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United States News Title: Elon Musk's growing empire is fueled by $4.9 billion in government subsidies Elon Musk's growing empire is fueled by $4.9 billion in government subsidies Elon Musk's companies fueled by government subsidies By Jerry Hirsch 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." 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. A looming question is whether the companies are moving toward self-sufficiency — as Dolev believes — and whether they can slash development costs before the public largesse ends. 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. cComments It's worth noting that Tesla has made all of their patents open-source, which isn't trivial. On the other hand, it is my strong opinion that the government should subsidize research, development, and deployment of new technologies. I'd much rather have my tax dollars go to... On a smaller scale, SpaceX, Musk's rocket company, cut a deal for about $20 million in economic development subsidies from Texas to construct a launch facility there. (Separate from incentives, SpaceX has won more than $5.5 billion in government contracts from NASA and the U.S. Air Force.) Subsidies are handed out in all kinds of industries, with U.S. corporations collecting tens of billions of dollars each year, according to Good Jobs First, a nonprofit that tracks government subsidies. And the incentives for solar panels and electric cars are available to all companies that sell them. Musk and his investors have also put large sums of private capital into the companies. 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. "Government support is a theme of all three of these companies, and without it none of them would be around," said Mark Spiegel, a hedge fund manager for Stanphyl Capital Partners who is shorting Tesla's stock, a bet that pays off if Tesla shares fall. Tesla stock has risen 157%, to $250.80 as of Friday's close, over the last two years. Musk has proved so adept at landing incentives that states now compete to give him money, said Ashlee Vance, author of "Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future," a recently published biography. "As his star has risen, every state wants a piece of Elon Musk," Vance said. Before his current ventures, he made a substantial sum from EBay Inc.'s $1.5-billion purchase of PayPal, the electronic payment system in which Musk held an 11% stake. Soon after, he founded SpaceX in 2002 with money from that sale, and he made major investments and took leadership posts at Tesla and Solar City. Musk is now the chief executive of both Tesla and SpaceX and the chairman of SolarCity, and holds big stakes in all three, including 27% of Tesla and 23% of SolarCity, according to recent regulatory filings. The ventures employ about 23,000 people nationwide, and they operate or are building factories and facilities in California, Michigan, New York, Nevada and Texas. Tense talks The $1.3 billion in benefits for Tesla's Nevada battery factory resulted from a year of hardball negotiations. Late in 2013, Tesla summoned economic development officials from seven states to its auto factory in Fremont, Calif. After a tour, they gathered in a conference room, where Tesla executives explained their plan to build the biggest lithium-ion battery factory in the world — then asked the states to bid for the project. Nevada at first offered its standard package of incentives, in this case worth $600 million to $700 million, said Steve Hill, Nevada's executive director of the Governor's Office of Economic Development. Tesla negotiators wanted far more. The automaker at first sought a $500-million upfront payment, among other enticements, Hill said. Nevada pushed back, in sometimes tense talks punctuated by raised voices. "It would have amounted to Nevada writing a series of checks during the first couple of years," said Hill, calling it an unacceptable risk. With the deal imperiled, Hill flew to Palo Alto in August to meet with Tesla's business development chief, Diarmuid O'Connell, a former State Department official who is the automaker's lead negotiator. They shored up the deal with an agreement to give Tesla $195 million in transferable tax credits, which the automaker could sell for upfront cash. To make room in its budget, Nevada reduced incentives for filming in the state and killed a tax break for insurance companies. Nevada Gov. Brian Sandoval and Musk sealed the agreement in a Labor Day phone conversation. Hill said it was worth it, pointing to the 6,000 jobs he expects the factory to eventually create. The state commissioned an analysis estimating the economic impact from the project at $100 billion over two decades, but some economists called that figure deeply flawed. It counted every Tesla employee as if they would otherwise have been unemployed, for instance, and it made no allowance for increased government spending to serve the influx of thousands of local residents. A $750-million factory Musk has similar success with getting subsidies for a SolarCity plant in