Elon Musk is being a hypocrite.
On Thursday, after President Donald Trump said he would withdraw the US from the Paris Agreement on climate change, Tesla’s CEO tweeted that he would leave the two White House advisory councils he sits on.
“Climate change is real,” Musk said. “Leaving Paris is not good for America or the world.”
But Trump had promised before he was elected to pull the US out of the agreement — and Musk knew that when he joined the councils.
Musk might have hoped he could change Trump’s view — and that he and Secretary of State Rex Tillerson could sway Trump to implement a carbon tax.
Musk’s agenda was transparent: Tesla’s electric vehicles don’t produce carbon, and anything that encourages people to turn to renewable energy would benefit the company, which is also making roof shingles that harness solar energy and battery packs that store it all.
And as my colleague Matt Debord has explained, Musk most likely felt that his role as a creator of manufacturing jobs in the US would have given him some sway over Trump.
It turns out that at least on the issue of the Paris Agreement, Trump was being serious about his intentions. And a carbon tax certainly looks unlikely.
The thing is that Trump doesn’t forgive — he holds grudges. That could spell bad news for Musk and Tesla.
Tesla’s customers, and those of its rivals, get tax credits when they buy its electric cars.
In 2015, the Los Angeles Times reported that all of Musk’s companies — Tesla, SolarCity, and SpaceX — had received about $US4.9 billion in “government support,” including a good portion of which came from states. It also included a $US465 million loan meant to spur production of electric cars — which Tesla repaid in full, according to Elektrek.
“Since 2006, SolarCity has installed systems for 217,595 customers, according to a corporate filing,” the Times report said. “If each paid the current average price for a residential system — about $US23,000, according to the Union of Concerned Scientists — the cost to the government would total about $US1.5 billion, which would include the Treasury grants paid to SolarCity.”
To be sure, that Los Angeles Times report is from 2015. But there’s no question Tesla continues to benefit from government programs aimed at spurring renewable energy consumption.
The tax credit for car buyers, for example, could put a meaningful dent in the purchase price of its much-anticipated “mass market” vehicle, the model 3.
Musk has downplayed this issue before. Seeking Alpha highlighted Musk’s comments during the company’s most recent quarterly conference call that the subsidies and credits helped the competition more than they helped Tesla:
“And I should perhaps touch again on this whole notion of — it’s almost like over the years there’s been all these sort of irritating articles, like Tesla survives because of government subsidies and tax credits. It drives me crazy. Here’s what those fools don’t realise. Tesla is not alone in the car industry, but all those things would be material if we were the only car company in existence. We are not. There are many car companies. What matters is whether we have a relative advantage in the market.”
But Tesla burned through $US623 million in cash in its most recent quarter, and while that was an improvement from the nearly $US1 billion cash burn in the previous quarter, it was still the second-highest total in the company’s history. The loss of tax breaks and subsidies for renewable-energy companies get could cause this hole to get deeper — fast.
I emailed Tesla about all this, and it sent me Musk’s statement from February about why he joined Trump’s economic advisory council:
“In December, I agreed to join the Presidential Advisory Forum to provide feedback on issues that I think are important for our country and the world. In tomorrow’s meeting, I and others will express our objections to the recent executive order on immigration and offer suggestions for changes to the policy.
“Advisory councils simply provide advice, and attending does not mean that I agree with actions by the administration. My goals are to accelerate the world’s transition to sustainable energy and to help make humanity a multi-planet civilisation, a consequence of which will be the creation of hundreds of thousands of jobs and a more inspiring future for all. I understand the perspective of those who object to my attending this meeting, but I believe at this time that engaging on critical issues will on balance serve the greater good.”
So sure, Musk feels like it is not worth his time to even do that anymore. But that choice could be Tesla’s loss.
Get the latest Tesla stock price here.
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