By now you should know X always has his smoking gun aimed at someone. I’ve even been made abreast of the fact that some citizens of this republic are sleeping with both eyes open instead of just one. If you need another reason to be vigilant and join their ranks ponder this next…
I want to train my fire on one Elon Musk, the CEO of Tesla. Turn on a finance show, read a paper, or just listen to small talk and you hear people placing this guy in the same category as Bill Gates, Steve Jobs, Warren Buffett and Larry Ellison. I have never really understood it, Gates, Buffett, Ellison, Jobs were all great innovators and leaders of companies that essentially print money to this day. Hence as William laid out in a different post they are all quite wealthy. Musk on the other hand runs a company (Tesla) that is basically doing what Amazon.com does; they are selling what is essentially their take on the future.
Tesla—if you’re wondering—is behind the electric cars that you see every once in a blue moon on the road. Also they own a network of charging stations, mostly in California. However, Tesla has never managed to be profitable, yet their stock has surged over the last few years. I wondered aloud, why is this?
I must say I am fascinated by Musk in the same way other people are. He speaks eloquently and always talks like a slick sales man selling a promise of prosperity just beyond the horizon. He has some very innovative ideas like trying to make an all-electric car go mainstream. He wants to take cars to space through his SpaceX program, and bought SolarCity—who is the largest solar panel provider in the USA.
Here is where the fascination stops and reality sets in. Musk fancies himself as an Amazon.com style disruptor, truth be told he is anything but. SolarCity is run by his cousins, both of whom just left the company I may add. Also in 10 years of operations, despite being the #1 rooftop solar company, they have yet to turn a profit. Tesla is simply promising a future that is unrealistic at best and the next Enron/Solyndra/Fisker at worst. In a daring and in my mind foolish gambit, Musk rolled all the SolarCity debt into Tesla just to keep his empire afloat.
Allow me to explain my thesis. Musk and his corporations are fully subsidized by you and I; Joe Taxpayer. Why do cities and states keep sending money to Musk, especially since it’s a failing enterprise? Easy answer, Musk is very good at playing the game! He is very close to the Governor of New York, Andrew Cuomo. This relationship paid off handsomely; the state gave SolarCity $750 million to build a large factory and only charges SolarCity $1 a year for rent. Seems pretty lucrative for a company that still cannot post a profit. SolarCity and Tesla don’t just play in New York, they have been very active in California, Arizona, and a handful of northwest states. (Of course California is fertile ground with funding sources like AB-32—thanks Arnold) Reno built a battery facility for his Tesla subsidiary that I am sure was at a cost very little to Musk.
In total, Musk and his cronies have received north of 5 billion in subsidies and tax breaks over the past decade, a total that interestingly enough amounts to about half of Musk’s net worth. However that’s not even the most brazen thing Musk has done.
Now Musk is playing in the political game. He donated over 3 million into a race for public utility commissioner in Arizona. He was the only donor. I’m sure he is getting his people on the commission to advance his SolarCity subsidiary. He can’t afford another fiasco for SolarCity like Nevada. Source: Nevada solar power collapse
My issue: he is doing this lobbying with money taken from the taxpayers. Musk is enriching himself while making the public responsible if he fails. Great gig, where do I sign up?
So why does the stock of Tesla keep going up if it is a Ponzi scheme? Easy answer, right now the words “disrupter” and “green” are buzzwords that are dominating the political and financial scene. Musk as I mentioned earlier is very gifted at promising investors and politicians that success is literally just beyond that corner or just over that horizon. Most all of these political and consultant types eat this stuff up; hence Musk is able to get a factory in Buffalo, New York for free, or a battery plant for next to nothing in Reno. Musk is the current poster child for the Liberal belief that government creates jobs.
Wait until Gavin Newsome gets elected in California, the money spigot may not shut off for 8 years! Chiefly my concern is this, while electric cars may be the rage and solar may be good for the environment, why are we continuing to allow the government pick and choose what type of business succeeds in this country? This is because the liberals are able to successfully convince other politicos in the room to vote their way every so often. The Left in this country have a vision; Obama tried it with Solyndra and Fisker. Liberals would love to see everyone driving a Tesla Model S and have rooftop solar everywhere thus eliminating utilities and pollution emissions. As long as Musk is able to continue buying himself more time and earning more subsidies he will eventually become too big to fail, think that is his end game?
When Enron, MCI, and World Com failed, investors and those affected said they wish they would have known sooner. This was their warning then and mine now, I personally would not touch this company with a 100 foot pole. If you need more proof go to your local Home Depot, watch the SolarCity rep chase customers around the store in a desperate attempt to sign-up new clients. Oh, and if you do sign on the dotted line, don’t forget, Musk gets all those government tax rebates for “going solar”, you just get a bill for the next 30 years to pay your solar lease because he owns the equipment on your roof. It may not save the planet, but it allows Musk to live another day off of taxpayers like you and me.
I’ll be back with another hit piece soon,