Tesla’s growth at taxpayer expense

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There’s a reason Tesla CEO Elon Musk departed the President’s advisory council when Trump withdrew the US from the Paris climate agreement. Tesla has been feeding at the government trough of alternative energy subsidies for years. Less government involvement in climate regulation means fewer goodies for Musk, which means the company might have to get most of its revenues directly from its customers.

The latest example of Tesla’s addiction to government is in Hong Kong, where a government tax break for electric vehicles ended on April 1. The subsidy essentially reduced the cost of a Tesla Model S from $130,000 to $75,000 at taxpayer expense. In March—after the forthcoming tax change was announced—2,939 Tesla vehicles were registered there. There were no Tesla vehicles registered in Hong Kong in April.

Proponents of the tax break argue that subsidies promote a cleaner environment. Even if this is true—and I’m not convinced—there’s no way that each Tesla makes a $55,000 improvement. To put this into perspective, 17.55 million vehicles were produced in the US in 2016. If the environmental impact of each new vehicle is $55,000, then the total environmental impact would be $965 trillion, and that only includes only a fraction of the 1 billion-plus vehicles on the roads worldwide.

It’s difficult to argue for a $55,000-per car electric subsidy with a straight face. The US electric vehicle tax credit ranges from $2500-7500, not including state credits. Considering only the low end of the federal range, the alleged annual environmental impact if everyone bought an electric car would be several times more than the national debt.

The US tax credit for electric vehicles is only one subsidy available to alternative energy firms, but it illustrates the point well. Musk knows that Tesla couldn’t sell as many cars without government help because electric vehicle technology isn’t strong enough to stand on its own. His grandstand in defense of the environment is really in defense of his company’s feeding spot at the government trough.

I have nothing against Tesla per se. The company builds a quality car, and electric vehicles may very well be the norm in the next decade. But taxpayer subsidies are not necessary to make this happen. As with all forms of alternative energy technology, the market is perfectly capable of sorting out the winners and losers without government intervention.

4 Comments

4 Comments

  1. 17@dlove  •  Jul 19, 2017 @9:28 PM

    With gas at $2 a gallon nobody will buy an electric car without free money.

  2. JH  •  Jul 21, 2017 @2:43 PM

    Why is the United States government subsidizing a car that costs $75000? I don’t care if it’s powered by dogcrap.

  3. proudlefty  •  Jul 22, 2017 @6:16 PM

    so if you agree that moving from oil to electric is good, then who’s going to fund it? government has a role.

  4. Arthur W.  •  Jul 24, 2017 @4:12 PM

    What about gas taxes when we go electric? State and Federal currently yield about $125 billion annually. It wouldn’t make much sense to tax what you are subsidizing.