LA Times does some Tesla Bashing

i suppose the times were trying to be even handed, but that's really out there. funny how everyone plays the subsidy card when it suits their purpose. this country has a huge budget. a lot bigger than revenue, unfortunately. if most were aware of where the money was going, they wouldn't be happy. ignorance is bliss.

 

Almost blasphemy for CA...

 

I thought i would wait for tesla's response before commenting.

Musk went on CNBC to talk about the story.
Elon Musk: Incentives not necessary but helpful

His points subsidies are over many years. Add up all the subsidies for tesla + solar city over all the years its only about 1/1000 of oil and gas subsidies this year alone.

CNBC helped him along and showed much higher subsidised companies in an infobox. This includes exxon that should get $4B this year alone. Timing is good for the piece as their is an oil and gas conference going on, so journalists now will ask about those subsidies.

 

It was interesting when cnbc asked the same subsidy question to corelabs about oil and gas subsidies.
His answer was there are no direct oil subsidies, but there are business subsidies that tesla and oil companies get. Oil companies get more than tesla because they are bigger. He estimated because of the physics of the oil fields and lower investment, US oil would decrease by the end of the year, and prices would head toward $70/bbl.

He didn't talk about the bigger direct subsidies for solar city, probably a good move as that could cause anger. 30% direct solar subsidy looks like its going away, and solar is tiny compared to oil.

Two of musk's points,
1) Nevada manufacturing subsidy is over 20 years and they actually have to produce to get it.
2) ZEV mandate is not tax payer funded. It is other car companies that would rather pay tesla than to build their own bev. The credits were there long before tesla existed, but tesla is getting the cars out. Every model S and X sale goes toward funding the more affordable model 3.

I sort of agree with API on most of the subsidies. Oil companies seem to pay more taxes than most ofther american companies. you need to get rid of them as a total tax reform. Perhaps oil and coal should get taxed more for their externalities, but that is a different question.

 

Not according to this study:

The Surprising Truth About Oil and Gas Company Corporate Tax Rates - US News

At Taxpayers for Common Sense, we recently analyzed the federal income taxes paid over the last five years by some of the largest U.S.-based oil and gas companies. What we found surprised us.

We set out to document the federal tax rate of oil and gas industry leaders because we knew the claim made by the American Petroleum Institute – that the industry pays an income tax rate of 44.3 percent – is misleading. The claim is misleading because the institute uses it in the context of reforming the federal tax code, but the figure includes all foreign, state and local taxes, as well as federal. When we looked at the financial statements of 20 of the largest oil and gas companies, we found this group paid an average federal tax rate of 24 percent on its U.S. income.
...
What was surprising, though, was the extent to which these companies were able to delay or defer the payment of the federal taxes they accrued. Most of the companies in our study deferred more than they actually paid. When the deferred taxes are subtracted from the amount these 20 companies owe, their average “current” tax rate drops to 11.7 percent. The independent oil and gas companies in the bottom half of our list, excluding the ones that recorded losses for the period, deferred almost all of the federal income taxes they accrued during the last five years, reporting an average current tax rate of just 3.7 percent.
...
Moreover, oil and gas companies don’t need government subsidies. Just the 20 companies in our study reported in excess of $175 billion in total deferred tax liabilities at the end of 2013. They do not pay any interest to the government on this amount, even if it takes 20 years to pay it. The oil and gas industry is one of the most profitable in the world – the five largest oil and gas companies reported more than $104 billion in profits last year – so it does not need special treatment in the tax code.

 

The fact remains that there is a much smaller market for any of Musk's 'stuff' -- cars, solar or rockets -- without subsidy, indirect though it may be. Absent the $$$ billions in subsidy, Musk's 'stuff' is uneconomic to the end-user and the overall demand therefore much smaller.

 

I don't think that is true anymore for tesla. Let's face it the zev mandate is the biggest subsidy for tesla. It has gotten tesla investments from mercedes and toyota, and r&d business from them, as well as cash from gm and honda. I am not sure if tesla would even have the model S out yet if not for the mandate. They might still be selling the roadster;-) Now if you look at that from a taxpayer point of view, taxpayers got bevs cheaper than if they had to relly on the oligopoly of only the big players. Hell we may still have the hummer, if the US still had large trade barriers to imported cars.

Now the subsidies, especially that 20 year 1.3B from nevada are probably necessary for the model 3 and lower battery costs. Add up the subsidies for the toyota truck factory in texas, the corrolla factory in mississippi, and the headquarters subsidy in texas and tesla is not getting a big bonus per job. All of those subsidies were simply moving jobs from indiana and california to texas and mississippi.

Solar city, absolutely it wouldn't exist without the subsidy. Then again solar city is doing better with the solar subsidy than bp or ivanpah, so unless your point is you only want huge corporations to do solar, I'm not sure of the problem. Probably reducing government regulations, ending the tarrif, and ending the subsidy would help solar city.

Absolutely there are a lot of subsidies in our tax code. I would start cutting with carried interest, instead of solar energy though.

 

electromagnetic radiation.

 

Oh, Musk's 'stuff' will kill people just as dead if not deader than pulmonary illness.

Inadvertently of course. Just wait for the SpaceX, battery and transportation-related loss of life.

Man-rating systems is a deadly business.

 

Really? Who cares what the Times says...and besides if you want to bash anyone, then bash the Government for subsidizing, not the recipients. Hell...if they want to give me money, I'll take it too.

