Without government subsidies, Musk would be broke.
4 Likes
Iāve been saying this for years. There was never a market for anything heās been involved with at least since he worked for his parentās diamond mine. (Or whatever it was)
The entire computer, hardware/software/peripherals industry is the same way. I was working for the Gov when they decided to just buy endless tons of computer crap only to throw it away 6 months later and buy the latest up-to-datest crap, rinse/repeat for the purpose of creating out of thin air a market for PCās. Nobody wanted them or had anything for them to do. Businesses already had their proprietary machines and software. But after several millionaires/tech businesses were created and the cost of making the machines and developing the software had come down, then they could start selling them at a price at which normal people would consider buying them.
And an industry was created.
Airline industry has been the same way only you canāt pin it on just one guy.
3 Likes
Itās possible the very early version of Tesla and Space X may not have survived without govt grants and loans. In the case of Space X, which is not unique, the govt has often funded experimental operations to which the public and the govt are long term beneficiaries. The bulk of the funds being paid are for contracts including high security satellite launches and NASA supply and re-supply missions. By the way, Space X has brought down the cost of those launches enormously, which inures to the the tax payerās benefit.
Tesla, along with every other major US auto manufacturer, received low interest loans. Interestingly, Telsa is the only manufacturer to fully pay back the govt early, by almost 9 years. Ford didnāt fully repay back its loan until 2022 and even had to restructure an earlier owed repayment date. GM and Chrysler received a separate bailout package under TARP under which the taxpayer ended up absorbing billions in losses.
If a debt of gratitude is owed to the taxpayer for assisting in some part, I would agree. Beyond that, Musk has been proven to be a wildly successful entrepreneur. Tesla represents the first successful mass produced vehicle in the US in nearly 75 years. Itās ushered in a move towards more clean energy transportation. By some estimates, Space X has saved the US govt nearly 40 Billion in launch costs by fostering market competition and reusable rockets. Just for Low Earth Payloads, the company has reduced the launch cost by 80-90%.
2 Likes
Tesla got $1,500,000,000 in the way of ālower pricesā on Tesla vehicles, which encouraged their adoption much faster than the private market would have allowed. It is with this kind of incentive that they were able to scale up and bring down their costs, as well as achieve the kind of consumer acceptance they have gotten. (Not saying their product wasnāt also great!)
That ā$7500 per vehicleā rebate was crucial to the company in the early days, not to mention the government loan that kept them out of bankruptcy. And, of course, most of SpaceX revenue has come from government contracts.
Very weird for a guy who seems to hate government so much.
1 Like
I donāt hate the government. I think on the whole private use of capital tends to produce better results than when capital is redistributed by govtās. Itās not an absolute position or Ayn Rand approach, but you can try to couch it as such. Case in point with Space Xās rocket development vs NASA trying to develop those technologies internally. Can you imagine the cost to the taxpayer of that type of approach?
Iām not a fan of the subsidies and would rather they not have existed. The 39 Billion awarded under the CHIPs act is a good example. In Teslaās case, I disagree that subsidies were the primary catalysts for purchases or that the success or failure of the company hinged on them. It was the product itself. I think Musk has said something similar. T
Having a contract to provide services and products to the Govt is not a subsidy or handout. I never quite understand why these ideas get conflated. Itās like you saying you subsidized apple by buying an Iphone. You didnāt but exchanged money for a product that provides you value.
There are things the US military needs to operate, which includes satellite deployment. Space X delivers that at the best price and net savings to the tax payer.
What is your point? Are you suggesting the govt is owed an ownership stake in Space X?
2 Likes
Sure. Although that wasnāt NASAās mission (although perhaps it should have been); they were/are charged with space exploration and the like, not making cheap rockets for space tourism or those other dreamy ideas that people come up with. (Again, Iād say they missed a bet here, but no, I donāt think only SpaceX was capable of putting together reusable rockets. Heck, NASA tried that with the Shuttle, which didnāt work out so well.)
And yet in every single case in every single country the proliferation of EVs has been aided - and then flattened when the subsidies went away. Iām a believer that there are some times when the market is just too remote and that some subsidy help is called for to get private industry āover the hump.ā Suppose the internet had not been aided by public subsidies and government grants (not to mention government scientists and labs): do you think it would have happened as quickly - or at all?
