This is a national tragedy:
Elon Musk has threatened to cease advising President Donald Trump on business issues amid reports that the United States is expected to withdraw from a major international climate pact.
The SpaceX and Tesla founder has been a longtime public advocate for the Paris agreement, an accord signed by former President Barack Obama — and almost every other major country — that seeks to reduce worldwide carbon emissions. Musk has even used his seat on one of Trump’s economic advisory councils to push Trump to stay on board with the accord.
Don't know which way Paris will go, but I've done all I can to advise directly to POTUS, through others in WH & via councils, that we remain
— Elon Musk (@elonmusk) May 31, 2017
Will have no choice but to depart councils in that case
— Elon Musk (@elonmusk) May 31, 2017
Putting Elon Musk in a position as a business adviser was nothing but an obvious PR move. Unless the government can give itself enormous subsidies and hype the hell out of subpar performance (hey, maybe we have been using Musk’s model since the Roosevelt administration) it is difficult to see what he was going to bring to the table.
Tesla Motors Inc., SolarCity Corp. and Space Exploration Technologies Corp., known as SpaceX, together have benefited from an estimated $4.9 billion in government support, according to data compiled by The Times. The figure underscores a common theme running through his emerging empire: a public-private financing model underpinning long-shot start-ups.
“He definitely goes where there is government money,” said Dan Dolev, an analyst at Jefferies Equity Research. “That’s a great strategy, but the government will cut you off one day.”
The figure compiled by The Times comprises a variety of government incentives, including grants, tax breaks, factory construction, discounted loans and environmental credits that Tesla can sell. It also includes tax credits and rebates to buyers of solar panels and electric cars.
A looming question is whether the companies are moving toward self-sufficiency — as Dolev believes — and whether they can slash development costs before the public largesse ends.
Tesla and SolarCity continue to report net losses after a decade in business, but the stocks of both companies have soared on their potential; Musk’s stake in the firms alone is worth about $10 billion. (SpaceX, a private company, does not publicly report financial performance.)
Musk and his companies’ investors enjoy most of the financial upside of the government support, while taxpayers shoulder the cost.
Some are even less complimentary:
Tesla borrowed Venture Capital (VC) money from Elon Musk at VC rates. It borrowed VC money from taxpayers at non-VC rates
Tesla needed $500MM to get started in 2008. The US Government lent $465MM to Tesla at 3% interest under its push for Green Energy. Elon Musk lent the company $38MM at10% interest plus stock options. Here are the profits on those loans:
- Elon Musk’s $38MM generates profit of $1.4BB, or 3,600% ROR- a VC payout
- Taxpayers’ $465MM- generates profits of $12MM or 2.6%ROR- not a VC Payout
Taxpayers took VC risk without VC returns. The table is set for Elon to arbitrage the Government’s largesse much more. All in, the US Government committed about $4.9BB to finance Tesla’s operations
Musk Gets More Government Money
Using Government loans, Elon Musk creates 2 more companies; SolarCity and SpaceX. He now controls three government sponsored clean energy companies financed by taxpayer money.
Tesla- makes electrical cars, develops technology for same. Loses money hoping for future profits
- Loans money to SolarCity via its own stock
- Borrowed $465MM from Gov’t at 3% and $38MM from Elon Musk at 10% plus stock options
- Does not make money
SolarCity- makes and leases solar panels to homeowners. Loses money hoping for a back-end profit
- Borrows money from Tesla
- Borrows Money from SpaceX
- Does not make money
SpaceX- will provide future service related to satellite launches. It makes money via prepaying customers
- Loans money to SolarCity at approx. 10%
- Borrows Money from Government at approx. 4%
- Makes money
Elon Musk now has 2 companies that do not make money. He has 1 that makes money from prepayments for services yet to be given. All are financed by the US taxpayer at ridiculously below market rates. The table is now set for financing using inflated currency (sound familiar?) in the form of Tesla stock to get real cash in Mr. Musk’s pockets.
The Daily Signal has an even lower opinion.
Already grossly subsidized, Musk’s SolarCity has become an albatross of waste, fraud, and abuse of tax payer dollars. As legitimate earnings and cash become even scarcer for SolarCity, its entanglement in the Tesla empire suggests that a drastic reckoning not only is imminent, but in fact emboldening Musk to become more outlandish and reckless.
Notably, SolarCity is run by Musk’s cousins, Lyndon and Peter Rive. During his chairmanship at SolarCity, Musk’s family enterprise has taken in billions of taxpayer dollars in subsidies from both the federal and local governments. But the subsidies and sweetheart deals were not enough, as losses and missed projections continued to mount.
Ultimately, rather than endure the embarrassment of collapse and further damage to the public image of Musk and Tesla, the cousins conspired to have Tesla simply purchase SolarCity this year. The conditions of the deal screamed foul play.
To say nothing of what sense it might make for an automaker to purchase a solar installation company, Tesla stockholders were being forced to absorb a failing, cash-burning company and pay top dollar to do so.
While cost cutting and corporate restructuring should have been the priority for a company swimming in debt and burning through available cash, SolarCity in fact has been doubling down on the failed model of taxpayer support. The desperate thirst for handouts has manifested itself in some of the murkiest political waters imaginable.
Thanks to Musk’s cozy relationship with New York Gov. Andrew Cuomo, a Democrat, the state has granted at least $750 million of its taxpayers’ money to SolarCity, building the company a factory and charging it only $1 per year in rent.
If Donald Trump was interested in representing Middle America and “draining the swamp” a parasite like Elon Musk should have been targeted for a federal fraud investigation rather than rewarded with a position as a White House adviser. His abrupt departure is due more to his realization that the hoped for trough of subsidies and grants from the Paris Agreement was not going to materialize than any concern about the environment.
The post Crony Capitalist Threatens to Quit Advisory Position Because Crony Capitalism Has Been Disrespected appeared first on RedState.
Read more here: http://www.redstate.com/streiff/2017/05/31/crony-capitalist-threatens-quit-advisory-position-crony-capitalism-disrespected/ by streiff Originally posted on http://www.redstate.com