Elon Musk's growing empire is fueled by $4.9B in government subsidies | Hacker News Reader

Elon Musk's growing empire is fueled by $4.9B in government subsidies

latimes.com

23 pointskushti29 comments

I'll just copy-paste my comment from the last article with this premise, about three weeks ago:

News flash: Policies meant to encourage growth in high-tech clean energy are encouraging growth in high-tech clean energy! This isn't the first time this has been trotted out as an indictment of Musk, and it certainly won't be the last, but it's really goddamned stupid.

Yeah, soon we should expect articles decrying professionals who took out student loans to get thru college!!

The nerve of people to use the resources they are given access to --and succeed!

Now, if we took that money and instead spent it on an ill managed social program which had little in the way of measured outcome, well, the intentions were right, so let's try spending some more, maybe we'll be successful next time.

I think people are just jealous of his success and can't see the benefit this brings all people, even indirectly. These are the things which further progress.

It's like we're going to fault this guy to working his ass off to bring things into the world that the government agrees we should bring into the world.

What's the problem? Why the vitriol about Musk using "taxpayer money"? (Interesting it's phrased as "taxpayer money" when trying to dis someone receiving it, but it's "government money" when approving of the redistribution of exactly the same money.)

Those government-supplied tax credits, loans, and grants are the direct result of legislation designed to encourage R&D in solar, space, and other industries. To encourage growth in the electric car industry, the federal (and many state) government gives credits etc to individuals who buy/lease EVs and businesses who build them ... so why the surprise when individuals buy/lease EVs and businesses (like Tesla) build them, leveraging the handouts designed precisely to encourage such activity?

It's like supporters of such credits don't actually want anyone to use them.

Damned if you do (Tesla), damned if you don't (Solyndra).

The reaction is either because no one understands how gradually a business is built, or he isn't participating in cronyism as more established incumbents are (oil & gas, auto dealers).

Standard political argumentation. The taxpayer vs government money thing is a perfect example of dog whistle politics. See https://en.wikipedia.org/wiki/Dog-whistle_politics

The problem is that he's stealing hard-earned taxpayer money to create a new economy of reusable rockets, solar energy and clean cars when he should be stealing hard-earned taxpayer money to mod his diesel engine for rolling coal sessions on the highway.

Musk must really be pissing off the old guard to get such bad press, jeez.

I'm surprised they didn't even mention Musk's response, The House Always Wins http://www.teslamotors.com/blog/house-always-wins Previous discussion https://news.ycombinator.com/item?id=8643529

ConAgra's secret? X.XB in Government Subsidies.

Exxon's secret? x.xB in government subsidies.

Apple's Secret? X.XB in Government Subsidies.

Your House's Secret? 188.7B in Government Subsidies. (the home interest deduction is, itself, one of the largest subsidies there is, and probably the biggest gateway into home depot)

Point being: Government Subsidies are huge. Saying it's anybody's secret is just sensational.

What's remarkable, actually, is how little we know and how hard it is to count up all the subsidies -- especially when you count tax expenditures.

http://www.pewtrusts.org/en/archived-projects/subsidyscope is a good place to learn about this stuff. But dated.

A billion here, a billion there, it adds up and soon you're talking real money.

Really, talking about a billion dollar subsidy is probably not worth debating in Congress, since its a trivial part of the national budget. A billion is the kind of small change we SHOULD be tossing around to encourage innovation, support an embattled industry or sustain a hard-hit segment of our population.

Cool thing about the article is that it already contains a link to Musk's response: 'If I cared about subsidies, I would have entered the oil and gas industry' http://www.latimes.com/business/autos/la-fi-hy-musk-subsidie...

Encouraging the kind of things he does, is a much better use of government subsidies than all the subsidies for oil and gas, or for big corporations in general.

The government should be a VC when it is in the public interest, i.e. the private VCs are skittish about a filed. DARAP gave us the Internet and driverless cars, for example. Like private VCs, they've had dramtic failures too like A123 Battery.

Can you name that billionaire made the internet with taxpayer money?

He is making great progress with tax payer's money.

The problem I have with Musk's use of government money is that his companies most reliant on the money are still reporting net losses after being in business for a decade. Maybe in the "start-up" world of hoping to make a big exit he is successful, still, I don't know how anyone can call this Musk being successful. Maybe he will be down the road, but I don't see it that way.

I'm originally from Reno NV, which will be directly impacted by the gigafactory. I think NV took a huge gamble on the tax incentives there, including cutting huge amounts of funding for other, much more diverse industries. As NV has seen, focusing on one or two extremely unstable industries (gambling and mining) can quickly put you in a bind when things go south, the economy, price of rare metals, etc. They are simply banking on Tesla as a third pillar of industry, one without a track record of returning on its investment in the form of profits. If things continue on the same track they have been with Tesla, I don't see NV getting a very good return on investment in the long run.

