Liberal entrepreneur Elon Musk’s business ventures have benefited from nearly $5 billion in government subsidies in the past few years, but apparently that’s not enough taxpayer support to stop his electric car business from losing $4,000 on every vehicle it sells.
Tesla Motors “burned $359 million in cash last quarter in a bull market for luxury vehicles,” according to Reuters, causing the company to “cut its production targets for this year and next.” Musk may even be forced to sell more stock to help plug the gap in the company’s finances.
Reuters reported that “Tesla plans to build between 50,000 and 55,000 cars this year,” most of which are built-to-order. The company’s latest filings showed it “delivered 11,532 cars in the second period and said it had an operating loss of about $47 million, for an operating loss per car of about $4,000.”
Interestingly enough, Tesla’s losses may be much higher than the company reports. Reuters notes that using “generally accepted accounting principles, or GAAP, used by GM or Ford, Tesla’s operating losses per vehicle have steadily widened to $14,758 from $3,794 in the second quarter of 2014.”
In the last quarter, Tesla saw its operating costs increase and its car sales fell — right now a Tesla Model S goes for $70,000 before federal and state tax credits kick in. Depending on the type of Model S you buy, the price can actually be $106,000 or more.
Despite the huge losses, however, Musk plans on expanding the company’s production to include a new battery-powered SUV and get into the battery business. Earlier this year, Musk unveiled a line of expensive batteries that could be used to store energy from solar panels to be used when the sun goes down.
Musk clearly hopes the battery packs will revolutionize the green energy industry and urge more people to buy solar panels — something that would help his other business, SolarCity, which already benefits from federal tax credits. So far, most solar panel users have opted not to use Tesla’s batteries because they can sell their solar power to utilities for money.
News of Tesla’s huge losses comes after reports that Musk’s business ventures have benefited from $4.9 billion in federal and state government subsidies. Tesla Motors, where Musk is CEO, has gotten generous federal loans and benefits from state and federal tax credits encouraging people to buy electric cars.
“In all, Tesla buyers have qualified for an estimated $284 million in federal tax incentives and collected more than $38 million in California rebates,” the Los Angeles Times reported in May, adding that Tesla already secured “a commitment of $126 million in California subsidies to companies developing energy storage technology.”
The Times also noted that Tesla got $1.3 billion in benefits from the state of Nevada to build a battery factory.
Reuters noted that even with the huge losses last quarter “Tesla’s stock is still about 70 percent higher than it was two years ago, and 8 percent ahead of its level on Jan 1.” The company has a market capitalization of $31 billion, meaning the company is worth more than “Fiat Chrysler Automobiles NV, the much larger maker of Ram pickups and Jeep Grand Cherokees.”
Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact licensing@dailycallernewsfoundation.org.
All content created by the Daily Caller News Foundation, an independent and nonpartisan newswire service, is available without charge to any legitimate news publisher that can provide a large audience. All republished articles must include our logo, our reporter’s byline and their DCNF affiliation. For any questions about our guidelines or partnering with us, please contact licensing@dailycallernewsfoundation.org.