Sunday, September 14, 2014

(Related update): Tesla as Green Cronyism Victim; Tesla as Green Cronyism Perpetrator

Related update: In a major development this past week, Tesla announced that it was going to locate a major battery manufacturing facility not in California, where Tesla already receives corporate welfare in the form of tax subsidies, but in neigboring Nevada.  Why?  You guessed it: Cronyism. From a blog post over at Crony Chronicles:
Tesla Motors recently announced that it will build its new lithium battery factory in Nevada. The Nevada state legislature and governor offered Tesla an incentive package of up to $1.3 billion to build the factory in the state. As part of the package, Tesla will face no property or payroll taxes for 10 years and no sales or use taxes for 20 years. The package also includes discounted electricity and other tax incentives.

While Tesla’s factory may bring jobs to Nevada, the tax incentive package is corporate welfare. Company-specific tax incentives let politicians favor selected companies over others. When politicians have the discretion to treat companies or people differently under the law, cronyism becomes a problem.

Original post (4/23/14): Writing in the Washington Times a few weeks ago, Ben Powell helps clear away some of the confusion that many have about the business dealings of the Tesla car company.  Turns out that Tesla is both a victim and a cause of green cronyism.  Here's Powell referring to recent decisions by several states protecting the traditional car dealership model from the threat of Tesla's competing sales model:
They don’t like competition and want the government to forcibly prevent companies from selling directly to consumers in order to protect old and potentially inefficient distribution networks from being displaced. Such bans impede consumers from finding the best deal through the market’s discovery process.

Some on the left claim that the ban unfairly targets manufacturers of electric cars. It primarily involves Tesla, but consumers should shed no tears for that company because Tesla is a welfare queen.
And here's Powell on Tesla as green crony:
The company received a $465 million loan from the Department of Energy to support the development of its Model S, which retails for more than $70,000. The Japanese government subsidized Panasonic to develop the lithium-ion batteries that power Tesla cars. Tesla sells California zero-emissions credits to other companies for revenue.
Of course, there is also the $7,500 federal tax break for each purchase of a Tesla electric car. That wasn’t enough for Tesla, though, and the company is now seeking subsidies from the Chinese government.