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Elon Musk Rakes In $4.9bn In Subsidies

June 1, 2015
tags:

By Paul Homewood

 

image

http://www.latimes.com/business/la-fi-hy-musk-subsidies-20150531-story.html#page=1

 

the LA Times reports:

 

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."

Tesla and SolarCity continue to report net losses after a decade in business, but the stocks of both companies have soared on their potential; Musk’s stake in the firms alone is worth about $10 billion. (SpaceX, a private company, does not publicly report financial performance.)

Musk and his companies’ investors enjoy most of the financial upside of the government support, while taxpayers shoulder the cost.

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.

Musk declined repeated requests for an interview through Tesla spokespeople, and officials at all three companies declined to comment.

The subsidies have generally been disclosed in public records and company filings. But the full scope of the public assistance hasn’t been tallied because it has been granted over time from different levels of government.

New York state is spending $750 million to build a solar panel factory in Buffalo for SolarCity. The San Mateo, Calif.-based company will lease the plant for $1 a year. It will not pay property taxes for a decade, which would otherwise total an estimated $260 million.

The federal government also provides grants or tax credits to cover 30% of the cost of solar installations. SolarCity reported receiving $497.5 million in direct grants from the Treasury Department.

That figure, however, doesn’t capture the full value of the government’s support.

Since 2006, SolarCity has installed systems for 217,595 customers, according to a corporate filing. If each paid the current average price for a residential system — about $23,000, according to the Union of Concerned Scientists — the cost to the government would total about $1.5 billion, which would include the Treasury grants paid to SolarCity.

Nevada has agreed to provide Tesla with $1.3 billion in incentives to help build a massive battery factory near Reno.

The Palo Alto company has also collected more than $517 million from competing automakers by selling environmental credits. In a regulatory system pioneered by California and adopted by nine other states, automakers must buy the credits if they fail to sell enough zero-emissions cars to meet mandates. The tally also includes some federal environmental credits.

 

As for his plans to save the world with battery power?

Musk laid out a vision of affordable clean energy in the remote villages of underdeveloped countries and homeowners in industrial nations severing themselves from utility grids. The Nevada factory will churn out the batteries alongside those for Tesla cars.

What he didn’t say: Tesla has already secured a commitment of $126 million in California subsidies to companies developing energy storage technology.

 

Here’s how the subsidies add up: 

 

 

TESLA MOTORS: $2.391 billion total

$1.29 billion — Nevada tax incentives for Gigafactory

$45 million — Value of discounted Department of Energy loan

$90 million — California Alternative Energy and Advanced Transportation Financing Authority

$517.2 million — Sale of California and other regulatory credits

$284 million — Estimated value of federal income tax credits for eligible U.S. buyers of Model S sedans

$38 million — Value of California rebate for California buyers of Model S sedans

$126 million — California Self-Generation Incentive Program

$647,626 — California job training reimbursement

 

SOLARCITY: $2.516 billion total

$750 million — New York State cost to build solar panel factory

$1.5 billion — Estimated value of 30% subsidy for solar installation since 2006, including at least $497 million in Treasury grants

$5.6 million — Oregon tax credits and rebates

$260 million — New York local property tax exemptions

 

SPACE EXPLORATION TECHNOLOGIES: $20 million total

$20 million — Texas state and local incentives and rebates for space launch facility near Brownsville

http://www.latimes.com/local/la-fi-hy-musk-subsidies-box-20150530-story.html

18 Comments
  1. Joe Public permalink
    June 1, 2015 11:15 am

    I’m surprised US taxpayers continue to put up with the costs they have to bear.

    • Roger Cole permalink
      June 1, 2015 5:50 pm

      Very few of them understand what they’re paying Joe and in any case the tax system is so top heavy that most people pay little or no Federal income tax anyway.

  2. June 1, 2015 11:40 am

    Tesla-fans please point me to the cost benefit analysis the government has done for these subsidies. I would like to see how much CO2 has REALLY been saved/expanded for each $1 spent.

    Green Iron Meter Breakage
    – They pay this guy a subsidy to reduce CO2
    – Then they pay him a subsidy to fly things into space ?

    Like ..Don’t rockets effect the Greenhouse effect ?
    “The Aerospace study shows that the radiative forcing of soot from a given hydrocarbon rocket scenario is as much as 100,000 times that of the carbon dioxide from the rockets. ” ..”according to a recent (2011) study by scientists at The Aerospace Corporation

  3. June 1, 2015 11:46 am

    Imagine having invested those vast sums in better public transport – amongst other things.

    @stewgreen we have also been blind to subsidy harvesting to a great extent but hopefully our on shore wind cowboys will be sent packing shortly.

  4. June 1, 2015 11:48 am

    Yep, not one commenter on the original article has said something like “Well Elon has reduced global CO2 by X tonnes”

  5. hugh permalink
    June 1, 2015 12:11 pm

    CO2 is largely a myth. See http://www.CO2science.org

    • June 1, 2015 5:24 pm

      What a strange study. Paul this really needs a closer look.

      A simple eyeball of the chart from the article looks to be an AMO pattern and rainfall is not even at the levels of earlier last century. So what caused previously higher rainfall? Can’t find the paper (prob paywalled anyway at Nature) but 3/4 due to CO2? Sounds a very, very political piece as part of the wall to wall propaganda ahead of Paris (I hope they are snowed in by then! ;))

      This image may not be inline but I see nothing unusual. Nothing. The droughts are also something I’ve seen mentioned often in relation to meridional flow as outlined by Lamb etc.

