Calif. throws subsidy at Tesla Motors

Oct. 12, 2012

By Joseph Perkins

Memo to Occupy San Jose: I’ve got a ripe target for you on Santana Row, playpen for the Silicon Valley wealthy.

Not Gucci, Burberry, Ferragamo or the other upscale stores along the Row. But Tesla Motors, the electric carmaker, whose co-founder and CEO, Elon Musk, boasts a $2.4 billion net worth.

Musk is not merely a member of America’s 1 percent, for which Occupy has much contempt. He’s a member of the 1 percent of 1 percent.

That’s why it is so unseemly that the California Energy Commission just gifted Tesla Motors $10 million to pay for machinery it purchased for its Freemont factory. Tesla will use the tax dollars, supposedly, to add 500 workers to build its Model X, a rechargable sports utility vehicle.

“These investments in clean vehicles,” said Energy Commissioner Carla Peterman, “will reduce petroleum use, improve air quality, and create jobs, while demonstrating California’s commitment to a greener transportation future.”

The problem is the means by which Peterman’s agency made those “investments.” It’s by socking California drivers with a surcharge on their vehicle registration and smog check fees.

It’s bad enough that the 99.9 percent of us that are not multi-billionaires like Musk have to subsidize his car company. But it’s patently unjust that the state’s most needful drivers — the working poor, the unemployed, the elderly on fixed incomes — have to bear that burden.

The state Energy Commission’s $10 million giveaway to Tesla might be less outrageous if the company was non-profit; if it was developing its modern electric version of the old German gasoline-fueled “people’s car,” which came to be known here in the states as the Volkswagon.

But Tesla Motors is hardly manufacturing any low-priced, low maintenance people’s cars. It’s producing automotive toys for the decidedly well-to-do. The kind of volk who drop by its Santana Row showroom.

Indeed, Tesla’s very first offering to the car buying public was a $109,000 fully-electric roadster. Its second offering, the Model S, a luxury sedan, had a base price of $57,400 to $77,400.

Tesla’s Model X, which is scheduled to go into production in 2014, according to Tesla spokeswoman Christine Ra, will start at $60,000 and top out at $100,000.

Tesla is not building vehicles for the mass of Californians, who have made the Honda Civic and Accord, and Toyota Camry and Corolla the state’s best-selling cars. It’s targeting well-heeled California residents, those whose tastes run to Mercedes, BMW and other luxury nameplates.

There’s nothing wrong with Tesla positioning itself at the high end of automobile market.

It’s just hypocritical for the state government, led by a governor promoting a ballot measure that “asks California’s wealthiest to pay a little more” in taxes, is asking California’s poor and middle class to pay a little more in vehicle registration and smog check fees to subsidize a car company owned by one of the state’s wealthiest residents.

The thing of it is, Tesla doesn’t even need the state’s $10 million gift. The company raised $200 million in a secondary stock offering just last week. CEO Musk says the company will be “cash flow positive” as soon as next month and profitable in 2013.

So $10 million will hardly make or break Tesla. And if there was even the remotest possibility of that happening, Musk’s pockets are deep enough to keep his car company afloat.