I’ve been a fan of Elon Musk for some time now. Why not, right? He builds spaceships and wants to colonize Mars, he builds electric cars that are green and great for the Earth, he wants to build a hyperloop, and so on.
If you go on YouTube and look at the comments on Elon Musk videos, or look at social media, or talk to pretty much anybody who’s heard of him, he’s made out to be a superhero. A real life Tony Stark.
Except… Well, except there’s something off about this. I mean, since when do the masses like capitalism or entrepreneurs? I certainly view them as heroes, but most people despise profit and business. How can the same people who ask for forced government redistribution of wealth also like Elon Musk and his projects? It just seemed like a cognitive dissonance was afoot.
So I did a bit of digging. It turns out Elon Musk is no capitalist hero. Oh no.
The Government Subsidies
Since Tesla has yet to make a profit in over a decade of business, I was wondering, how does he stays afloat? He takes massive amounts of subsidies from the government, that’s how. According to this article, almost $5 billion. And that article is a couple of years old now.
Take this excerpt:
“New York state is spending $750 million to build a solar panel factory in Buffalo for SolarCity. The San Mateo, Calif.-based company will lease the plant for $1 a year. It will not pay property taxes for a decade, which would otherwise total an estimated $260 million.”
Wow. Well dare I say, anybody can make a business like that! Hah. Get the government to use tax-payer money (stolen at gunpoint, need I remind you) to build you a factory, then lease it from them for a token $1 a year. What a joke.
The subsidies go on. I don’t need to list all of them. SpaceX also gets billions in contracts from NASA. I couldn’t find a good summary of how much is government vs. private now, but certainly most of the initial funding was government.
And the Gigafactory that is so famous for being the biggest in the world. That too is built with taxpayer money. $1.4 billion of it.
So Elon Musk has built two big companies using taxpayer money. Neither of which are profitable. SpaceX goes from making 0.2% in profits one year, to going into the red the next. And Tesla has never even come close to making a profit. Of course, to anyone who studies economics, this should not come as a surprise. Profit can only come to companies that have to actually fight for it. As soon as a government subsidizes a company, they’re no longer in a competitive market. The consequences of failure are removed, and so is any real incentive for success.
The lack of profit is a tremendously important point. Let me remind you what profit is: profit is the creation of value. If you take $20 in raw materials (say, you purchase some wood), and you create a beautiful table worth $100, you’ve not only made an $80 profit, you’ve added value to society.
And if on the other hand the result of your efforts is a reduction in value – if you consumed more than you created, then you are a net negative to society. A drain. The fact that in over 10 years Tesla has never made a profit and that they have taken billions in stolen taxpayer money from the government means that its existence is a negative, not a positive.
Okay, fine. So he hasn’t actually made a profit with any of the amazing high-tech startup ideas he’s been in the news for. But at least electric cars are good for the environment, right? Well…
Electric cars aren’t that good for the environment
This realization was quite disappointing for me. I hate air and water pollution. I hate what we’re doing to our planet. I haven’t strictly speaking needed a car so far in my life and so I don’t have one. I will have one later, as I’m no longer going to be able to walk, cycle, and take public transport everywhere in the near future. But so far, I’ve been okay. I recycle where I can. I live a relatively minimalist lifestyle with few possessions. My footprint isn’t so bad.
I was quite looking forward to getting an electric car. Sure, they’re expensive. But they’re cool, and most importantly, I thought they were good for the environment.
But they’re not.
According to this, and many other articles, electric vehicles have a heavier environmental burden to produce upfront than a gas guzzler. Why? Because the Lithium, Cobalt, and Nickel required to produce a car battery, so called rare earth metals, result in a lot of pollution to get out of the ground, and they’re hazardous to human health when dealing with them. I can only imagine that in countries like China, the 4th biggest Lithium producer and with the 2nd largest known deposits, proper health and safety precautions aren’t going to be used when excavating this stuff.
Only over the course of a lifetime of use for an electric car (I think the break-even point is after a decade) do electric cars start to make sense. And even that is only true when the electricity comes from nuclear, solar, or wind sources. If you’re burning coal to charge your “green” electric car, it’s actually more polluting than just driving around a regular petrol car.
And that really sucks, because one of if not the main appeals of an electric car is it’s supposed benefits to the environment. The fact that this is all a marketing trick is really disappointing.
And that makes this particular subsidy Tesla get even worse:
“The Palo Alto company has also collected more than $517 million from competing automakers by selling environmental credits. In a regulatory system pioneered by California and adopted by nine other states, automakers must buy the credits if they fail to sell enough zero-emissions cars to meet mandates. The tally also includes some federal environmental credits.”
So Tesla produces cars that are roughly as bad for the environment as their competitors, and then gets half a billion dollars from them in exchange for environmental credits. I can’t imagine Elon doesn’t know about what goes into the making of his batteries. Especially since he’s showing off building the biggest battery factory in the world. Either this man is ignorant of what goes on in his companies, or far more likely, he is corrupt.
Elon’s personal life
Whenever I look for role models to look up to, I look at how they deal with the people closest to them. What is their family like? If they have kids, do they spend a lot of time with them? Have they been a good parent?
I haven’t delved too deeply into his personal life and I won’t. Suffice it to say, he’s had two marriages (with children from the first), which means his kids have to deal with being from a broken home.
That’s bad. But what’s worse is Elon’s reputation for being a workaholic. Apparently he works as much as 100 hours a week. I work 40 hours a week and I feel like there’s not enough time left in my day to do that I enjoy doing. If I had kids, I’d feel like I was missing out on their childhood. I hope I’ll be able to work from home when I do have children.
There is no way that Elon’s kids get enough of his attention. Not between all 5 of them.
It turns out that the narrative that Elon is some great man pioneering all these fantastic new technologies and succeeding despite naysayers is far from the truth. The truth is that Elon has great marketing skills, and with these skills he has tricked people. Making tremendous losses across multiple companies and staying afloat using what amounts to bailout money from the government is failure, not success. Claiming to want to help the environment by producing a product that is at best slightly better, and at worst worse for the environment than the competition is corruption, not leadership or heroism.
And putting the above ahead of providing his children with a stable, healthy family environment and plenty of attention from their father? Well, I’ll let you come up with the name for that.