Recently, the L.A. Times published a story about the $4.9 billion that Elon Musk's companies – Tesla Motors, SolarCity, and SpaceX – have received from state and federal governments in grants, tax incentives, environmental credits, low-interest loans, and aid with factory construction. Most of this money stems from the positive environmental impact that these companies can potentially provide.
Though many people believe in the movement toward further use of alternative energy sources, the idea that Musk's companies receive that much taxpayer money has led some to question the return that consumers receive on their investment. Musk spoke to these concerns in a recent interview with CNBC.
In the conversation, Musk did not argue the figures from the original article, but he emphasized the fact that all of the money comes in increments over a long period of time, rather than the company simply receiving "some huge check." In Musk's mind, the government aid is neither necessary nor superfluous.
"Both of those positions are false," he told CNBC reporters. "What the incentives do is they are catalysts. They improve the rate at which a certain thing happens."
Though he continues to claim that the funding is unnecessary, his companies' SEC filings suggest that it is quite important. For instance, a recent SolarCity filing states, "The expiration, elimination or reduction of… rebates, credits and incentives would adversely impact our business."
Musk made it clear in his interview that the amount his companies receive pales in comparison, to both the fossil fuel industry, which receives about $550 billion annually, and the renewable energy industry, which receives about $120 billion annually, according to a study by the International Energy Agency.
One example of the large amount of money that Tesla receives, is in Nevada, where the state is providing $1.3 billion in benefits for a new factory near Reno. Musk says that money won't come all at once. "The $1.3 billion…is actually spread out over 20 years." And that's only if the factory has an "economic output…of about $5 billion per year."
The remaining question, though, still has to do with why a taxpayer should want to provide so much aid to these companies. CNBC touched on this by asking why Tesla has yet to produce a car that would be affordable for the general public. Musk replied, "The nature of technology development and the need to achieve economies with scale prevent us from coming out with a compelling, low-cost electric car right now." But he hopes to release "some sort of more affordable car in approximately 2017."
It will be interesting to see what a guy who is worth $13.3 billion thinks is "more affordable."