The US government has had to make a habit of bailing out automakers. In fact, Tesla and Ford are the only two US automakers that haven’t gone bankrupt over the years. Tesla CEO Elon Musk has said on many occasions that the electric automaker was on the verge of bankruptcy multiple times. However, Tesla has prevailed, and even soared to become the most valuable automaker in the world.
Clearly, it wasn’t easy. Very few automotive startups have been successful, and even over a short period of time, we’ve watched many an electric carmaker struggle and fail. Some people say the only reason Tesla has been successful is thanks to government incentives. However, Tesla’s EVs, along with GM’s, were phased out of the eligibility for the US federal tax credit year ago. While GM hasn’t really had anything to show since then, Tesla has become hugely successful, leading the world in EVs.
To take things a step further, if people are going to say that incentives have helped keep EV makers afloat, they may want to consider the massive oil and gasoline subsidies that have helped automakers for years, not to mention the government loans and bailouts.
Tesla took on a Department of Energy loan many years ago, which some skeptics point to as one of the main “saves” for the company. However, Tesla paid that loan off nine years ahead of schedule. In fact, the electric automaker has made a habit of paying loans off early. Unfortunately, though, the US government penalized Tesla for that early payoff. Musk recently replied to a tweet explaining the situation.
There’s been a story in the news about how Tesla essentially turned down massive battery subsidies in Germany. Musk responded by stating that Tesla got $465 million from the US Department of Energy back in 2010/2011. The terms were terrible and exceeded the value of the money received, so Tesla paid it off early, even though that meant an early repayment penalty.
Musk also noted as he has in the past, Tesla doesn’t think there should be any subsidies. Sure, if they’re available, it will take advantage of them just like everyone else in order to stay competitive. However, a level playing field makes more sense.
There’s a catch though: Musk says if the government is going to eliminate subsidies, it must eliminate the “massive subsidies for oil and gas.” Interestingly, President Biden promised to do that during his campaign, but he hasn’t followed through. And, based on how the situation is currently playing out, Biden certainly won’t do it on the recommendation of Elon Musk.
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