Buffalo, N.Y. The company currently buys many of its solar panels from China, but it will soon become its own supplier with a new and heavily subsidized factory. An affiliate of New York's College of Nanoscale Science and Engineering in Albany will spend $750 million to build a solar panel factory on state land. SolarCity estimated in a corporate filing that it will spend an additional $150 million to get the factory operating. When finished in 2017, the 1.2-million-square-foot facility will be the largest solar panel factory in the Western Hemisphere. New York officials see the subsidy as a worthy investment because they expect that it will create 3,000 jobs. The plant will replace a long-closed steel factory. "The SolarCity facility will bring extensive benefits and value to this formerly dormant brownfield that provided zero benefit to the city and region," said Peter Cutler, spokesman for Empire State Development, New York's economic development agency. SpaceX, though it depends far more on government contracts than subsidies, received an incentive package in Texas for a commercial rocket launch facility. The state put up more than $15 million in subsidies and infrastructure spending to help SpaceX build a launch pad in rural Cameron County at the southern tip of Texas. Local governments contributed an additional $5 million. Included in the local subsidies is a 15-year property tax break from the local school district worth $3.1 million to SpaceX. Officials say the development still will bring in about $5 million more over that period than the local school district otherwise would have collected. "That's $5 million more than we have ever seen from that property," said Dr. Lisa Garcia, superintendent of the Point Isabel Independent School District. "It is remote.... It is just sand dunes." Crucial aid The public money for Tesla and SolarCity factories is crucial to both companies' efforts to lower development and manufacturing costs. The task is made more urgent by the impending expiration of some of their biggest subsidies. The federal government's 30% tax credit for solar installations gets slashed to 10% in 2017 for commercial customers and ends completely for homeowners. Tesla buyers also get a $7,500 federal income tax credit and a $2,500 rebate from the state of California. The federal government has capped the $7,500 credit at a total of 200,000 vehicles per manufacturer; Tesla is about a quarter of the way to that limit. In all, Tesla buyers have qualified for an estimated $284 million in federal tax incentives and collected more than $38 million in California rebates. California legislators recently passed a law, which has not yet taken effect, calling for income limits on electric car buyers seeking the state's $2,500 subsidy. Tesla owners have an average household income of about $320,000, according to Strategic Visions, an auto industry research firm. Competition could also eat into Tesla's public support. If major automakers build more zero-emission cars, they won't have to buy as many government-awarded environmental credits from Tesla. In the big picture, the government supports electric cars and solar panels in the hope of promoting widespread adoption and, ultimately, slashing carbon emissions. In the early days at Tesla — when the company first produced an expensive electric sports car, which it no longer sells — Musk promised more rapid development of electric cars for the masses. In a 2008 blog post, Musk laid out a plan: After the sports car, Tesla would produce a sedan costing "half the $89k price point of the Tesla Roadster and the third model will be even more affordable." In fact, the second model now typically sells for $100,000, and the much-delayed third model, the Model X sport utility, is expected to sell for a similar price. Timing on a less expensive model — maybe $35,000 or $40,000, after subsidies — remains uncertain. "Some may question whether this actually does any good for the world," Musk wrote in 2008. "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.... When someone buys the Tesla Roadster sports car, they are actually helping to pay for the development of the low-cost family car." Next: Battery subsidies Now Musk is moving into a new industry: energy storage. Last month, he starred in a typically dramatic announcement of Tesla Energy-branded batteries for homes and businesses. On a concert-like stage, backed by pulsating music, Musk declared that the batteries would someday render the world's energy grid obsolete. "We are talking about trying to change the fundamental energy infrastructure of the world," he said. 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. jerry.hirsch@latimes.com Post Comment Private Reply Ignore Thread Top • Page Up • Full Thread • Page Down • Bottom/Latest
#1. To: Willie Green (#0)
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. Your kind of a guy taking advantage of your kind of government giveways. потому что Бог хочет это тот путь
Question, how much of the stuff he's planning on making actually works, and how much is just selling snake oil?
