Tesla: Not exactly innocent in the government partiality business
posted at 6:01 pm on March 18, 2014 by Dustin Siggins
Last week, New Jersey governor Chris Christie made his state the fifth in the nation to put enormous roadblocks in the path of Tesla, the electric car company whose business model is creating havoc for gas-powered and dealership-based automakers. AllahPundit called it as he rightly saw it:
But am I right in thinking that this is nothing more than pure, sweet, 200-proof special-interest cronyism at work? The sticking point, as some of you already know, is that Tesla sells directly to the public through its own stores, not through third-party dealerships. Car dealers obviously have a strong incentive to make sure that that business model doesn’t catch on. Solution: Keep Tesla off the market, especially a market like New Jersey where there’s high demand for luxury cars among well-heeled Manhattan commuters.
Condemnation from the right has been pretty thorough. Policy writer and analyst Derek Khanna says Christie’s move ignores “creative destruction,” and after the governor’s decision “57 million Americans live in states where Tesla cannot legally sell cars.” A.J. Delgado writes at National Review Online that several states are pushing regulations to make that number of Americans even larger, and “these laws effectively target only Tesla, the sole manufacturer known for direct sales.”
However, Tesla does not deserve as much sympathy as it may appear to at first glance. Per Delgado:
New Jersey is just the latest state seeking to block Tesla. Although the company has received hundreds of millions of dollars in federal and state subsidies — in the form of loans, air-pollution credits, and tax breaks for buyers — Tesla finds itself on the side of the free market when it comes to the state-by-state struggle against America’s patchwork of car-dealer protections.
On its website, Tesla notes a $7,500 federal subsidy for its vehicles, and on February 10 China’s subsidies helped shoot Tesla to a record stock price. Of course, Tesla is hardly alone in receiving assistance from friendly governments. In America, the domestic automakers saw decades of tariffs designed to protect them from Asian and European automakers, plus the 2008 bailout and subsequent harassment of Toyota by Congress. BMW, Toyota, GMAC, Ford, and Chrysler also secretly received billions in Federal Reserve loans.
And we haven’t even gotten to all of the federal subsidies to the energy sources these companies use. The Left loves to rage about federal subsidies for oil companies, but as detailed by Just Facts, gasoline’s subsidies amount to a penny a gallon. In order to reach the $7,500 per-car federal subsidy Tesla receives, the average new automobile — which as of last September got 25 miles per gallon — would have to travel nearly 19 million miles.
The production of electricity also sees enormous subsidies, but they are spread out through numerous other programs, and thus largely hidden. Those programs include large wind and solar subsidies and smaller nuclear and coal subsidies.
So, yes, criticism of the states that are banning Tesla is appropriate, especially the states that are headed by Republican governors and/or legislatures — but since Tesla has partnered with the government partiality business for years, sympathy should be a scant commodity.