Elon Musk hates government subsidies. His companies love them. – Grid News

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Elon Musk hates government subsidies. His companies love them.

Last December, Elon Musk beamed in from his new Tesla plant near Austin, Texas — a behemoth the size of 75 football fields with a crisp white factory floor — to a Washington, D.C., conference hosted by the Wall Street Journal.

Musk, appearing onstage on a jumbotron-sized screen, was quickly asked about the climate-friendly Build Back Better legislation that lawmakers were considering at the time.

Musk’s take: Kill the bill. “It might be better if the bill doesn’t pass,” Musk said, smiling as he spoke. The government “should just try to get out of the way,” he said.

“I’m literally saying get rid of all subsidies,” Musk said later, punctuating his comments. When Tesla started, “there were no [electric vehicle] subsidies at all,” he added.

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Musk has repeatedly expressed concern about how much the government spends and the many rules and regulations it places on companies. But Musk rarely mentions that his companies benefit from government help.

Tesla and SpaceX have received more than $7 billion in government contracts alone and billions more 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 have twice in recent years made the difference between the company posting a profit instead of a loss, according to an analysis by Trefis, a financial data firm.

These practices highlight how Musk’s idealism can contradict his business dealings — or even, in some cases, statements made by Musk himself. Despite his “no subsidies” ideals, his companies usually operate pragmatically, maximizing their government tax breaks and lobbying aggressively for contracts. As Musk is poised to take control of Twitter, his work with the government highlights how lofty statements are often tempered by reality.

“When we talk about subsidies and economic development, he’s not innovative at all — He follows the same practice that everybody else does,” said Kasia Tarczynska, an analyst at Good Jobs First, a nonprofit organization that researches and advocates on subsidies for jobs.

The factory where Musk did the Wall Street Journal interview in December is itself an example of Tesla following an existing corporate playbook to maximize tax breaks.

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Tulsa, Oklahoma, rolled out 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 building the plant in Austin, Texas, Nashville, Tennessee, or Tulsa, Oklahoma, which rolled out an elaborate bid for Tesla’s business that included painting a seven-story statue of an oil worker to look like Musk. Texas, meanwhile, offered $60 million in benefits, some of which came from the local school district, which capped the value of Tesla’s property in order to artificially lower its tax bill.

Tesla chose Austin for the site after courting both states. After the company picked Austin, Musk said during an interview with the podcast Automotive News that his employees’ preference for Austin was “a big factor” and their “top pick.” This caused speculation about whether Tulsa had been used to squeeze a more lucrative deal out of Texas.

The deal might wind up benefiting Austin, but it could also exacerbate existing problems like the area’s lack of affordable housing, said Margaret Gómez, a Travis County commissioner who was the only commissioner to not vote for the economic incentive package. (Gómez abstained.)

“People are very excited just because of the jobs,” Gómez told Grid. “We need to look at all angles of deals that we make because we’re essentially gambling with taxpayer money. If the deal turns out good in the end for people, great. But what if it doesn’t? How do we go back and make up all that tax revenue that we gave up?”

It wasn’t the first time Tesla had won major economic concessions from a state: New York gave SolarCity, a Tesla subsidiary, $350 million in cash and $400 million in loans to incentivize the company to move there in 2014, according to Good Jobs First. Nevada has given Tesla more than a billion dollars in tax breaks and incentives in exchange for building a factory there. It was the biggest such deal in the state’s history.

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SpaceX may not have made it without NASA

In 2008, Musk had sank $100 million into his space exploration company, SpaceX, and by his own admission things were not going to plan.

He’d allocated himself enough money to try launching a rocket three times. But SpaceX’s first three launch attempts did not reach Earth’s orbit. The company was alive “by the skin of its teeth,” Musk said later, as was Tesla, which had been operating for five years and was only just starting to produce cars. He sank more money into each business but was running out of funds.

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It was really the NASA contracts that got it through those early years.

Musk’s fortunes began to change that fall, when SpaceX succeeded on its fourth rocket launch. What followed was a $1.6 billion contract from NASA to resupply the International Space Station.

Musk was later asked about getting that news in an interview with “60 Minutes.”

“I couldn’t even hold the phone. I just blurted out, ‘I love you guys!’” said Musk.


“They saved you — financially and even emotionally,” said correspondent Scott Pelley.

When a clip of the interview went viral on Twitter in 2021, Musk reiterated his feelings. “I do love NASA, always have,” he tweeted.

