Is Elon Musk Addicted To Your Tax Dollars?

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He’s been heralded as one of the great geniuses of our time, a man whose work has kickstarted everything from electric vehicles to solar energy and private space travel. But does Elon Musk have an addiction to government subsidies?

That’s the thrust of an investigative story in the Los Angeles Times this weekend. The Times concludes that based on the data they obtained, SpaceX, Tesla Motors and Solar City have benefitted from a combined $4.9 billion in government support. That’s a lot.

The taxpayer funds for Musk’s various endeavors come at the federal and state levels. Perhaps the most well-known beneficiary of government help is Tesla, which received $465 million in loans under the government’s $8.4 billion Advanced Vehicle Technology Manufacturing program. Tesla has since repaid those loans, and early, while two of the other five loan recipients failed entirely.


But ATVM is only one part of the story. From the Times:

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.

Then there’s SpaceX, which got $20 million in subsidies from Texas to build a facility there. The Tesla Gigafactory is being built near Reno, Nevada with aid from $1.3 billion in tax incentives. There’s also the $517 million Tesla has collected selling zero emission vehicle credits to other automakers. Still, Tesla and SpaceX continue to report net losses.

I guess it comes down to whether or not you think government (specifically, your own tax dollars) has any role in subsidizing private businesses. On one hand, they’re helping to create jobs, grow burgeoning industries, and perhaps even make the world a better place with more zero emission cars and solar energy, if you’re an idealist. And an optimist. Also, it’s not like our state and federal governments don’t subsidize the hell out of other businesses.


On the other hand, the Times’ report raises questions about whether any of Musk’s companies can survive in the long term without being subsidized by the government, as well as who has really benefitted from all that support.

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.


Officials from Tesla and other companies declined to comment on the Times story. We have asked Tesla for one as well and will update this story if they get back to us. In the meantime, the full story is worth a read.


UPDATE: While Musk didn’t respond to the Times’ story he did appear on CNBC today to downplay the importance of subsidies.


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