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Elon Musk: Earth-shattering genius or serial U.S. taxpayer abuser?

Written By | Jan 26, 2018
Elon Musk plus Tesla shares

Tesla’s troubled Model 3. (Image via Wikipedia entry on Tesla, CC 4.0 license)

WASHINGTON, January 26, 2018: Major stock averages are bubbling up once again Friday after suffering from virtual heart palpitations over the last two trading sessions. Tech in general and Apple (symbol: AAPL) were hit fairly hard, likely due to profit taking in tech and iPhone sales skepticism in Apple. That said, however, one topic that’s been on our mind lately is the strange, magical world of Elon Musk.

Musk, a multimillionaire South African import with a shining reputation for technical genius and a future vision that would put even the prolific Nostradamus to shame has been in the financial and business news at least once a week (and often more frequently) for as long as we can remember.

Unfortunately, as with any individual elevated to godlike status by an uncritical and adoring media, Elon Musk, in this writer’s opinion, deftly conceals, via reliably fawning MSM PR, two major, overriding flaws that dog whatever his business plan really is. Both emphatically contradict the near-universal media hagiography he’s long enjoyed.

  • Already rich, Elon Musk has been getting richer by surfing a gigantic tsunami of taxpayer money while consistently failing to make crucial product development and sales milestones.
  • Musk’s marquee product – the spectacularly underperforming of Tesla-branded, eco-sensitive automobiles – only has appeal to wealthy car buyers looking for the most ostentatious way to conduct their habitual virtue-signaling.

It’s not particularly surprising that Musk has attracted so much taxpayer money to subsidize his money-bleeding ventures in solar power and costly electric automobile toys for the rich. His pie-in-the-sky ventures connected perfectly with Barack Obama’s anti-fossil fuel crusade during which his administration airdropped uncounted millions of taxpayer dollars on any fumbling “industry” that promised to eviscerate the fossil fuel / energy sector. In other words, Elon Musk is another of Obama’s serial taxpayer abusers gorging themselves at the environmental extremist trough.




Given all this unwarranted and costly taxpayer largess, Musk folded his money-hemorrhaging solar business into his other – but showier – money-hemorrhaging electric auto-sports car business largely to conceal his losses there while using more taxpayer money to airbrush the newly combined company’s balance sheet a bit.


Read also: Covert marijuana stocks: Corporate giants getting P&Ls high on weed?


Hunting for even more taxpayer money, the Musk Magic managed to hornswoggle the jobs-hungry Nevada government into heavily subsidizing a huge new electric car battery to be built near the California border not far from Reno.

But, like solar panels and the “affordable” Tesla Model 3 (circa $35,000 plus options) that just doesn’t quite want to work, that new battery factory is also fighting physical and fiscal headwinds according to a recent report.

“Tesla’s problems with battery production at the company’s Gigafactory in Sparks, Nevada, are worse than the company has acknowledged and could cause further delays and quality issues for the new Model 3, according to a number of current and former Tesla employees. These problems include Tesla needing to make some of the batteries by hand and borrowing scores of employees from one of its suppliers to help with this manual assembly, said these people.

“Tesla’s future as a mass-market carmaker hinges on automated production of the Model 3, which more than 400,000 people have already reserved, paying $1,000 refundable fees to do so.

“The company has already delayed production, citing problems at the Gigafactory. On Nov. 1, 2017, CEO Elon Musk assured investors in an earnings call that Tesla was making strides to correct its manufacturing issues and get the Model 3 out.”

Then again, if you regularly read articles about Elon Musk and his money-losing ventures in the financial press, you’ll soon discover that Elon is always “assuring investors.” It’s not surprising, then, that after his most recent assurance on the Gigafactory battery kerfuffle,

“… in mid-December, Tesla was still making its Model 3 batteries partly by hand, according to current engineers and ex-Tesla employees who worked at the Gigafactory in recent months. They say Tesla had to ‘borrow’ scores of employees from Panasonic, which is a partner in the Gigafactory and supplies lithium-ion battery cells, to help with this manual assembly.

“Tesla is still not close to mass producing batteries for the basic $35,000 model of this electric sedan, sources say. These people requested anonymity as they are not authorized by the company to talk to the press.



“A Tesla spokesperson told CNBC: ‘Until we reach full production, by definition some elements of the production process will be more manual. This is something Elon and [CTO] JB [Straubel] discussed extensively on our Q3 earnings call, and it has no impact on the quality or safety of the batteries we’re producing.’”

As we write this article, shares of Tesla (now including Musk’s solar operations) are soaring once again, up approximately $2.20 per share to stand at $340 per share. That’s pretty remarkable, considering this informational newsbit on TSLA’s upcoming earnings report, as accessed through our brokerage software:

“TSLA has confirmed that earnings will be announced 02/07/2018. With 19 analysts covering TSLA, the consensus EPS estimate is -$3.11, and the high and low estimates are -$1.98 and -$3.69, respectively.”

Note all the minus signs. Tesla continues to lose money. Big Time. But that’s okay. We taxpayers will likely be forking over another tranche of our hard-earned dollars to Elon Musk in the future to keep his perpetually-failing auto and solar businesses afloat so rich people can buy more of those virtue-signaling products made cheaper (for them) with our money.

Elon Musk

California Senator Diane Feinstein gushes over Elon Musk in this 2010 photo. (Image via Wikipedia entry on Elon Musk, CC 2.0 license)

Perhaps the Federal government – much of which, still run by Obama administration supporters, has been on autopilot when it comes to subsidizing its wealthy, pro-Democrat supporters – has managed thus far to keep Musk’s massive losses and cost overruns out of the headlines and away from the prying eyes of the slowly growing cadre of Trump appointees.

Or perhaps the military – which does largely secret business with Musk’s perhaps more promising, rocket-oriented SpaceX business – wants to keep Rocket Man Musk functional while he refines that product line, even after his most recent, costly failure to put an expensive and (we think) crucial secret payload into orbit.

But whatever the case, there simply must be a limit to the taxpayer subsidies that are keeping Musk’s earthbound and perpetually money-losing ventures – and his high-flying lifestyle – afloat.

A certain brave few investors and funds appear to agree. As of early January, short interest in TSLA shares was sitting at an amazing 18.3 percent of shares outstanding. That number is even more astounding when you consider that every times TSLA takes a hit from short sellers, mass buying predictably hits the shorts – hard – as the stock rallies back from each attack.

It’s almost as if some government or something has created a secret Plunge Protection Scheme for this one particular stock, still a showpiece for Barack Obama’s pipe dream of killing off fossil fuels forever, the better to stem the rise of the oceans as we recall.

We actually have no problem with Musk’s ventures per se. It’s just that we have a big problem being forced to pay for them while keeping another wealthy Democrat living in the high style to which he’s grown accustomed. That’s made even more painful by the simple fact that no actual American worker, statistically speaking, can afford one of those swell, virtue-signaling Tesla models.

To put a bit of icing on the cake, there’s also this: Where does all the relatively cheap energy come from to charge all those special batteries the Gigafactory can’t make? From fossil fuels, that’s where. Electricity has to come from somewhere, and that’s where it comes from. It’s an inconvenient truth those wealthy left-wing virtue-signalers never tell you. Perhaps it’s even something they don’t understand.

We don’t short stocks often. But expensive as it is, TSLA shares could be cruisin’ for a bruisin’ when news of that company’s latest mega-fail is released on February 7.

 

Terry Ponick

Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Senior Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17