How Tesla’s Elon Musk became the master of fake business – by Lawrence Solomon (Financial Post – August 11, 2017)

“In 2015, Tesla sold 2,738 cars in Denmark; in 2016, after the government
said it would be phasing out subsidies, Tesla sold 176 cars, a drop of
94 per cent.”

The fastest-growing industries over the last two decades have been fake industries, those that thrive despite having few customers willing to buy their products except at fire-sale prices.

The fake industries all have the same angel investors — governments — and the same promoter touting their wares — again governments. These fake industries, the brainchild of subsidy entrepreneurs, also tend to be dazzlers, the better to wow their politician backers and the stock market speculators betting on cash flows of government subsidies.

Today’s fake-industry leader is Tesla, the electric car developed by subsidy entrepreneur Elon Musk, who also heads SolarCity and SpaceX, other government darlings. Musk’s genius is primarily in the subsidy-seeking realm — by 2015, U.S. governments alone had given his companies US$5 billion through direct grants, tax breaks, cut-rate loans, cashable environmental credits, tax credits and rebates to buyers of his products.

Counting subsidies from Canada and Europe, the government bankroll could be double that. Counting indirect subsidies — such as electric-vehicle-friendly infrastructure — the subsidies soar ever higher.

Speculators who bet on Musk’s ability to continue to get government backing have been well rewarded — Tesla’s stock value has skyrocketed, so much so that its market valuation topped that of BMW this year. Tesla stock is now valued at US$801,000 per car sold in 2016, compared to $26,000 per BMW sold and $5,000 per GM car sold.

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