Elon Musk Strikes Back: LA Times article attacking Tesla and SolarCity 'fundamentally incorrect'

April 8, 2014 – 12:00 pm

"If I cared about subsidies, I would have entered the oil and gas industry, " said Elon Musk, the CEO of Tesla Motors and SpaceX, and the chairman of SolarCity.

A recent Los Angeles Times article supposedly investigated how much government subsidies the Musk empire (Tesla, SpaceX, SolarCity) is receiving, and the numbers in that article are pretty big. The general impression that one is left with after reading it is that Musk goes where there's government money to be had, that his success is largely dependent on the taxpayer, and that without it, most of what he's doing might not be possible.

The fuzzy math and insinuations obviously got to Musk, because he called CNBC and tried to debunk the piece on live television. I'll let you be the judge of whether he was successful, and i'll share more of my thoughts below.

The first thing to note is the very common tendency with journalists of going for the biggest number possible, so looking at multi-decade incentives as if they were all received upfront (without discounting the amount back to the present) makes for big headlines, but that's not realistic economically. If we did that for the oil & gas & coal industries, we'd probably get numbers in the trillions of dollars (easily, especially if we look at indirect subsidies, including military protection which still costs taxpayers a lot).

© Tesla

Musk makes that point well when he says that all the help that all his companies have gotten, are getting, and will get in the future remains 1/1000th of what the oil industry gets in a single year. But the other point, which he makes about the Gigafactory, but which could also be made about Tesla's Fremont Factory or SpaceX's factory near Los Angeles, or about SolarCity's future solar panel gigafactory in the state of New York, is the positive economic benefits that the taxpayers get in return for their initial help.

An important point is also made about the Zero-Emission-Vehicle (ZEV) credits. None of the money there comes from the government. It's "other automakers who are unwilling to make electric cars" who are buying some from Tesla to meet their quotas.

Source: www.treehugger.com

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