      Pielke’s BS button seems appropriate.

      The article, (pretty much what the AP reports also) has some strange quotes in terms of attribution* (my emphasis below) –

      …research by scientists at the National Centre for Atmospheric Science at the University of Reading, has shown how increased greenhouse gases in the atmosphere, which have caused climate change, have triggered a return of crucial seasonal rains to the Sahel region.

      The researchers used a supercomputer climate simulator to study different influences on North African rainfall.

      And when they examined the increases in rainfall since the 1980s, they found around three-quarters of the additional rain was caused by rising greenhouse.

      ‘This shows how climate change can hit specific countries and regions in a much more complicated way than the simple idea of “global warming” might suggest.

      ‘In particular, we are beginning to discover how climate change is influencing rainfall patterns. What we are learning shows that human activity is already having a major impact.’

      But despite the beneficial impact of global warming on Africa, the scientists have warned that the long term impacts will be very differenct [sic] as greenhouse gases continue to accumulate in the atmosphere.

      It comes as the latest UN assessement [sic] of climate change impacts, shows Africa will face increased risk from heatwaves, sea level rises, flooding and drought, leading to potential crop failures, water shortages and disease.

      Professor Sutton added: ‘These positive short-term impacts were accidental. No-one was trying to bring them about.

      ‘Nevertheless, such major changes show that by continuing to emit greenhouse gases, we are seriously upsetting a natural system that we don’t even fully understand, and this system is our home.

      […]

      ‘Our new study shows that our activities are not just causing problems for future generations. They are causing major changes now.

      ‘Continuing on the current path of greenhouse gas emissions will lead to more serious and widespread impacts.

      ‘I trust the governments meeting later this year in Paris will appreciate the gravity of this message.’ [let the advocacy of that sink in]

      […]

      …when they examined the increases in rainfall since the 1980s, they found around three-quarters of the additional rain was caused by rising greenhouse gas concentrations.
      […]
      Our new study shows that our activities are not just causing problems for future generations. They are causing major changes now.

      It is not all too surprising as on the NCAR site they refer to Skeptical Science.

      This really is crossing over to 100% advocacy…er sorry 97% 😉

      * found this –
      The African Sahel has experienced important changes in seasonal rainfall distributions, extreme events and hydrological regimes over the last 20 years, which have a major impact on communities. The relationship between these changes, and teleconnections with large-scale climate variability have, however, not been fully investigated, which reduces significantly our capacity to understand future trends in hydroclimatic fluctuations over the Sahel. Such trends are moreover determined by the combined effects of anthropogenic and natural climate variability at the decadal timescales.

      http://www.coventry.ac.uk/research/research-students/research-studentships/past-and-future-of-west-african-hydroclimatic-variability-and-their-teleconnections/

  6. John F. Hultquist permalink
    June 1, 2015 4:38 pm

    “ …affordable clean energy in the remote villages

    I guess I missed the part where the clean energy became affordable in remote villages. Do words no longer have established meanings?
    The villages of Vail and Breckenridge can support the many solar panels and large batteries. Such things incur costs beyond the means of “remote villages.”
    The plan must be to take money from those that work and then buy, ship, and set up solar panels, batteries, wire, converters, and so on and on in places that now have no such things. Then the energy will flow freely to the villagers.
    This will stop the atmosphere from warming, ice caps from melting, and oceans from rising – How?

    • Dave Ward permalink
      June 2, 2015 11:40 am

      The TV series “Outback Truckers” featured the horrendous journey faced by Steve Grahame when he travelled from Perth to a couple of remote Aboriginal settlements located on islands off Australia’s Northern Territory. This was in order to deliver two container loads of solar panels, batteries & associated control gear. Heaven knows what it cost in terms of diesel plus the ferry he had to take, on top of the many A$ tens of thousands for the equipment. I think we can be sure that the Aussie taxpayer footed the bill, and they will undoubtedly pay for new batteries and inverters in a few years time, when the first set expire in the baking heat…

      • June 5, 2015 3:58 pm

        Yep, the air con needed to keep them cool probably needs more power than the panels can provide. Reminds me of the signboard hung up in casablanca airport departures showing the amount of power being generated by their solar panels. It seemed that the display board used more power than was being generated – and that was N Africa where the sun DO shine.

  7. June 1, 2015 5:36 pm

    Reblogged this on CraigM350 and commented:
    Wealth redistribution.

  8. john in cheshire permalink
    June 2, 2015 7:58 am

    Mr Musk sounds like John DeLorean on steroids I’m assuming people remember that scam, back in the’70s to set up a car factory in Northern Ireland that cost the British taxpayer many millions before it was shut down.

  9. June 2, 2015 2:25 pm

    Elon DeLorean ..very good point John.
    – I think the entire “success” of the “massive” Northern Ireland revolutionary motor inustry employing “thousands” of workers is due to DeLorean

  10. June 2, 2015 8:49 pm

    It’s not a stretch to portray Musk as a latter day Robber Baron

    $4.9 Billion ….

  11. Nik permalink
    June 4, 2015 8:33 pm

    This bit is priceless: “Musk and his companies’ investors enjoy most of the financial upside of the government support, while taxpayers shoulder the cost.”

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