Tesla just a tax-funded government project

Waverley electric carMay 26, 2013

By John Seiler

I’ve seen a couple of Tesla cars tooling around Orange County. They’re neat, as we said in the 1960s. And they’re made in California. They also survived where other electric car companies, such as Fisker, have crashed.

The problem with the Tesla and all these cars is the short range before recharging. The Tesla Model S is supposed to go 300 miles under ideal conditions. But as the New York Times found out in its test, that means you have to stop for an hour full charge after about 250 miles.

So a 500-mile trip would add another hour to the time. By contrast, filling up a typical sedan takes less than 10 minutes.

Tesla just paid back its government loan nine years early. But the Wall Street Journal also revealed where the money is coming from:

The decade-old Tesla debuted its first product, the Roadster, in 2006. With a base price of $109,000, it was discontinued before it hit 2,500 sales. Tesla introduced its Model S a year ago and had sold an estimated 9,650 at a bargain $70,000 through April. By contrast, Ford sold 168,843 F-series pickup trucks in the first quarter alone.

Tesla wouldn’t have sold even that many cars without the extraordinary help of government. In 2009 the company received a $465 million Obama loan guarantee, supplemented last year by a $10 million grant from the California Energy Commission.

That money has underwritten Tesla’s engineering and manufacturing, but federal and state governments also subsidize the purchase of Tesla products. Any U.S. buyer of a Tesla car qualifies for a $7,500 federal tax credit, while states like Colorado throw in up to $6,000 more in state income-tax credits. Taxpayers pay first so Tesla can build the cars and again to help the wealthy buy them.

These subsidies are important enough to Tesla that its website features an “Incentives” section directing buyers where to look for their states’ electric-vehicle benefits—rebates, free parking, exemptions from state sales tax, use of high-occupancy lanes, and the like. Buyers from states that offer no incentives get this Tesla message: “Want to help make EV [electric vehicle] incentives a reality in your area? Encourage your local or state representative by calling or sending them a letter.”

Tesla’s biggest windfall has been the cash payments it extracts from rival car makers (and their customers), via its sale of zero-emission credits. A number of states including California require that traditional car makers reach certain production quotas of zero-emission vehicles—or to purchase credits if they cannot. Tesla is a main supplier.

Morgan Stanley MS +0.41% report in April said Tesla made $40.5 million on credits in 2012, and that it could collect $250 million in 2013. Tesla acknowledged in a recent SEC filing that emissions credit sales hit $85 million in 2013’s first quarter alone—15% of its revenue, and the only reason it made a profit.

Take away the credits and Tesla lost $53 million in the first quarter, or $10,000 per car sold. California’s zero-emission credits provided $67.9 million to the company in the first quarter, and the combination of that state’s credits and federal and local incentives can add up to $45,000 per Tesla sold, according to an analysis by the Los Angeles Times.

It’s all just another government scam aiding special interests. Crony capitalism at its worst.

Cost of gas

By the way, gas-powered cars really are not costing more to drive, despite higher gasoline prices. I just saw the 1974 movie “The Sugarland Express,” starring cute Goldie Hawn and directed by Steven Spielberg. It was filmed in 1973. I noticed that gas prices then were 31.9 cents per gallon. The film was made entirely in Texas, including San Antonio.

According to SanAntonioGasPrices.com, you can buy gas there now for $3.19 a gallon — by conicidence, that’s exactly 10 times the price in 1974.

But there’s been a lot of inflation since then. The Labor Department’s CPI Inflation Calculator shows that 31.9 cents in 1973 = $1.67 today. So that’s about half today’s actual price. And cars’ fuel efficiency now is about twice that of 1973.

So the cost of running a gas-powered car is about the same as in 1973.

Some day electric cars, which have been around a century, will be more efficient and make sense without taxpayer subsidies. That day is decades off.


Write a comment
  1. jimmydeeoc
    jimmydeeoc 26 May, 2013, 11:15

    That day is decades off.

    And in the meantime “the little people” will fund our modern-day royalty (Hollywood and Silicon Valley execs)to tool around in Teslas, patting each other on the back for being so gosh-darn environmentally “aware” as they wag their fingers at those knuckle-dragging F-series drivers.

    Boy does this country need a make-over.