Also, no one is taking into account the skilled manufacturing workforce (or lack thereof) in Reno, the existing manufacturing going on there, and the fact that either people will need to either come from out of state, or be poached from just about every manufacturing company in the area to supply Tesla's workforce requirements. If manufacturing in Reno is brought to its knees to support Tesla how is that any better than not having Tesla there in the first place?

Finally, the location of the gigafactory is going to lead people to live in Reno, but the factory is in a different county. Therefore the burden of all of the extra children, traffic, government services, etc., will be focused in an area not receiving any money from the overall package for those services.

While I hope someone besides Musk and his shareholders can take part in the upside of all of this investment, I personally don't see it coming to fruition anytime soon.

Well, sometimes the country can't just put its trust into private investors to really accomplish something in innovation. There is already a lot of money sleeping, sometimes off shore, so I don't think it's really relevant to judge this aspect.

It's the nature of current capitalism and how big players just won't even try going towards the electric car because it's a risk for their business model. If you want to go forward, sometimes you have to force your hand, and it involves using government money. You could also argue that putting a flag on the moon is worthless too. Sometimes the answer is not in accounting. Markets and money are just that, tools. You can't always think in a logic that revolves around capitalism, you have to look further than that.

Of course the companies most reliant on the money are still reporting net losses. If they weren't reliant on money it'd be because they were turning a profit. So perhaps a more succinct and accurate statement is that you have a problem with government investments in long, as-of-yet unprofitable (earnings) companies. You don't like the long-shots that take a long time to potentially mature. And I probably wouldn't either if they were near my town.

I'm not against long-shots that take time to mature, as long as those are part of a diversified investment portfolio.

The legislators gave up or severely decreased tax incentives to other industries to make up the gap. Could Tesla be worth all of that in the long run? Possibly, still, I think it would be wise to continue to invest some of the money in other ventures rather than putting it all in on Tesla.

I imagine NV sees this as a kind of loss leader. If they bring in Musk this, it is expected, could kick off more innovative industries which would diversify the NV economy.

The hope is, that like zappos, this could kick off more technology oriented industries to consider NV as a possible location for their business. You don't want your state to become the Rhode island --the one which does little to diversify and attract new industry.

I agree, I'm just not sure that having to give up existing tax incentives to other industries to fund a $1.3B subsidy to one company is the way to go about generating new industry in the area.

There is a small group of start-ups in the area that seem to be doing well for themselves and every so often there is talk of Reno becoming the next Silicon Valley, so I think the SAAS sector is covered.

Reno also has Sierra Nevada Corp, which was in competition with SpaceX and Boeing on some space related ventures for whatever that is worth.

as employees are paid in county X and live in county Y, doesn't the second county receive tax side effects from the employees? Such as property taxes and secondary spending?

Perhaps Nevada gave too much away (or not?), but the tone of your argument seems to suggest that you think NV and Reno would be better off without the gigafactory. Apart from 'they were bribed' what reasons do you think your state/county lawmakers had for making this deal? What data and evidence did they consider, and how is your opinion different?

I don't think it would be better off without the gigafactory, I think it would be better off without such a steep investment in one company.

Sure, there will be tax and other money spent where the people live and work, but I'm not seeing how that will be enough of a boost to the economy to justify $1.3B in incentives given to Tesla, especially when their ask was for less than half of that amount.

You are seriously arguing against more jobs in an area to protect current employers?!

Let's compare this with oil subsidies, and ask american if they want to see some kind of alternative.

Oh and let's not even ask americans, democracy and science don't really go together...

Alternatively with a different slant: Government policies designed to encourage private sector development of technologies in various areas have done just that. Also, Elon Musk is pretty good at utilizing them.

There is a separable issue of whether or not such policies have the long term effect they target.

This stuff is really easy to wrap up in political hyperbole to the point that it evades useful discussion.

$4.9B to jump-start several industries sounds pretty cheap to me. Helping develop commercially risky but highly important areas of technology seems like one of the roles government is best suited for, and Musk's companies don't seem to be taking those subsidies and funneling them to investors/management - they're being invested in people and tech.

Relevant commentary[1] on his Solar City venture in Buffalo NY

[1] http://www.buffalonews.com/opinion/buffalo-news-editorials/e...

I'm all for subsidizing new ventures. Maybe the government shouldnt give away the subsidy for free, but in exchange for some % of the company. At least that way, we could repay some of the debts when things like spacex/tesla/solarcity succeed.

I am so sick of this being posted. We know. Energy, Defense and Transportation are heavily subsidized in US.

> Elon Musk's Empire

Energy, Defense, Transportation.

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