Elon Musk Is Government Subsidy Critic But Tesla’s Q2 Results Were Helped By Covid-19 Aid

Tesl

TSLA
a CEO Elon Musk has criticized government stimulus efforts aimed at minimizing economic damage due to the coronavirus pandemic, but the electric-car maker disclosed that it received government payroll “benefits” that helped it stay profitable during this year’s second quarter.

Tesla didn’t provide details on how much financial aid it received or even which countries provided the benefits. The Palo Alto, California-based company didn’t respond to a request for details. 

“As part of various governmental responses to the pandemic granted to companies globally, we received certain payroll-related benefits which helped to reduce the impact of the Covid-19 pandemic on our financial results,” the company said in its quarterly earnings filing. “Such payroll-related benefits related to our direct headcount have been primarily netted against our idle capacity charges disclosed as well as marginally reduced our operating expenses. The impact of the idle capacity charges incurred in the current period were almost entirely offset by our cost savings initiatives and payroll-related benefits.”

Musk tweeted on July 24, days after Tesla reported a $104 million net income for the quarter, that “Another government stimulus package is not in the best interests of the people imo.” He followed that with a Karl Marx-related tweet on July 27 linking Marx’s book Das Kapital to the idea of government handouts. 

The billionaire tech entrepreneur, who qualified for a further stock award worth more than $2 billion after the second quarter, is a curious critic of government assistance, given the outside role it has played in Tesla’s history. The company was able to get into production owing to a $465 million low-interest loan provided by the Obama Administration and its customers received federal tax credits for years, as well as state rebates, for buying its zero-emission vehicles that were worth billions of dollars. 

The company is also the top beneficiary of indirect government subsidies in the form of sales of pollution credits–including California ZEV credits, U.S. Corporate Average Fuel Economy credits and more recently European Union carbon credits–to automakers that need them. To date, Tesla has reported $3.1 billion in lucrative credit sales which are essentially free money.

In addition to its production and design operations in California and Nevada and a solar panel plant in New York, Tesla operates an auto plant in Shanghai and has engineering facilities in Germany where it’s also building a new auto-assembly plant. That factory, near Berlin, is being funded by a long-term carbon credit sales arrangement with Fiat Chrysler.

Tesla were up about 1% to $1,553.13 in Nasdaq

NDAQ
trading on Tuesday. Forbes estimates Musk’s net worth to be about $70 billion, due to his large stake in Tesla.

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