Tuesday, January 27, 2015

Tesla Is No Free Market Champion

Some conservative types have been extolling the electric car company Tesla's fight against archaic and anti-consumer laws that prevent direct-to-consumer car sales. But Phil Kerpen, writing in National Review Online, cautions that Tesla Motors (NASDAQ:TSLA) is hardly a model of free-market capitalism.
In fact, he says, the company wouldn't last long without massive government subsidies.
First, Tesla buyers get a $7,500 federal tax credit, plus a $2,500 rebate from several states. Then there are the environmental credits that California hands out to companies selling "zero emissions" cars.
A Tesla Model S, for example, gets four credits for each one that moves off the lot, which Tesla then sells -- at $5,000 apiece -- to other car companies that can't meet the state's zero-emissions sales mandate. In 2013, these credits netted Tesla $129.8 million
It's not as though Tesla is pretending otherwise. It says right in the company's 2014 annual report that its growth "depends in part on the availability and amounts of government subsidies and economic incentives."
Kerpen has a better way of putting it: "Tesla has effectively socialized its costs through subsidized loans, tax credits, abatements, and regulatory schemes while privatizing its gains."

Read More At Investor's Business Daily: http://news.investors.com/blogs-capital-hill/012615-736307-tesla-depends-on-government-subsidies-to-survive.htm#ixzz3Q2jpOETr
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