‘China rocks,’ U.S. full of ‘entitlement’

Tesla and SpaceX CEO Elon Musk lamented the “entitled” and “complacent” character of people in the United States, and lauded the “smart” and “hard working people” of China, in the first installment of a three-part interview with Automotive News’ “Daily Drive” podcast published Friday. 

Specifically, Musk criticized New York and California — states that have supported his businesses, especially Tesla, with considerable tax breaks, regulatory credits and other government help.

Automotive News publisher Jason Stein, who conducted the interview, asked Musk, “How about China as an EV strategy leader in the world?”

Musk replied: “China rocks in my opinion. The energy in China is great. People there – there’s like a lot of smart, hard working people. And they’re really — they’re not entitled, they’re not complacent, whereas I see in the United States increasingly much more complacency and entitlement especially in places like the Bay Area, and L.A. and New York.”

Last year, Chinese government officials helped Tesla secure loans worth around $1.6 billion to construct and begin manufacturing vehicles at the company’s relatively new Shanghai factory. This year, the Shanghai government helped Tesla get back to normal operations quickly, at its new plant, after the region was struck by a Covid-19 outbreak and issued widespread quarantines that temporarily suspended manufacturing there.

Musk pointed out, Telsa has not received as much assistance from the government in China as domestic companies. “They have been supportive. But it would be weird if they were more supportive to a non-Chinese company. They’re not,” he said.

The enthusiasm the mercurial Musk expressed for China contrasted with his previously stated disdain for communism. In a tweet on Monday this week, Musk mocked social welfare programs in general, and Karl Marx’s “Das Kapital.”

During the Automotive News podcast, Musk also compared the U.S., California and New York to sports teams about to lose their winning status.

He said:

“When you’ve been winning for too long you sort of take things for granted. The United States, and especially like California and New York, you’ve been winning for too long. When you’ve been winning too long you take things for granted. So, just like some pro sports team they win a championship you know a bunch of times in a row, they get complacent and they start losing.”

Among U.S. automakers, “Tesla has had the least government support of any car company,” Musk said.

He boasted about Tesla’s repayment of a loan to the U.S. Department of Energy ahead of schedule.

In June 2009, the Obama-era Department of Energy awarded Tesla a $465 million loan to set up a vehicle assembly plant in Fremont, California, and to begin production of its flagship all-electric sedan, the Model S. Tesla repaid it with interest by May 2013, nine years ahead of schedule. 

The DOE loan was small compared with the tens of billions in TARP loans that went to bail out General Motors and Chrysler during the financial crisis that began in 2008.

However, Tesla has benefited from other forms of government assistance in the U.S. According to analysis by the Los Angeles Times, Tesla’s government assistance in the U.S. has surpassed $4.9 billion.

Tesla’s government support in California has included more than $220 million in sales and use tax exclusions from the California Alternative Energy and Advanced Transportation Financing Authority, as well as zero emission vehicle and solar renewable energy credits granted by the state. The sale of these regulatory credits were a major factor in Tesla’s profitability in the past four quarters. 

As CNBC and others previously reported, New York state spent $959 million on a solar-panel factory in Buffalo, now operated by Tesla, in a drive to bring more than 1,000 high-paying tech and manufacturing jobs to the state.

Tesla hasn’t fulfilled its employment obligations in New York so far. A financial filing out this week revealed that Tesla has obtained a full-year extension from the state in order to meet the head count requirement. If it does not, Musk’s electric car and renewable energy venture will have to pay back $41 million to the Empire State.

On the podcast, Musk also celebrated the fact that Tesla is now seen as a “legitimate” American and multinational automaker. While it used to be an upstart and underdog, Automotive News asked him what was going on with the soaring price of Tesla shares, which are up more than 240% this year, and whether Musk felt a need to manage investors’ expectations.

The CEO demurred:

“It’s not worth trying to massage the stock market or manage investor expectations. It’s just. You know? At the end of the day, if you make great cars and the company’s healthy and making great products investors will be happy…If you make lousy products your customers will be unhappy and then your investors will be unhappy.”

He offered this advice to other entrepreneurs: 

“My advice, you know, to corporate America or companies worldwide is spend less time on marketing presentations and more time on your product. Honestly that should be the number one thing taught in business schools. Put down that spreadsheet and that PowerPoint presentation and go and make your product better.”

He also predicted that online car sales, and delivering cars direct to consumers, rather than vehicle sales through stores or traditional dealerships, would become even more of a standard, after Covid-19. 

Tesla saw “strong orders through the whole pandemic,” Musk said. Tesla reported that its deliveries declined about 5% for the second quarter of 2020. Due to Covid-19 impacts, most other automakers saw sales plunge more than 30% during the same period. The CEO concluded, “Having a traditional dealer situation, I think, seems increasingly unnecessary and I think probably the pandemic just reinforced that.”

Tesla shares closed down 3.8% on Friday, but have been on a spectacular run this year despite the global coronavirus pandemic and the onset of a recession.