Last December, Elon Musk built a behemoth the size of 75 football fields with a crisp white factory floor at a Washington, D.C., conference hosted by The Wall Street Journal — from his new Tesla plant near Austin, Texas.
Musk, seen on stage in a jumbotron-shaped Screen, was quickly asked about the climate-friendly Build Back Better legislation that lawmakers were considering at the time.
Take the musk: Kill Bill. “It might be better not to pass the bill,” Musk said with a smile. The government should “just try to get out of the way,” he said.
“I’m really saying get rid of all subsidies,” Musk later said, pausing his remarks. When Tesla Started, “There Weren’t” [electric vehicle] subsidies,” he said.
Musk has repeatedly expressed concern about how much the government spends and how many rules and regulations it imposes on companies. But Musk rarely mentions that his companies benefit from government aid.
Tesla and SpaceX alone have received more than $7 billion in government contracts and more than billions in tax breaks, loans and other subsidies, an analysis by Grid found. In recent years, Tesla has sold at least $6 billion worth of government-backed electric vehicle credits, Grid found. These sales in recent years have made the difference between a company posting a profit rather than a loss, according to an analysis by financial data firm, Trefis.
These practices shed light on how Musk’s idealism can contradict his business practices – or even, in some cases, statements made by Musk himself. Despite their “no subsidies” ideals, their companies usually operate practically, maximizing their government tax breaks and aggressively lobbying for contracts. As Musk prepares to take control of Twitter, his work with the government highlights how high-profile statements are often tainted by reality.
“When we talk about subsidies and economic growth, he is not innovative at all – he follows the same practice that everyone else does,” said Kasia Tarzynska, an analyst at Good Jobs First, a Non-profit organization that researches and advocates for subsidies for jobs.
The factory where Musk interviewed the Wall Street Journal in December is an example of Tesla following the current corporate playbook for maximizing tax breaks.
Tulsa, Oklahoma made an elaborate bid for Tesla’s business that included painting a seven-story statue of an oil worker to look like Elon Musk.
When Tesla decided to build its new factory in 2020, it publicly weighed in on building the plant in Austin, Texas, Nashville, Tennessee, or Tulsa, Oklahoma, making an elaborate bid for Tesla’s business that included a Painting a seven-story statue of Oil workers to look like oysters. Meanwhile, Texas offered $60 million in benefits, some of which came from the local school district, Which limited the value of Tesla’s assets in order to artificially lower its tax bill.
Tesla chose Austin for the site after meeting both states. After the company chose Austin, Musk said during an interview with the podcast Automotive News that his employees’ preference for Austin was “a big factor” and his “top pick”. This led to speculation whether Tulsa was used to squeeze more Attractive deal outside Texas.
The deal could benefit Austin, but it could also exacerbate existing problems such as a lack of affordable housing in the area, said Margaret Gomez, a Travis County commissioner who was the only commissioner not to vote for an economic stimulus package. (Gomez refrained.)
“People are very excited just because of the jobs,” Gomez told Grid. “We need to look at all angles of deals that we do because we’re essentially gambling with taxpayers’ money. If the deal goes well for the people in the end, great. But what if it doesn’t. How do we go back and all that tax revenue we’ve left behind?”
This wasn’t the first time Tesla had won major economic concessions from a state: New York offered SolarCity, a Tesla subsidiary, $350 million in cash and $500 million in cash to encourage the company to move there in 2014, according to Good Jobs First. 400 million loan. , Nevada has given Tesla incentives in return for a tax break of more than $1 billion and building a factory there. It was the largest such deal in the history of the state.
SpaceX Wouldn’t Have Made It Without NASA
In 2008, Musk had drowned $100 million in his space exploration company, SpaceX, and by his own admission things were not going to go to plan.
He had allocated himself enough money to try to launch the rocket three times. But SpaceX’s first three launch attempts did not reach Earth orbit. The company was alive “by the skin of its teeth,” Musk later said, as was Tesla, which had been operating for five years and was only starting to produce cars. He invested more money in each business but was running out of funds.
It was actually the contracts from NASA that it received in those early years.
Musk’s fortunes began to turn that fall, when SpaceX succeeded on its fourth rocket launch. This was followed by a $1.6 billion contract with NASA to resupply the International Space Station.
Musk was later asked about receiving that news in an interview with “60 Minutes.”
“I couldn’t even hold the phone. Musk said, ‘I love you!’
“He saved you – financially and emotionally too,” said correspondent Scott Pele.
When a clip of the interview went viral on Twitter in 2021, Musk reiterated his sentiments. “I love NASA, always have been,” he tweeted.
NASA has since given $5.4 billion to SpaceX. Space consultant Laura Forzik said the relationship not only earned SpaceX money, but also earned respect and trust in the industry.