NASA has since given SpaceX $5.4 billion. The relationship not only earned SpaceX money but also respect and trust in the industry, said Laura Forczyk, a space consultant.

“SpaceX is newer, but it’s proven itself primarily through those contracts,” said Forczyk. “It was really the NASA contracts that got it through those early years.”

Tesla also got off the ground with help from the government: a $465 million Energy Department loan issued in 2010. The funds were double the amount that Tesla raised when it went public that year and drew criticism from politicians like Mitt Romney, who in 2012 hit at President Barack Obama for his investments in green energy, comparing Tesla to Solyndra and calling the company a “loser.” (Musk has argued that Tesla would have succeeded without the loan, saying the company was “bailed in, not bailed out.”)

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Tesla has continued to make significant money off electric vehicle manufacturing credits that the company earns for making its cars and sells to companies that produce fewer electric vehicles. Tesla has sold more than $6 billion in such credits over time, according to a Grid analysis of company financial disclosures.

“In the early years of Tesla, this meant a lot,” said David Rapson, economics professor at the University of California, Davis. “These credits to the tune of billions of dollars would have been very beneficial in terms of relaxing their capital needs.”

Whatever his criticisms of the government generally, Musk has repeatedly said it should play a role in helping to develop space travel to Mars, which is also a personal mission for him.

“It’s not necessary that I think the government shouldn’t exist, or that there are not good things that the government can do, or things that are necessary for the government to do. You know, for example, science programs where we send a probe to Mars,” Musk said during his Wall Street Journal summit interview. (He also slammed existing government funding for infrastructure but professed that in the future the country will need to construct more double-decker freeways and tunnels — the latter being the focus of another Musk enterprise, the Boring Company.)

SpaceX is no longer just a NASA contractor. Its expansion grabbed headlines earlier this month when the Washington Post obtained documents showing the United States Agency for International Development had spent millions of dollars to purchase the company’s Starlink internet terminals to send to Ukraine, despite a SpaceX executive previously saying that the terminals were not funded by the U.S. government.

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But SpaceX doesn’t just get money from NASA. It has even more business with the Defense Department, which has contracted nearly $2 billion worth of work to the company.

In January, SpaceX was awarded $102 million for work on using rockets to transport cargo — a yet-to-be-achieved feat that would greatly speed up the transport of military equipment, and maybe someday soldiers, around the world. Other military spending on SpaceX has been for the company’s Starlink satellite business, which was contracted to develop a satellite capable of tracking missiles in 2020.

Musk’s companies are lobbying for more

While Musk might say his team didn’t think much about the Build Back Better bill “at all,” lobbyists hired by Tesla did.

Public disclosures show Tesla and SpaceX spent close to $3 million in 2021 lobbying the federal government on a range of issues, including the Build Back Better and infrastructure bills. (Tesla also spent $1.5 million to lobby state governments last year, according to the tracking website OpenSecrets.)

Tesla’s lobbyists include Obama-era former employees at the Energy Department and the Labor Department, as well as a former aide for Republican House Minority Whip Steve Scalise. One is a former aide to Democratic Sen. 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.

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Though Musk has very publicly said Tesla doesn’t need government subsidies, Tesla is a founding member of a group created by electric vehicle makers, Zero Emission 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 made domestically, like much of Tesla.

SpaceX has spent $700,000 on lobbying so far this year, slightly more than Blue Origin’s $560,000. The company’s goal is broad: the Defense Department budget, broadband internet and cybersecurity, according to disclosure documents. It has hired lobbyists such as Jim Green, a former Federal Communications Commission (FCC) head of intergovernmental affairs, and Adrienne Schweer, 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 could beam broadband into hard-to-wire areas. Among other things, SpaceX recently pushed the FCC to change the license for its satellites so they can 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 eventually approved SpaceX’s request, Musk had nothing but praise.

“FCC is fair & sensible. NHTSA & FAA too. 99.9% of the time, I agree with regulators!” Musk tweeted. “On rare occasions, we disagree. This is almost always due to new technologies that past regulations didn’t anticipate.”

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Thanks to Alicia Benjamin for copy editing this article.

Grid’s analysis of federal contracts used data from USASpending.gov and included the total obligated amount awarded to SpaceX and subsidiary companies in federal contracts since the company was founded. The analysis did not include subcontracts awarded. Estimates of tax breaks, loans and subsidies include those given to Tesla, Inc., and subsidiary companies, according to Good Jobs First’s subsidy tracker.