    Reply this comment
  2. Gerald Shields
    Gerald Shields 26 May, 2013, 12:54

    You know what I say to this article? Total bull**** and semantics! That NYT writer avoided all kinds of charging stations to justify that negative article! This and Consumer Reports gave the Tesla S its highest rating! Moreover, it isn’t just high gas prices that make today’s cars hard to afford. There’s insurance, parking fees, licensing fees, maintenance fees. If I can get rid of having to pay 4 bucks a gallon for just having to plug a car into an electric socket for free to what, $2.00 an hour to charge an electric car?! Where do I sign up?!

    Reply this comment
  3. section9
    section9 29 May, 2013, 05:00

    Nice try, Gerald.

    This is a tax subsidy for the Ruling Class. Look at the cost per automobile. The taxpayers in California and across the nation are paying the freight.

    If you want Elon Musk’s car to be a success, then let’s see how it works without the subsidies and at Volkswagen or Model T prices.

    Then you’ll have buyers.

    Capitalism beats State Capitalism every time.

    Reply this comment
  4. Amped
    Amped 22 June, 2013, 14:33

    What a completely nonsensical article which has, it its root, fear of the unknown. I find that to be a common thread with all conservatives – fear and hatred. That is something a psychologist can address, but beyond my pay grade. Let me education you a little bit. Tesla has repaid 100% of the government loan, and 7 years early. Were you aware that the loan program in question was started under George W Bush?

    If you are against EV drivers getting a $7,500 federal tax credit, you must also have been against hybrids getting the same. Why don’t you give up your standard deduction when you file your tax returns? While your at it, riddle me this… why does big oil receive $600 million in tax breaks annually, which the government never gets back, but Tesla is called a “government project” for borrowing less than that and repaying the full amount? If the government can give unneeded tax breaks to big oil, it certainly can give tax credits to buyers of EVs. If you don’t think I deserve a $7,500 tax credit for buying a Tesla, then please also ask Shell, Exxon, Chevron, etc. to send back their tax breaks to Washington. Fair is fair. The day they give back their corporate welfare is the day I will include an extra $7,500 with my tax check.

    You really do need to check your facts. Lastly, I am not an elite. I don’t live in Hollywood. And I am decidedly “middle class”. I am a real estate agent in Arizona. And guess what? I’m buying a Tesla Model S because it’s the future, will become an integral part of my business and will allow me to make more money with less overhead over the long term. You go on hating EVs and calling amazing companies like Tesla “government projects”. I pity people like you who live such a small life.

    Reply this comment
  5. CalWatchdog
    CalWatchdog Author 22 June, 2013, 15:28

    Amped: I only reported on the $7,500 tax credit, quoting the Wall Street Journal. Actually I would favor keeping it.

    What I really object to, though, is this from the WSJ article, “the cash payments it extracts from rival car makers (and their customers), via its sale of zero-emission credits. A number of states including California require that traditional car makers reach certain production quotas of zero-emission vehicles—or to purchase credits if they cannot. Tesla is a main supplier.”

    So that’s just a ripoff facilitated by governments with guns.

    — John Seiler

    Reply this comment
  6. Steve
    Steve 18 July, 2013, 04:22

    Hey Gerald, what does the NYT writer avoiding charging stations have anything to do with the fact that the vehicle did not go the mileage touted by Tesla? As far as your claim of $4/gallon, versus $2 per electric charge, the super charges Tesla sells draw almost 100 amps, granted they charge in just over 15 minutes, but if you needed to charge morning and night, thats 60 times in a month @100 amp charge, thats going to add up in addition to the bloated car price!! And what about the fossil fuels that are being burned to produce that electric for you at your home? And what about all the batteries that need to be disposed of at the end of the cars life, thats not cheap!!! Bottom line like everything else Elon does he is using other peoples money to “innovate” (i call it copying others, has he ever truly created anything??) and brain wash the American public.

    Reply this comment
  7. JCooper
    JCooper 20 October, 2013, 09:38

    I live in San Clemente,Ca. I have seen so many Teslas tooling around my town, its creepy. These cars are the new status symbol funded by the declining middle class. I am discussed! Every time I see one of these cars in my little town, I want to scream. Besides that, how stupid is it to buy a car for over $100K and only be able to go 300 miles and then have to charge it overnight. What if you get stuck and have to go another 30 miles? Oh yea, you have to plug it in for hour and get a charge and go another 10 miles. That means you would need to wait at least 3 hours somewhere charging your car to go another 30 miles. These vehicles are just a rich man’s rip off of the middle class. Just wait until Obama gets his way and enough cars are electric he will jam the coal industry even more and the cost of electricity will skyrocket. We will have no alternative but to pay whatever the rate will be. THIS IS JUST ANOTHER LIBERAL WAY TO HOODWINK THE AMERICAN PEOPLE! THINK SOYLNDRA!