“SpaceX is new, but it has proven itself primarily through those contracts,” Forczyk said. “It was really the NASA contract that it got in those early years.”
Tesla also got off the ground with help from the government: a $465 million Department of Energy loan issued in 2010. It was double the amount Tesla raised when it went public that year and drew criticism from politicians such as Mitt Romney, who in 2012 hit out at President Barack Obama for its investments in green energy, comparing Tesla to Solindra and calling the company a “loser”. ” said. (Musk has argued that Tesla would have been successful without the loan, saying the company had been “bailed, not bailed out.”)
Tesla continues to make significant money from electric vehicle manufacturing credits that the company earns to build its own cars and sells to companies that make fewer electric vehicles. Tesla has sold more than $6 billion in such credits over time, according to a Grid analysis of the company’s financial disclosures.
“In Tesla’s early years, it meant a lot,” said David Rapson, a professor of economics at the University of California, Davis. “These billions of dollars in credits would have been very beneficial in terms of reducing their capital needs.”
Whatever his criticisms of the government in general, Musk has said repeatedly that it should play a part in helping develop space travel to Mars, which is also a personal mission for him.
“It is not necessary that I think that government should not exist, or that there are not good things that government can do, or things that are necessary for government. You know, for example, science programs Where do we send a probe to Mars,” Musk said during his Wall Street Journal summit interview. (He also criticized existing government funding for the infrastructure, but said the country would need to build more double-decker freeways and tunnels in the future—the latter being the focus of another Musk venture, The Boring Company. .)
SpaceX is no longer just a NASA contractor. Its expansion made headlines earlier this month, when The Washington Post obtained documents showing that the United States Agency for International Development had spent millions of dollars to buy the company’s Starlink Internet terminals to be shipped to Ukraine. , while a SpaceX executive previously said the terminals were not funded. by the US Government.
But SpaceX doesn’t just get money from NASA. it is Even more trade with the Department of Defense, which has contracted the company about $2 billion in work.
In January, SpaceX was awarded $102 million for its work using rockets to transport cargo — a yet-to-be-achieved feat that could accelerate the transportation of military equipment and perhaps someday troops around the world. Will give Other military spending on SpaceX has been for the company’s Starlink satellite business, which was contracted in 2020 to develop a satellite capable of tracking missiles.
Musk’s companies are lobbying for more
While Musk might say his team didn’t think “at all” about the Build Back Better bill, the lobbyists hired by Tesla did.
show public disclosures Tesla and SpaceX spent nearly $3 million in 2021 lobbying the federal government on a range of issues, including the Build Back Better and infrastructure bills. (According to the tracking website OpenSecrets, Tesla spent $1.5 million last year lobbying state governments.)
Tesla’s lobbyists include former Obama-era Energy Department and Labor Department employees, as well as former aides to Republican House Minority Whip Steve Scalise. One is a former aide to Democratic Senator Richard Blumenthal of Connecticut, a member of a Senate committee that oversees highways and transportation, who has been a vocal critic of Tesla’s self-driving cars.
Although Musk has publicly stated that Tesla does not require government subsidies, Tesla is a founding member of a group created by electric vehicle manufacturers, the Zero Emissions Transportation Association (ZETA), that promotes exactly that. ZETA advocates for more tax credits for electric vehicles and federal investment in electric charging stations – and says the government should encourage electric cars to be manufactured domestically, such as Tesla.
SpaceX has spent $700,000 on lobbying so far this year, a little more than Blue Origin’s $560,000. The company’s goals are broad: the Defense Department’s budget, broadband Internet and cyber security, according to the disclosure documents. It has hired lobbyists such as Jim Green, a former Federal Communications Commission (FCC) chief of intergovernmental affairs, and Adrienne Schwer, who in the past worked for three secretaries of defense during the Obama administration.
Green’s background is helpful to SpaceX as it tries to build a Starlink satellite business that can beam broadband into hard-to-wire areas. Among other things, SpaceX recently prompted the FCC to change the license for its satellites so that they could fly closer to the ground — over the objection of rival companies who said SpaceX’s proposal would interfere with their satellite networks.
When the FCC finally approved SpaceX’s request, Musk had nothing but praise.
“The FCC is fair and sane. NHTSA and FAA too. 99.9% of the times, I agree with the regulators!” musk tweeted, “On rare occasions, we disagree. This is almost always due to new technologies that previous regulations did not anticipate.”
Thanks to Alicia Benjamin for copy editing this article.
Used data from the grid’s analysis of federated contracts USASpending.gov And the federal contracts include the total bound amount awarded to SpaceX and subsidiaries since the company’s inception. Provided subcontractors were not included in the analysis. Estimates for tax breaks, loans, and subsidies include estimates given to Tesla, Inc., and subsidiaries. good jobs firstSubsidy Tracker.
