Tesla Motors Inc. (NASDAQ:TSLA) CEO Elon Musk is known for his skill at taking an idea and running with it. The billionaire has always relied on the kindness of others to make his dreams a reality, however, and that support has set the taxpayer back $4.9 billion says a new report.
The Los Angeles Times posted its look into the state finances behind the big three Musk-driven firms, Tesla Motors, SolarCity Corp (NASDAQ:SCTY) and SpaceX, on Saturday. They found that they have gotten huge sums in state grants including a whopping $1.29 Bn from the State of Nevada to subsidize the Gigafactory.
Elon Musk gets State support
The other big sources of cash for Tesla Motors included $517.2 Mn credits from the State of California and others, $284 Mn in tax breaks for Tesla Motors car buyers from the federal government, and $126 Mn in self-generation grants from California.
Tesla Motors took advantage of $2.391 Bn in State support, not including that offered around the world, since it began.
SolarCity Corp got $1.5 Bn in a subsidy for solar generation, $750 Mn in support from the State of New York for its solar panel factory and $260 Mn in property tax exemption in the same State.
SolarCity Corp ended up with $2.516 Bn in state payments.
SpaceX is, despite the generally state controlled sphere it operates in, the least reliant on subsidies of the three Musk firms. The company has taken just one payment: $20 Mn in rebates Texas for its space center in Brownsville.
The $4.9 Bn seems like a good investment right now as the value of Tesla Motors tops $30 Bn and SolarCity is worth close to $6 Bn. Most of the payments were from states rather than central law makers, and most were offered in order to secure jobs and investment into the state economy.
Tesla Motors needs cash
There is no arguing that Tesla Motors could have survived without government cash. Google refused to buy the firm for just $6 Bn back in 2012, and back then it had a working car on the road. Before that the firm only sold the Roadster, a car far beyond the mass market.
Tesla Motors still doesn’t make a profit and the firm still uses some state grants in order to keep its business working. The firm gets EV credits from California, and it takes advantage of a number of other pieces of state support.
When JPMorgan analyst Adam Jonas saw the most recent Tesla Motors earnings numbers he called the firm’s cash-burn “eye-watering”. Tesla blew away $400 Mn in the first three months of 2015, leaving it with about $1 Bn on hand.
The firm’s cash position would be a lot worse without the $1.29 Bn grant from Nevada. Elon Musk has never denied that Tesla Motors relies a lot on the State to make the firm work.
When the firm repaid the Department of Energy loan in 2013, Elon Musk said “I hope we did you proud” to the “American taxpayer from whom these funds originate.”
Tesla will need a dig out from somewhere before the end of the year. It can come from new shares, new debt, Google, or even the government, but the firm’s numbers don’t make sense without an injection.
Tesla Motors shares have gone from strength to strength so far in 2015 despite questions being asked about the firm’s business model and cash burn. Shares in Tesla Motors are now up more than 11% for the year so far.