Tuesday, October 18, 2016

FAILURES BUILT BY MUSK, CRONIES COST TAXPAYERS BILLIONS



By Dean Chambers

Steve Jobs did it the right way.

 He invented products, such as the iPod or the iPhone, that were far superior to what was already available that they rapidly grew in demand and dominated the market in their class of products. 
Apple made billions selling tens of millions of iPods and iPhones, making Jobs (and Apple stockholders) quite legitimately wealthy in the process. 

But Elon Musk, who has followed a clearly different route on his way to becoming worth an estimated $13 billion, is clearly no Steve Jobs.

Elon Musk has followed an entirely different path to wealth, one that involves creating three companies of which two them are not economically viable nor have they won significant market share for their products while the third is entirely dependent on government largesse for its very existence. 

Musk’s company that makes electric cars, Tesla motors, loses between $4,000 to as much as $14,700 per car it sells for well more than $70,000 each. Tesla has lost almost half of its overal value since the end of 2015.

Musk has worked out a deal with the government of Nevada to get $1.3 billion to make batteries for the Tesla cars while he convinced California politicians to subsidize Tesla $126 million to develop energy storage technology. Federal and state politicians, who want to convince the voters they are supporting such “cool” environmentally beneficial projects like building expensive luxury electric cars for the very wealthy who can pay more than $70,000 for them, are the best friends Elon Musk can find to help build his business dreams at taxpayer expense. In total, Tesla has received about $2.391 billion in government benefits.

Even better than Tesla for convincing politicians to hand over taxpayer money to Musk and is cronies is his solar panel company called SolarCity. In the last year, the failing SolarCity is fast going the way of Solyndra, having lost more than 60 percent of its overall value. This is despite getting more than $2.5 billion in subsidies from state and federal governments.

Elon Musk has leveraged great relationships with politicians and other cronies to build his heavily-subsidized companies and that is no more true than in the case of his third company, the space exploration company SpaceX. Arizona Republican Senator John McCain worked tirelessly on behalf of Musk, who has received many donations from Elon Musk. McCain not only worked hard to make SpaceX could bid for NASA and U.S. Air Force launch contracts, but he changed the rules of the process to block United Launch Alliance (ULA) from bidding, which assured SpaceX the monopoly on those contracts since no other company is currently qualified to provide such launch services.

This virtual monopoly on U.S. government space launches, thanks to Sen. McCain, had brought in $5.5 billion in contracts to SpaceX. With an insider connection and pipeline to that much taxpayer money, there is no way SpaceX could be anything but profitable. As a result, the Department of Defense’s Inspector General is investigating allegations that McCain corruptly worked with Musk to outlaw use of the Russian-made rockets used by ULA. The McCain-Musk relationship is not the only one in which Musk’s support for key politicians has netted subsidies and contracts for one or more of his three companies.

“Musk took notice. A prolific political donor, he began pouring money into the campaigns of key state lawmakers. On November 7, 2012, he donated $1,000 to state representative Rene Oliveira (D). Two weeks later, he gave state senator Eddie Lucio Jr. (D) $2,000, The Washington Free Beacon reported, “The next month, the Associated Press reported that Lucio and Oliveira were working to secure state backing for a potential SpaceX launch pad in Brownsville.”

Likewise, Texas state senator Tommy Williams helped get funding for a SpaceX project into the budget, not too long after Musk had given $2,000 to Williams’ campaign. A $1,000 donation to Jim Pitts, the chairman of the Texas House House Appropriations Committee, no doubt helped the cause as well.

“It is not Musk’s first foray into the political process. Two of his companies, Tesla Motors and Solar City, have received extensive backing from the Department of Energy. As in Texas, Musk has made high-dollar donations to major national politicians, including President Barack Obama,” The Washington Free Beacon reported.

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2 comments:

Anonymous said...

Let's not forget Tesla lobbying Republicans to push for laws to be changed allowing Tesla to sell direct to consumers in Texas- a move where they wanted to destroy auto dealerships throughout the state. When Tesla was challenged to forego the millions upon millions they get for "green incentives" their only counter was how "free market friendly" the policy would be.

Right, Tesla. You believe in the free market but also want to be bankrolled by the government to monopolize entire industries. Nice try.

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