WWith the invasion of Ukraine and the shutdowns in China putting additional pressure on a supply chain that has not yet recovered from the ongoing pandemic, many predict a global recession. Elon Musk says come with it.
“This is actually a good thing,” Musk said said in response to a question from a Twitter user. “It’s been raining money on fools for too long. Some bankruptcies have to happen.
“Also,” he continued, “everything that is at Covid’s home has tricked people into thinking that you do not actually have to work hard. Rude awakening incoming!”
That’s tough talk from a man said to be worth $ 218 billion north, more than anyone else in the world. And it conveniently overlooks the significant distributions Musk himself made in the process of increasing his net worth after dropping $ 6.5 million for a majority stake in Tesla in 2004. How did Musk cope with the economic storms and rude awakenings afterwards?
In 2008, the company launched its only product – a Lotus Elise knockoff called Roadster. At a starting price of around $ 80,000, the coupe was not exactly priced to move; 2450 global sales made Musk’s vision of mass – producing electric cars look like a dream. But a year later, Tesla received a $ 465 million loan as part of a federal stimulus package – money that mainly paid for the development and production of the groundbreaking Model S.
Musk, who is quick to note that Tesla repaid the loan early, is moving these cars with the help of significant tax breaks for electric vehicles. And he benefits from the cars’ absence of exhaust pipes by reselling its cache of carbon credits to rivals emitting high-carbon under pressure to clean up – at least $ 517 million since 2015. That’s one reason why Bill Ackerman and other short-sellers are betting big on Tesla’s failure. The company would probably have been as dead as Nikola Tesla even if it had not been for the authorities “counting money over idiots”.
Musk also claimed on Twitter that a recession would be good because “companies that are inherently negative cash flow (ie value destroyers) must die so that they stop consuming resources”. From 2010 to 2018, Tesla raised $ 20 billion in capital while producing a negative cash flow of $ 9 billion; 2021 was the company’s first full year of profitability.
It’s not just Washington that has been generous. Tesla also benefits from state tax breaks for income tax for green vehicles and routinely helps with corporate subsidies. Since August last year, the company has received approximately $ 64 million in incentives to move to Austin, Texas, and build Giga Texas – the new factory that is expected to produce another gonzo Musk idea, the Tesla Cybertruck.
Musk’s other companies have also benefited from the company’s welfare schemes. In 2015, the LA Times estimated that Musk’s companies had benefited from nearly $ 5 billion in state aid. It includes SpaceX, which just got a $ 2.89 billion contract with Nasa and a $ 653 million air force contract, both in 2021; and SolarCity, which capitalized on $ 1.5 billion in government assistance and bled cash even before the solar energy company was absorbed into Tesla – which itself accepted the salary benefits from Donald Trump’s pandemic stimulus package of $ 600 billion.
Musk can scold work-from-homers all he wants. But when it comes to benefiting from dividends and loans, few have counted on more than him.