 

Let's start with the first one solar.
1) Solar subsidies of 30% are given to all customers. Since Solar city puts up the panels, and Tesla uses them for super chargers, we could say they "get" the 30%.

Now singling out Solar city and Tesla is rather ludicrous for this. Compared to solyndra and ivanpah there is not any abuse, they are providing solar at a much lower cost to the federal government. Here was the LA times on ivanpah in 2012

Taxpayers, ratepayers will fund California solar plants - latimes
But it actually turned out worse.
Ivanpah: Time to End the Subsidies | Cato @ Liberty

LA times needs to not pretend that tesla and solar city are the pigs at the trough that NRG, Google, GE, and Buffet's Berkshire Hathaway are. Solar city may actually force them to take less rate payer and taxpayer money. I don't see anyone dying from these solar installs.

Still Solar costs are higher than they need be because of the tarrif on imported PV cells, and the regulatory hurdles. Put out a $50/ton tax on coal, streamline the regulations, force utilities to pay fairly for solar electricity, end the tarrif, and the subsidies, especially those nasty targetted ones for Ivanpah could be put to bed. Solar is the most subsidized energy in the US on a per kwh basis, but we also have many things making it more expensive than it needs to be to install and put on the grid.

1) spacex mainly because the russians would not sell him rockets. The money the government gives space X is less than they would have given the russians more money. It has in effect saved tax payers money. Now in economics you either want to cut space missions, which may go private like space x, in which case you applaud or free enterprise and american ingenuity. Will more people die because Space X is doing it and not the Russians? That is doubtfull. Time will tell

2) Tesla's main subsidy is the ZEV credit. Now I happen to disagree with that implementation, but it is mainly a transfer payment from other car companies to tesla. It does have manufacturer credits that all manufacturers get, especially the juicy 20 year one in Nevada. Then we get to the plug-in tax credit, which tesla has used more efficiently than the other automakers. I'm not sure why you would single them out and not nissan, gm, ford, toyota, bmw (takers of the credit in that order). Its a tiny thing. The carried interest credit, mainly a loophole for the super rich, costs $11B/year, that plug-in credit will cost about $1B for all manufacturers this year and almost nothing by 2020. As for deaths, tesla's excellent safety appears to have protected its drivers in accident that lesser cars would have surely killed them. I doubt you can find a single death in a tesla that would not have occured had the company not existed.

 

Lutz takes another swipe at Tesla

 

Let's take the comments 1 by 1

1) Lutz - powerwall is worse than lead acid. For back up or storage. While this was true at one time, it isn't true right now. Powerwall is less expensive when you include lifecyle and maintenance. Not that Lutz understands technology. Now powerwall simply lowers the risk of the gigafactory, I would not expect it to add much to tesla's valuation, but its not a trick like lutz once called the prius (also wrong about the tech then as now)

2) Lutz - "infinitesimally small" by global standards. "The prospects for making money on the cars is pretty slim," he said, and claimed the business was "hemorrhaging cash."

Well since mr. Lutz took a global auto giant and sent it to bankrupcy I wouldn't expect him to understand profit margins. The model S is very profitable 27% gross margins last quarter. Now they are burning cash, absolutely to invest in the model X due out in around 3 months, and the model 3 and the gigafactory. Those are the things tesla is using the profits and bond market to invest for growth. Meanwhile Lutz is involved with via motors an much smaller and less profable conversion shop.

3 Lutz - The Gigafactory doesn't help Tesla either, according to Lutz. The long-time auto exec believes that making lithium-ion batteries is a largely automated process. The only way to get a competitive advantage would be to somehow obtain the raw materials significantly cheaper.

Well Lutz was at gm when they sold the ovonics battery patents to texaco. I think he knows a lot about how to make batteries more expensive but doesn't quite understand how to make them cheaper. Tesla already has a cost advantage on batteries, and the gigafactory should drop the price enough to release the model 3. If tesla doesn't build it, no one else would do it fast enough for capacity for tesla's schedule. A chief bottleneck in 2013 and 2014 is panasonic could not deliver the batteries tesla wanted.


There we go, 3 for 3 and bob lutz is wrong. That should not surprise anyone that drives a prius.

 

does he like anyone but himself?

 

Be careful if you ask anybody that question...

 

Fifty years from now, when Telsa buys the remains of GM, those comments would be even more fun to read.

 

This is one of those ongoing arguments, and we won't lay it to rest here. My focus is on the underlying question of what the unsubsidized cost of an item would be, because that's a major indicator of how many resources were consumed to manufacture that item and get it to the customer. In other words, fundamental cheapness is an essential "green" factor.

Today's Tesla's are toys for rich people, subsidized by the rest of us, and (considering the cost of manufacturing) very un-green. If you want true green, buy a Prius if you drive a lot, or a cheaper subcompact if you don't.

If electric cars become affordable and versatile, maybe that will justify this early era of subsidies. But I remain skeptical. When the government is giving away money, hucksters always show up to take that money. (I'm not saying all takers are hucksters; just that hucksters are always there, and they're better than anyone else at taking the people's money off the table and pocketing it.) I appreciate that Musk/Tesla is actually building neat cars instead of vanishing without a trace (like Solyndra or Range Fuels or countless others), but still...

If Tesla Would Stop Selling Cars, We'd All Save Some Money - Forbes