It’s rare that two conflicting stories hit the media at the same time about one person. But Elon Musk is a rare bird. If I had to classify him, I’d call him a Government Dodo. Don’t get me wrong: Musk is smart. It’s the government that’s the dodo.
California is considering a bailout for Tesla once federal $7,500 tax credits for each vehicle run out in 2018.
Federal tax credits for Tesla vehicles are slated to phase out once the Silicon Valley company produces and sells 200,000 electric cars. California’s proposal is a $3 billion incentive program and would reduce the price of an electric vehicle by as much as $10,000.
Tesla is nearly 80,000 cars away from hitting the cutoff point, so customers that are counting on a $7,500 rebate to lower the sticker price might be forced to fork over more money for the Model 3 than they initially thought.
Let’s unpack that. For the $35,000 Model 3 (fully loaded, around $53,000), somewhere between 14 and 21 percent is being financed by yours truly, Mr. Taxpayer. Nearly 50 percent of Tesla’s sales of the Model S have been in California (because rich Silicon Valley entrepreneurs can afford the price tag and enjoy the “cool factor”).
Here’s the stinger:
Data shows that the elimination of the tax credit could be a death knell for Tesla, especially considering the company’s inability to mass produce vehicles at the scale of its larger competitors.
A July 10 data analysis from the Wall Street Journal shows that there were no new Tesla Model S sedans and Model X SUVs registered in Hong Kong the month after that country revoked the tax credit.
Without government assistance, it seems Tesla can’t make money, because they can’t sell cars at the price they actually have to collect to stay in business. So California is going to tax the working class to pay for Elon Musk to add to his fortune.
And add to his fortune he has.
Space News reported Friday that Musk is now worth $5 billion more after SpaceX (his other company) raised $351 million in a funding round, bringing that company’s value to over $21 billion (coincidentally, about the same as Musk’s personal net worth).
SpaceX gets its money from–you guessed it–taxpayers. A $4.2 billion contract with NASA in 2014 drives revenue. SpaceX essentially gets nothing from private companies, other than investment dollars. They are all betting on more money from Uncle Sugar.
Musk himself has gotten rich off the Government Dodo.
Listen, I have an idea–one worthy of Barack Obama. Let’s let Tesla fail. Let the tax credits expire. Then when it’s just about cold in the morgue, we bail it out, in exchange for equity. If taxpayers are going to pay for Musk to get rich making electric cars (a worthy endeavor, by the way), then we might as well own the company.
If GM was any indication of how this works out (of course, the union pensions won, and existing shareholders lost in that mob-inspired deal), taxpayers ought to get a nice return. But we know that won’t happen, because dodoes aren’t prized for being smart. In fact, they’re extinct precisely because they’re not.