayers should be used to start that company.
It seems that Elon Musk is a master at using taxpayer money.
According to Breitbart.com, “Elon Musk’s $5 billion in government subsidies helps make ends meet.”
[T]he Los Angeles entrepreneur built Tesla Motors Inc., SolarCity Corp. and Space Exploration Technologies Corp., known as SpaceX, and what came was an estimated $4.9 billion in government subsidies, according to data compiled by The Los Angeles Times.
“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.”
Now after a plethora of government incentives, such as grants, tax breaks, factory construction, discounted loans, environmental credits that Tesla can sell, tax credits and rebates to buyers of solar panels and electric cars, questions remain whether these companies can make it on their own and are they worth the investment of taxpayer funds.
Although stock prices have risen for both Tesla and SolarCity–Musk’s slice of the pie is estimated at $10 billion–both companies haven’t made a profit in over 10 years and are still reporting huge net losses. Tesla stock has risen 157% over the last two years, to $250.80 as of Friday’s close.
Space X, the L.A. mogul’s private company, does not have to show its financial statement—a private company which enjoys more than $5.5 billion in government contracts from NASA and the U.S. Air Force.
Unfortunately, Musk and his companies’ investors reap all of the financial rewards of the government support, while taxpayers assume much of the cost.
What does this tell us?
It tells us that Tesla cars really aren’t needed, or at least that someone else could deliver them more efficiently.
If there was a real possibility of selling Tesla cars to a significant number of buyers, those buyers would have already motivated entrepreneurs to develop the product and get investors to join them. The only reason you need government involvement is because there was no such market. The only other possibility is that Musk wanted to get a larger fortune in the process of bringing the cars to market than he would have gained in the private sector (where he pretends to be operating). In that case, other entrepreneurs have been pushed out of the market because of Musk’s government advantage, which increases his personal fortune. Either way, Musk is a robber, not a giver. He is as much a welfare queen as Warren Buffet.