With the invasion of Ukraine and lockdowns in China putting added pressure on a supply chain that has yet to recover from the ongoing pandemic, many are predicting a global recession. Elon Musk says bring it on.
“This is actually a good thing,” Musk said in response to a question from a Twitter user. “It has been raining money on fools for too long. Some bankruptcies need to happen.
“Also,” he continued, “all the Covid stay-at-home stuff has tricked people into thinking that you don’t actually need to work hard. Rude awakening inbound!”
It’s tough talk from a man said to be worth north of $218bn, more than anyone in the world. And it conveniently overlooks the considerable handouts Musk himself took in the process of growing his net worth after plunking down $6.5m for a majority stake in Tesla in 2004. How did Musk weather the economic storms and rude awakenings thereafter?
In 2008, the company rolled out its only product – a Lotus Elise knockoff called the Roadster. At a starting price of around $80,000, the coupe wasn’t exactly priced to move; 2,450 global sales made Musk’s vision of mass-producing electric cars look like a pipe dream. But a year later, Tesla received a $465m loan as part of a federal stimulus package – money that essentially paid for the development and manufacture of the groundbreaking Model S.
Musk, who’s quick to note that Tesla paid that loan back early, moves those cars with help from considerable tax breaks for electric vehicles. And he further takes advantage of his cars’ absence of tailpipe emissions by reselling his cache of carbon credits to high-carbon emitting rivals under pressure to clean up – at least $517m since 2015. There’s a reason why Bill Ackerman and other short-sellers bet big on Tesla to fail. The company would probably be as dead as Nikola Tesla himself if it hadn’t been for the government “raining money on fools”.
Musk also claimed on Twitter that a recession would be good because “companies that are inherently negative cash flow (ie value destroyers) need to die, so that they stop consuming resources”. From 2010 to 2018, Tesla raised $20bn in capital while producing a negative cash flow of $9bn; 2021 was the company’s first full year of profitability.
It isn’t just Washington that has been generous. Tesla also benefits from state tax income tax breaks for green vehicles and routinely helps itself to corporate subsidies. Since last August the company has received roughly $64m in incentives to move to Austin, Texas, and build Giga Texas – the spanking new factory that’s expected to produce another gonzo Musk idea, the Tesla Cybertruck.
Musk’s other companies have benefited from corporate welfare schemes too. In 2015, the LA Times reckoned Musk’s companies had benefited from almost $5bn in government support. That includes SpaceX, which just landed a $2.89bn contract with Nasa and a $653m air force contract, both in 2021; and SolarCity, which capitalized on $1.5bn in government aid and haemorrhaged cash too before the solar energy company was absorbed into Tesla –which itself accepted payroll benefits from Donald Trump’s $600bn pandemic stimulus package.
Musk can scold work-from-homers all he wants. But when it comes to benefiting from handouts and loans, few have been rained on more than him.