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| "Daddy, read me the story about how the Power Ponies saved the Job Creators" |
There are many stirring yarns
of dogged entrepreneurs who by dint of their prodigious intellects, hard work,
and business smarts built businesses all by themselves. Giants of the business world.
Secular saints
for our national—and dare I say international--religion: Steve Jobs, Henry Ford, even according to
some, Papa John. Visionaries, pioneers,
rugged self-reliant individuals. The
kind that disdain handouts.
According to these tales, more often than not
these hardy individuals have had to struggle against the heavy “dead hand” of governments
that seem more interested in crushing their visions than stepping out of the
way to allow them to succeed. Men like
Hank Rearden.
In today’s installment, we look at but one slim chapter from the
storied career of Elon Musk—visionary technology investor,
entrepreneur, engineer, and product architect.
An immigrant to these shores and to Canada in
more tolerant times, he’s built many businesses all by himself demonstrating,
though no demonstration is really required, that a hard working smart
individual can succeed on his own without government handouts.
But would you
be surprised if I told you that Musk like many other of our secular saints had
a silent partner who helped make his dreams reality?
An unsung hero. One that AA will now reveal.
To set that
stage some information from Tesla’s financials. They say that numbers never
lie, though they rarely ascribe that virtue to all accountants.
TESLA
REGULATORY CREDIT SALES (RCS)
|
||||
Millions
of US Dollars
|
||||
Year
|
RCS
|
Net
Loss
|
RCS/NL
|
NL-RCS
|
2009
|
$8
|
($557)
|
1.5%
|
($565)
|
2010
|
$3
|
($154)
|
1.8%
|
($157)
|
2011
|
$4
|
($254)
|
1.5%
|
($258)
|
2012
|
$41
|
($396)
|
10.2%
|
($437)
|
2013
|
$194
|
($74)
|
262.7%
|
($268)
|
2014
|
$216
|
($294)
|
73.6%
|
($510)
|
2015
|
$169
|
($889)
|
19.0%
|
($1,057)
|
2016
|
$302
|
($773)
|
39.1%
|
($1,075)
|
2017
|
$360
|
($2,241)
|
16.1%
|
($2,601)
|
2018
|
$419
|
($1,063)
|
39.4%
|
($1,481)
|
TOTAL
|
$1,716
|
($6,695)
|
25.6%
|
($8,411)
|
Regulatory Credit Sales are
from Zero Emission Vehicle Credits (ZEV), Green House Gas (GHG), and since 2016
credits associated with Solar City. You
can read about it here on
page 11 of Tesla’s 2018 Annual Report.
Data above is from that AR and earlier ARs.
Tesla has also
indirectly benefited from the USD 7,500 tax rebate given purchasers of its cars
by the Federal Government. To be fair
Tesla is not the only company that has benefited. That tax rebate is not reflected above as it
accrues to the purchasers not directly to Tesla.
However, without Uncle Sugar’s discount,
Tesla cars would cost more and sales would be less.
Tesla has reached the
200,000 car sales milestone at which point the credit halves and then haves
again this year. Unless Tesla and other electronic vehicle manufacturers are
successful in their efforts to “save the environment” by having a usually
compassionate Congress extend the rebate program, an important support for
sales will be lost.
At this moment prospects don’t appear good for the
“Driving American Forward” Bill. Senate Bill. House
Version.
Let’s assume that this noble effort falters.
Ignoring the reductions in 2019 in the
rebate, and assuming that anyone who buys a Tesla has at least a USD 7,500
Federal tax bill, then Uncle Sugar has supported Tesla’s business to the tune of at least an additional USD 1.5 billion. Or USD
3.2 billion in total.
Beyond that Tesla benefited from a US Government
Guaranteed USD 465 million loan under
the ATVM program. Tesla repaid the loan
prior to its maturity.
There are a lot of Sugar Daddies out
there for struggling corporations and the deserving rich who can afford to buy
Tesla’s product.
With partners like these it’s hard to see how Tesla can fail,
unless you look closely at the financials.
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