In the entire country: 20,000 radio stations, 5,000 TV stations, 50,000 magazine publishers, 10,000 daily and weekly newspapers, a hundred thousand ad agencies, independent film producers and Hollywood alike, not a single one of them āinventedā the internet or anything like it. Not the telephone companies, not the cable MSOs, nobody.
Well this is nonsense. I bought a product with my own money. If I had bought it with some of your money, and some of everybody elseās money - that would be a subsidy. Apple didnāt need it. (Curiously, Google did, or at least appropriated much government research in creating the original algorithm. DoD has funded much of the underlying research that got AI going. DoD also invented GPS before handing it off to civilian use. DARPA and NSF have been instrumental in much of the technological boom we enjoy today.)
Yes. Iām all for it. Iām also cognizant that SpaceX developed much of their technology using āoff the shelfā technology. Who do you think built the shelf in the first place?
1 Like
There is no across the board answer on subsidies. They help accelerate and direct economic activity but they also end up distorting it as well. Case in point, the unequal subsidy amount for EVās built by union vs non union labor. It distorts pricing and gives unfair advantages rather than letting the consumer choose the winner based on what best serves the market. Ethanol based fuel was another poor use and distortion of food prices.
I donāt know that the EV market flattened because of the loss of subsidies and or it was just the natural decline of consumer interest. The slowdown in the US Market seems to be a combination of factors and the largest of which is that there is just less overall interest in EVās. I suspect that is a combination of range, price and charging inconvenience. Whether subsidies impact an increase in sales, it doesnāt mean thatās a prudent use of tax payer dollars. We donāt need EVās for the sake of having EVās. In addition, it only delays the economic realities and itās more likely a temporary sugar high than a long term fix. The Auto industry will need to figure out a path to profitability without the crutch of subsidies longer term. In particular, US driving habits create some hurdles that may require other power plant solutions or a combination.
Again, itās not an argument against all subsidies. The early development of the internet is really no comparison to subsidizing the sale of products by for profit companies. The internet was a collaboration between the military and then academic researchers. When well thought out or as you suggested areas to encourage problem solving where the private sector will not dedicate capital, it can be valuable to use a private and public partnership. Regardless of its success, itās not a blanket endorsement of other subsidy arrangements or that the policy for EVās is an appropriate one.
No, that would not be a subsidy. Read the title of the post āVIRTUALLY ALL OF MUSKāS WEALTH IS DUE TO GOVT SUBSIDIESā. Muskās wealth is largely tied to the current and future revenue generated by SPACE X, much of which comes from govt contracts. Those are not subsidies but contractual purchases and I might add, at the lowest available price. It was the conflating of contractual revenue with original monies provided for research grants, which I was addressing with my comment.
Again, my question to you is what are you looking for? Should the govt own a portion of SPACE X? Do you think anybody could have been awarded what Musk was and built two successful companies? GM and Ford, despite all their resources and the same access to govt help, still canāt figure out a path to profitability. Mary Barra was given credit for electrifying the EV industry, where is she now? Boeing has now officially grounded its starship liner. Maybe we should recognize the initial help from taxpayers but also a true genius that is solving some pretty important problems.
By the way, the shelf, to the extent it exists, was built by taxpayers. Given the vocal political tilt here, I think the main issue with Musk is his political activism. If it werenāt for that, most people would agree his and his teamās success is absolutely remarkable. But, many people cannot separate their ideological leanings from appreciating his achievements. Itās fine, itās the nature of things today. In a few months, someone will question Musk as a founder of Tesla again. Itās just intended to minimize his achievements, just like the origin of this thread.
2 Likes
Probably helped a lot, BUT itās important to remember that the $7500 tax credits had strings attached. The biggest one was that the original $7500 tax credit was limited to 250,000 vehicles per manufacturer, and as I recall, Tesla ran out in late 2019 or thereabouts. Then there was the new tax credit that existed for about 2 years, but that one had significant income limits, I saw an estimate that CA buyers (the largest market for Tesla by far) had only a very small number of buyers eligible for that tax credit. So in the end, the biggest period of growth in Tesla sales either had no tax credit available (ran out of 250,000), or had many (most?) ineligible due to income limits. For each of my Teslas, I did not receive any tax credit at all.
3 Likes
Iām totally fine with Elon Musk getting government subsidies. We the people decided through our elected representatives that EVs and privately operated space launch vehicles are in our best interests, and created financial incentives to make those things happen. We encouraged Musk and others to take advantage of those incentives and they did.
4 Likes