    Reply this comment
  8. I need a bailout
    I need a bailout 6 April, 2014, 19:40

    67% of US electricity comes from coal and natural gas. Coal and natural gas are powering these Tesla’s that the government (which is broke) is subsidizing to the tune of up to $10,000. I can see a lot of people steaming mad at the nonsense of these subsidies for the rich which the US power grid is crumbling and people are paying record high electrical rates. The last thing the US electrical grid needs is additional load.

    Reply this comment
  9. us independence
    us independence 20 May, 2014, 08:37

    I generally think government interference in markets is bad. But in this case we get a lot of gas from countries that are very anti American. Russia, Iran, Venezuela etc. I would love to cut the use of gas, pushing gas prices down, and drive the economies of these countries into the ground.

    Every time we use more gas we are basically funding countries hostile to the US.

    Yes electric cars use electricity but the net use of oil and gas is far less for an electric car.

    Reply this comment
    • Jason
      Jason 13 June, 2014, 14:43

      @us independence:
      Very true. Look at Dubai and Abu Dhabi. They have so much money, they have Lamborghinis and Ferraris as POLICE CRUISERS.

      We need energy independence.

      Reply this comment
  10. Jason
    Jason 13 June, 2014, 14:41

    Peronsally, I think we should jump off electric and head to hydrogen fuel cell powered vehicles.
    London’s already using it in their buses.

    1) Hydrogen fuel cell already fits the way we fill up now. Two minutes at the pump and you’re off.
    2) It only emits H2O.. which we know of as “water”.
    3) Hydrogen is the most abundant element in the UNIVERSE.. it will be considerably more difficult to price gouge (though I imagine that’s why no company wants to invest in it. Why should they care about humanity’s future anyways?)

    Personally, the only reason I can see us not going hydrogen fuel cell is either patent trolls (which I believe should be illegal) but more than likely above all others.. the cost of setting up infrastructure.

    My idea would have the government set up “Hydro Pump Stations” or something. Seems like a sure-fire way to fund the government, too, since they’re the ONLY ones that really seem like they could. Companies don’t want to spend the money on setting up pump stations and infrastructure. I mean.. heaven forbid they be heralded at the ones that usher in the future.

    Despite hydrogen being the answer to everything wrong in our automotive industry, it seems it’s not mentioned at all.. and it should be.

    Reply this comment
  11. Savs
    Savs 10 April, 2016, 21:53

    So essentially this article is complaining about well off or better then well off people who are able to buy a new type of car on a tax write off. But the problem that the writer wanted to originally grip about was if the car worked or not. Which it apparently does which is why we’re all here reading from an article by a professional pessimist. You can write the same exact article about the first cell phone which was as big as a wide brick or the microwave or the VCR or DVD player. All the wealthy or well initially always pay the big bucks being in the “I got it first” curve and we get it last when it’s cheaper and better. Anyone with any brains that knows about cars would love to cut out the vast set of thieves, crooks and utter dirt bags and the list would include the design and mechanical failure of any liquid or gas powered vehicles. He’s the list of who and what you will be free of forever if you get an electric car from Tesla: All mechanics, All Dealers, All combustion engines, All transmissions, gaskets, seals, steering fluid, brake fuild, oil, transmission fuild, anti-freeze, radiators, hoses, belts, fuel filters, oil filters, ten to twenty computers. Instead of driving your car to an almost impossible 200,000 miles drive it for more then 500,000,000 miles and get a new engine like changing an alternator or starter. An electric motor has no mechanical moving parts its just a magnet which has north and south repelling each other through an electrical charge spinning a center spindle into a grease packed gear box turning two axles which turns two wheels just like in a toy car or elevator. Awesome. The future is bright don’t pay attention to poorly written elaborate nonsense. I’m sure the writer is driving a brand new car or leasing or doesn’t drive if he/she is in a metropolitan area with subways and buses. I on the other hand am not well off but fix my own piece of expensive junk and get filty with oil, grease and cut my hands up in thight places under my piece of shiny junk. I know what’s under both hoods and can’t wait to be free, free, free of a whole crowd of crooks and con artist in the car business. I hope that they all lose they’re jobs and become homeless or are sent to jail for all the crimes that have been committed. Also removing the state and some insurance companies by not needing emissions inspection is another tremendous bonus. There are too many pulses and so very few minuses to speak of. Next step is a self charging car with no more plugging into the grid. Awesome.. Can’t wait…

    Reply this comment

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