Figueres told Bloomberg News last year that the Chinese government (which continues to enforce forced abortions, infanticide and compulsory sterilization) is “doing it right” when it comes to climate change, even though China is by far the biggest emitter of greenhouse gasses.
Jun 9 Tesla: Automobile Rent Seeker
Elon Musk keeps raking in Nevada taxpayer largesse while being a wee bit behind producing the jobs and capital expenditures he promised Governor Sandoval. Applied Economics looks foolish now that the real numbers are coming in at a fraction of the rosy picture the for-hire economists painted for the governor.
In 2016, 1700 employees were supposed to be on the job. The year-end audit indicates only 477 were toiling in the gigafactory. Maybe Mr. Musk will catch up this year–except the projections are much higher, 4,700 employees as supposed to be on site by year-end. In 2018 the number is projected to be 6,500.
Last year $1.1 billion was spent on the gigafactory, less than half the projected $3 billion. After state government paid $43 million to brothel owner Lance Gilman for Tesla’s land and now has forked over another $59 million in transferrable tax credits, taxpayer have “invested” $214,000 in each $22.00/hour job.
Seeking Alpha writer Montana Skeptic speculates, “it’s inconceivable Tesla will achieve the capital expenditure number. After all, Nevada assumed Tesla would have completed all five phases of the Gigafactory by October of this year. Tesla is just now finishing up Phase 2, and there’s no indication it has any plans soon to start work on the other three phases.”
Of course it will all be worth it in the long run. Applied Economics claimed, “Based on the construction and operations impacts combined, the Gigafactory could generate overall impacts of $100.6 billion over 20 years.”
And that’s not all. “The facility would directly employ about 6,500 people with an estimated annual payroll of $369.7 million by 2018. Through the multiplier effect, an additional 16,200 jobs and $955.3 million in annual payroll could be supported at other local businesses, based on the most likely scenario for the level of supplier demand that could be met locally.”
So, in the end, according those at Applied Economics taking a wild-assed guess, “Over the 20 year period, the company could generate up to $1.95 billion in direct and indirect revenues in Nevada, net of abatements and reimbursements, based on the most likely scenario.”
But if you asked the aforementioned Mr. Skeptic, he says, “I believe the Model 3 will lose money. The Gigafactory will never be fully built. The solar roof tiles will never be more than a tiny niche product, and will be unprofitable as well. The Tesla Energy business cannot possibly generate material profits, as the battery storage business is highly competitive and commoditized.”
Jim Chanos, who is famously short Tesla stock, told Barron’s
We think [Tesla] will be burning close to $750 million to a $1 billion a quarter for the next handful of quarters. They have not finished the Gigafactory. The batteries are made by Panasonic. You have an executive departure list – the only one I’ve seen longer in the last two year’s is Valeant Pharmaceuticals (VRX). People are leaving left right and center.
[Model 3s] are supposed to go into production in July. They’ll be competing with real auto companies in 2018. Elon Musk is trying to reposition [Tesla] into something other than an automobile company, but it’s an automobile company with a money-losing solar subsidiary. Rule of thumb: it takes about 50 cents in capital for every dollar of automobile revenues. If Musk is going for 500,000 Model 3s and 100,000 of the Model Ss and Model Xs, he’s going to need something on the order of $30-some billion in revenues. He’s going to need another $10 billion in capital to do that too. So the Teslarian should brace themselves, because they’re going to get a chance to buy a lot more stock.
Chanos says Tesla is in the auto business. Automobile rent seeking, to be exact.