I presume that the question the editors of the Wall Street Journal ask about Tesla is rhetorical:
No one should begrudge Mr. Musk his commercial success, but one question comes to mind: Why does Tesla still need subsidies to make and consumers to buy electric cars? The House reconciliation bill would extend the existing $7,500 EV tax credit through 2031 and remove the 200,000 car per-manufacturer cap, which both GM and Tesla have hit.
This is in addition to the many other government subsidies to produce batteries and the cars themselves. Tesla also benefits from the sale of regulatory credits to companies that don’t produce enough electric or hybrid cars to meet government mandates. Tesla’s 10-Q filing shows revenue of $1.15 billion from selling regulatory credits through Sept. 30 this year.
I will answer that question with a question: would Tesla be or remain a trillion dollar company without the subsidies? I think that Elon Musk is a very smart guy but his primary expertise is neither technical nor in business acumen but in seeking and receiving subsidies.
As additional evidence I submit the provisions in the “infrastructure bill” (the real infrastructure bill as opposed to the phony “social infrastructure” bill) regarding rural broadband could in effect be a subsidy to another of Mr. Musk’s companies: Starlink. My take differs from that of Congress. I think that Starlink’s network renders the need for special action or support for rural broadband obsolete.
Considering the complete unmooring of Tesla’s market valuation from any rational analysis of profits/revenue/free cash flow, I submit the answer is Tesla would probably still be a trillion dollar company.
As a benchmark for insanity; Tesla is more valuable then every other auto manufacturer in the world combined.
Remember Cathy Woods projected Tesla would be a 3 trillion dollar company in 4 years.
“…would Tesla be or remain a trillion dollar company without the subsidies?”
Of course it would. With all the advances in technology, and burgeoning consumer demand, people are scrambling and fighting among themselves like a crazed mob to get into show rooms. Its like Wall-Mart of Black Friday. Why, if you ask they are filling up steves ER’s with the injured……….
OK. I just made that up. It wouldn’t, because it needs subsidy in the worst way.
As an aside, I was talking to my Porsche salesman who said their EV, the Taycan, is selling like hot cakes. What most people fail to understand is that an EV is really not a long hauler. Its truly the Sunday afternoon short cruiser. The same guy who has a 911 for 5 years and only has 5000 miles on it buys a Taycan. Its different. Has the wildest color schemes. And doesn’t save jack squat in C emissions.