This 'its all subsidies' is just nonsense that isn't true. Its history written by people who people who hate Musk.
The claim that SpaceX and Tesla are only relevant because of govenrment subsidies is just bad business history, its simply not accurate. Or at least its not accurate unless you take the position that all cooperation only exist because of government.
SpaceX got saved in 2008 by getting the COTS contract from NASA, that is clear true however, it wasn't billions and that money was not paid to them directly. They had to achieve checkpoints to get the money. Getting that contract only allowed them to raise the money.
The government certainty has been a big costumer of SpaceX but they got these contracts because they beat the competition and offered far lower prices, not because Musk is good with behind the scenes politics. They competed successful both in the domestic and the international market.
And for Tesla its just false. Tesla got the same tax exemptions any large company gets when investing in a region that just how it works in the US and that's not cash in Tesla account, but rather lower operating cost for the next 20 years. To even attempt to make the claim, you have to basically look at the fuel credit system. But that system isn't a direct subsidy for Tesla, its just the rules for the car industry as a whole. Any company can profit from that system if they want to, some did others didn't. For a few years there was a EV tax credit but only for a very limited number of vehicles that Tesla quickly blew past, but again that was for all car companies and it was a tax credit for people who buy cars, so it wouldn't help Tesla as they were hemorrhaging cash.
Tesla got a loans from the DoE for Model S production. This loan was specifically to set up Model S production, and by that point Tesla had a few options to finance production it was not a bail out because they were running out of cash. Tesla paid this loan back and the govenrment made profit. Under the same program Ford and GM also got much bigger loans and have still not paid them back, they had to ask the govenrment multiple time to extend the loan period).
And the claim that Musk business constantly hemorrhage cash is also mostly false. If you sit down and compare SpaceX to all the other rocket companies before and since, you will discover that SpaceX is was incredibly low cash operation. To give you some comparison, Virgin Orbit spent something like 400M to get to Orbit with a small rocket. SpaceX had something like 100M. RocketLab spent about the same amount as SpaceX but for a smaller rocket with less potential for upgrades. Other companies like Relativity have received billions in funding before they ever launch a rocket. Firefly went bankrupt and then got 300M of millions of investment to launch their first rocket.
What SpaceX did and with how little cash they did it, in a political situation way less friendly then what it was a decade later is astonishing.
We can make the same argument for Tesla. Compare Tesla to the EV Boom that happened in the last 4-5 years, all these other companies like Nikola, Lordstown, Rivian, Lucid and so on were swimming in cash often getting 100s of millions and sometimes 10s of billions in cash. In hindsight and what we are seeing now is that Tesla was incredibly cash and capital efficient.
I never said that it was all subsidies. I said that his other successful businesses have been propped up by government cash, which is objectively true. If it hadn't been for government contracts or tax exemptions there wouldn't be a SpaceX or a Tesla, or they would have struggled way more and been a fraction of the size. It's not necessarily a bad thing that his businesses were enabled by big government help, as there is a clear national interest in having more space travel and electric car options.
The problem is if Elon has become too overconfident in entering difficult business areas because his companies have been saved multiple times by government contracts and deals. Does he start to think he can save any business in any difficult space because he pulled off SpaceX and Tesla? Is the government going to bail out Twitter for national security interests if he messes up?
Comments
This 'its all subsidies' is just nonsense that isn't true. Its history written by people who people who hate Musk.
The claim that SpaceX and Tesla are only relevant because of govenrment subsidies is just bad business history, its simply not accurate. Or at least its not accurate unless you take the position that all cooperation only exist because of government.
SpaceX got saved in 2008 by getting the COTS contract from NASA, that is clear true however, it wasn't billions and that money was not paid to them directly. They had to achieve checkpoints to get the money. Getting that contract only allowed them to raise the money.
The government certainty has been a big costumer of SpaceX but they got these contracts because they beat the competition and offered far lower prices, not because Musk is good with behind the scenes politics. They competed successful both in the domestic and the international market.
And for Tesla its just false. Tesla got the same tax exemptions any large company gets when investing in a region that just how it works in the US and that's not cash in Tesla account, but rather lower operating cost for the next 20 years. To even attempt to make the claim, you have to basically look at the fuel credit system. But that system isn't a direct subsidy for Tesla, its just the rules for the car industry as a whole. Any company can profit from that system if they want to, some did others didn't. For a few years there was a EV tax credit but only for a very limited number of vehicles that Tesla quickly blew past, but again that was for all car companies and it was a tax credit for people who buy cars, so it wouldn't help Tesla as they were hemorrhaging cash.
Tesla got a loans from the DoE for Model S production. This loan was specifically to set up Model S production, and by that point Tesla had a few options to finance production it was not a bail out because they were running out of cash. Tesla paid this loan back and the govenrment made profit. Under the same program Ford and GM also got much bigger loans and have still not paid them back, they had to ask the govenrment multiple time to extend the loan period).
And the claim that Musk business constantly hemorrhage cash is also mostly false. If you sit down and compare SpaceX to all the other rocket companies before and since, you will discover that SpaceX is was incredibly low cash operation. To give you some comparison, Virgin Orbit spent something like 400M to get to Orbit with a small rocket. SpaceX had something like 100M. RocketLab spent about the same amount as SpaceX but for a smaller rocket with less potential for upgrades. Other companies like Relativity have received billions in funding before they ever launch a rocket. Firefly went bankrupt and then got 300M of millions of investment to launch their first rocket.
What SpaceX did and with how little cash they did it, in a political situation way less friendly then what it was a decade later is astonishing.
We can make the same argument for Tesla. Compare Tesla to the EV Boom that happened in the last 4-5 years, all these other companies like Nikola, Lordstown, Rivian, Lucid and so on were swimming in cash often getting 100s of millions and sometimes 10s of billions in cash. In hindsight and what we are seeing now is that Tesla was incredibly cash and capital efficient.
I never said that it was all subsidies. I said that his other successful businesses have been propped up by government cash, which is objectively true. If it hadn't been for government contracts or tax exemptions there wouldn't be a SpaceX or a Tesla, or they would have struggled way more and been a fraction of the size. It's not necessarily a bad thing that his businesses were enabled by big government help, as there is a clear national interest in having more space travel and electric car options.
The problem is if Elon has become too overconfident in entering difficult business areas because his companies have been saved multiple times by government contracts and deals. Does he start to think he can save any business in any difficult space because he pulled off SpaceX and Tesla? Is the government going to bail out Twitter for national security interests if he messes up?