Elon Musk: Incentives not necessary, but helpful Tesla CEO Elon Musk said Monday that a Los Angeles Times article claiming his companies received government subsidies is incorrect. (Tweet This) "The article makes it seem as though my company is getting some huge check, which is fundamentally false," he told CNBC's "Power Lunch." According to the article, Musk's three companies, Tesla, SolarCity and SpaceX, "have benefited" from a total of about $4.9 billion in government subsidies. Musk said that the article was misleading and did not accurately portray the situation. Shares of Tesla were down slightly in late trading Monday. Musk said that "none of the incentives are necessary, but they are all helpful," referencing incentive packages some of his companies received to build factories in states like Nevada. He said that the reason these incentives exist is because "voters want a particular thing to happen, and faster than it might otherwise occur." "That is all that these incentives achieve," he added. Musk said that the only incentives he bargained for directly were state-level incentives. These include a small launch site in Texas for SpaceX and a Tesla gigafactory in Nevada. He explained that such incentive packages have existed long before his companies received some of them. "The incentives that Telsa and SolarCity receive are a tiny, tiny, pittance compared to what the oil and gas industry receives every year," he said. Brian Thevenot, deputy business editor at the Times, responded to Musk's comments by saying that he doesn't need to defend the story because it speaks for itself. "I'm actually surprised that he had such a sensitive reaction to this story because, really at its core, it's basically a business strategy story that's merely factual," he said in an interview on CNBC's "Closing Bell." "It paints a picture that I think Elon Musk would agree with, that his business strategy is to incubate high-risk, high-tech companies that promote green technology with the help of billions of dollars of government money," he said. Thevenot added that the point of the story was to report on the strategy and "let the public debate whether it is wrong or right." Speaking on the affordability of a Tesla vehicle, Musk acknowledged the Model S is a "relatively expensive car," but that a more affordable car is expected to come out in 2017. Customers purchasing Model S and Model X cars this year are directly helping to fund a more affordable electric car in the future, he said. "I wish we could have gotten there sooner, but we are doing the best we can," Musk said. Some people march to a different drummer - and some people POLKA.
I wouldn't be afraid to say most of what he's peddling is snake oil. And a lot of what he's getting is probably going back to Leftard politicians in the way of campaign contributions, another money laundering scheme. “Political correctness is a doctrine, fostered by a delusional, illogical minority, and rapidly promoted by mainstream media, which holds forth the proposition that it is entirely possible to pick up a turd by the clean end.”
Submitted by Tyler Durden on 05/08/2013 When you donate hundreds of thousands of dollars to re-election campaigns and push more hundreds of thousands of dollars through lobbying, you expect a little more back than the measly $95.6 million that SolarCity received in stimulus grants. The company, chaired by none other than Elon Musk, had applied for $325 million in federal aid in the same program that 'helped' Solyndra (and Tesla) and is now, according to the Wall Street Journal, suing the government for underpayment of green-energy subsidies. It seems SolarCity are using the M.A.D. defense, claiming that "they could lose millions more," if the government fails to provide the subsidies they asked for. As National Review details, SolarCity is one of the solar companies that is being investigated by the IRS after Treasury found that it "repeatedly overstated the value of its investments." So far the Treasury has paid out over $17 billion in green-energy stimulus grants and this case is not without precedent as a number of other renewable-energy firms are set to file suit. Via National Review, ... A look at the Department of Treasury Section 1603 data shows that SolarCity received 27 awards across 15 states amounting to $95.6 million in cash from a long-standing tax credit for renewable-energy investment turned into a direct grant in the stimulus bill. SolarCity has applied for approximately $325 million in these stimulus grants, according to the SEC filing. There are a few things to note here. First, ... SolarCity ... is being investigated by the IRS after Treasury found that it "repeatedly overstated the value of its investments, the SEC filings indicate." Since the dollar amount of the grant is a set percentage of the value of the project, the benefit of overstating one’s value is that it leads to more taxpayers’ cash. ... Second, the chairman of SolarCity is Elon Musk, who is also a large owner in the company. In addition to being the chairman of SolarCity, he is also CEO of the automobile company Tesla. Tesla received $465 million from the ATVM loan-guarantee program, the DOE program that gave us the Fisker scandal. ... Third, it is worth noting that Elon Musk is a generous political donor. Why does this matter? Because it’s one thing for the government to mismanage taxpayers’ money (as it may have with 1603 payments to SolarCity); it’s another when the mismanagement happens to heavily benefit some of the administration’s large donors. ... Fourth, according to the Center for Responsive Politics, SolarCity spent $535,000 in 2009 and 2010 to lobby Congress and the Department of Energy on climate legislation, theRecovery Act, “green workforce training and development,” and provisions in various legislation “relevant to solar development.” “Political correctness is a doctrine, fostered by a delusional, illogical minority, and rapidly promoted by mainstream media, which holds forth the proposition that it is entirely possible to pick up a turd by the clean end.”
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