Biden Hits Elon With $6 Billion Payback
By George Rasley
Elon Musk has been in the Democrats’ crosshairs ever since he bought Twitter and transformed it into free speech platform X, and his “bromance” with President Donald Trump has only whetted the Democrats’ thirst for payback.
On top of the Biden administration’s various politically motivated regulatory moves against Musk’s companies, including Tesla automobiles and Space X, their disqualification of Elon’s Starlink system to provide crucial post-hurricane emergency communications systems, the Democrat California Coastal Commission in a blatantly political decision, decided to deny Space X’s request for more launches from Vandenberg Air Force Base.
“I really appreciate the work of the Space Force,” said California Commission Chair Caryl Hart. “But here we’re dealing with a company, the head of which has aggressively injected himself into the presidential race and he’s managed a company in a way that was just described by Commissioner Newsom that I find to be very disturbing.”
“Elon Musk is hopping about the country, spewing and tweeting political falsehoods and attacking FEMA while claiming his desire to help the hurricane victims with free Starlink access to the internet,” Commissioner Gretchen Newsom said at the meeting in San Diego.
Now, the Biden administration has handed Rivian, Musk’s principal electric vehicle competitor, a $6 billion loan to subsidize their uncompetitive electric vehicles.
According to reporting by the Wall Street Journal, Rivian is rapidly burning through cash. It has suffered repeated assembly disruptions and had to recall vehicles to fix defects.
But, rather than address their production issues, Rivian hired Biden’s former Senate Chief of Staff, Alan Hoffman, as its head lobbyist.
When Rivian went public three years ago its stock surged to a fantastic $120 billion market valuation. Rivian at the time had sold a mere 156 vehicles despite being in business for 12 years. Its shares are now worth $11.8 billion – meaning the Biden administration is handing Rivian a loan for more than half its market cap.
As the WSJ observed:
Investors may have been betting on government subsidies supercharging Rivian’s growth, and they can’t blame the Biden Administration for not delivering. The Inflation Reduction Act includes a $7,500 tax credit per vehicle for EV buyers, plus a $40,000 credit for commercial EVs. The latter is a particular boon for Amazon, that corporate pauper, which owns shares representing 14.8% of Rivian’s voting power and has agreed to buy up to 100,000 of its delivery vans. The IRA also includes hefty subsidies for domestic battery production.
Despite these giant subsidies, Rivian lost about $4 billion on the 37,396 vehicles it has sold during the first nine months of this year. That’s $107,043 a vehicle. Ford loses only about $51,000 on each EV sold.
The “loan” will go to build a factory in Georgia with the capacity to make 400,000 SUVs and crossovers. This follows Illinois Gov. J.B. Pritzker’s pledge this spring of $827 million in state “incentives” for Rivian to expand production at an Illinois plant to 215,000 vehicles a year, reported The Journal.
Even Rivian seems to harbor doubts about its future, observed the WSJ editors. It warns that current and potential competitors have “significantly greater financial, technical, manufacturing, marketing, or other resources.” And, even if Rivian scales up and builds all these EVs, there’s no guarantee someone will buy them. Rivian’s sales fell in the last quarter, which it attributed in part to a “more challenging consumer environment.” It’s right about that. Traditional auto makers are having to slash prices to sell EVs to meet government mandates.
So, why would the American taxpayers “loan” Rivian $6 billion when the company itself questions its viability?
We see two things at work here.
One is that Democrats are notoriously bad at capitalism. They think that if massive taxpayer subsidies won’t entice consumers to buy a product that doesn’t meet their needs, then mandating its use surely will.
The other thing at work is that Democrats are really good at payback and weaponizing government against their enemies, see President Trump and now Elon Musk for examples.
The gift to Rivian is obviously a shot at Elon Musk and Tesla, using $6 billion of taxpayer money as the ammunition. Fortunately, the Department of Energy says the loan is a “conditional commitment” that hinges on Rivian meeting “technical, legal, environmental, and financial conditions.” That means the Trump team may have the power to scrap it, which we urge them to do at their first opportunity.
George Rasley is editor of Conservative HQ.
Published with permission of conservativehq.com