Why does Musk jump into Trump's train?
An interesting article appeared yesterday at the Huffington Post. In a very caustic form, but with a large number of supporting references, the author claims that Musk is forced to support Trump in order not to lose state support, without which his unprofitable enterprises would be doomed. I bring to your attention its translation.
Photo: HECTOR GUERRERO via Getty Images.
Hard times have come for the “green guru” Ilona Mask.
First, President Trump, to whom Musk was in opposition during the election campaign, appointed him to his Strategy and Policy Forum and to the production council . Then Mask broke with the environmental community and supported Rex Tillerson, former CEO of Exxon Mobil, for the post of US Secretary of State. Progressists took this as a betrayal and flew into a rage. “What did they promise you in the golden room?” - one tweeted Mask.
')
Secondly, Musk began to defend Trump’s controversial ban on Muslim entry, retweeting a tweet saying: “After reading, the decree looks much better than what the left described.” This provoked an even louder response from the progressives. One group, Americablog , went so far as to create an online petition requiring Mask to break up with Trump. “Enough!” The group announced. “Tell the Mask to stop defending Trump's racism, it's time to throw Trump out ( untranslatable wordplay, in the original“ to dump Trump ” ).”
For most of his career, Musk meticulously created an image of an uncompromising environmentalist, which made him attractive to the left. Why, then, does he risk this reputation, his most valuable asset, protecting Trump? The answer is simple. He has no choice. His businesses depend on the federal government, and still do not make a profit.
After SpaceX was saved from bankruptcy in 2008 with the first government contract, the space company Musk continued to function only because it received $ 6.5 billion from contracts with NASA and the US military. After SolarCity, the rooftop solar panel company, went public, it didn’t have a single profitable quarter , despite receiving tax breaks that should have helped reduce the price of the panels. In November 2016, SolarCity came so close to bankruptcy that Musk was forced to save her by buying Tesla for $ 2.6 billion .
But Tesla, the company Mask, which produces electric cars, itself constantly had and has serious financial problems, despite the fact that the government provided tax privileges to reduce the price of cars. Since 2010, when the company became public, and until the third quarter of 2016, Tesla showed a profit of only two quarters . The fourth quarter figures, which need to be published by February 15, do not look much better. Analysts expect another unprofitable quarter. Worse, the question of liquidity arises. Tesla claims to have $ 3.2 billion in cash at the beginning of the fourth quarter, but up to half of it could be spent on settlements with suppliers and creditors and unsecured cash assets, such as deposit for cars and repurchase agreements.
There are other problems. In addition to its chronic non-profitability, Tesla now has to commit itself to SolarCity, not only $ 3 billion in debt at the time of the takeover, but also a negative balance. Faced with the risk of running out of money, Musk did what he announced earlier, he would not do. In the third quarter, Musk said to investors that the fourth quarter would be so good that he would not need to raise additional funds. However, in December, using two credit lines at Deutsche Bank, Musk collected another $ 500 million of debts. And in January 2017, SolarCity announced plans to raise $ 145 million through a bond issue.
The situation was worsened by the fact that in the fourth quarter it turned out that Tesla had not reached the planned production targets. The 83,922 cars produced by 3,300 did not reach the plan. Because of this, Bank of America / Merrill Lynch issued a sharp indictment: “The Model S has been in production for four years now, and explanations about production problems are becoming less convincing. Production Model S just falls. Further, advertising statements about increasing production volumes by 64% to 83,922 in 2016 mask the fact that Tesla’s total production is less than one-third of the production of a conventional automobile plant ... We believe that in the near future, production will need to reach high-quality critical mass in order to create a constant real profit and turnover, which will be able to finance the future plans of the company ".
The shaky state of the business empire Mask explains well why he jumped on the Trump train. Musk may want short-term privileges from the government, such as tax breaks on solar energy. But if the Mask companies remain unprofitable, and by all indications, it will, and he will no longer be able to save capital, the Mask may have to turn to Trump and the government for more serious support. Therefore, in the near future we should not expect a gap Mask with Trump. Unfortunately for Mask, this can ruin his relationship with the progressives, who until recently were his most loyal supporters.
NOTE: I understand perfectly well that the article is quite sharp, and the topic is holivar. Therefore, in the comments I would like to hear not the labeling of "crook / savior of mankind," but a constructive discussion with references to facts.
Photo: HECTOR GUERRERO via Getty Images.
Hard times have come for the “green guru” Ilona Mask.
First, President Trump, to whom Musk was in opposition during the election campaign, appointed him to his Strategy and Policy Forum and to the production council . Then Mask broke with the environmental community and supported Rex Tillerson, former CEO of Exxon Mobil, for the post of US Secretary of State. Progressists took this as a betrayal and flew into a rage. “What did they promise you in the golden room?” - one tweeted Mask.
')
Secondly, Musk began to defend Trump’s controversial ban on Muslim entry, retweeting a tweet saying: “After reading, the decree looks much better than what the left described.” This provoked an even louder response from the progressives. One group, Americablog , went so far as to create an online petition requiring Mask to break up with Trump. “Enough!” The group announced. “Tell the Mask to stop defending Trump's racism, it's time to throw Trump out ( untranslatable wordplay, in the original“ to dump Trump ” ).”
For most of his career, Musk meticulously created an image of an uncompromising environmentalist, which made him attractive to the left. Why, then, does he risk this reputation, his most valuable asset, protecting Trump? The answer is simple. He has no choice. His businesses depend on the federal government, and still do not make a profit.
After SpaceX was saved from bankruptcy in 2008 with the first government contract, the space company Musk continued to function only because it received $ 6.5 billion from contracts with NASA and the US military. After SolarCity, the rooftop solar panel company, went public, it didn’t have a single profitable quarter , despite receiving tax breaks that should have helped reduce the price of the panels. In November 2016, SolarCity came so close to bankruptcy that Musk was forced to save her by buying Tesla for $ 2.6 billion .
But Tesla, the company Mask, which produces electric cars, itself constantly had and has serious financial problems, despite the fact that the government provided tax privileges to reduce the price of cars. Since 2010, when the company became public, and until the third quarter of 2016, Tesla showed a profit of only two quarters . The fourth quarter figures, which need to be published by February 15, do not look much better. Analysts expect another unprofitable quarter. Worse, the question of liquidity arises. Tesla claims to have $ 3.2 billion in cash at the beginning of the fourth quarter, but up to half of it could be spent on settlements with suppliers and creditors and unsecured cash assets, such as deposit for cars and repurchase agreements.
There are other problems. In addition to its chronic non-profitability, Tesla now has to commit itself to SolarCity, not only $ 3 billion in debt at the time of the takeover, but also a negative balance. Faced with the risk of running out of money, Musk did what he announced earlier, he would not do. In the third quarter, Musk said to investors that the fourth quarter would be so good that he would not need to raise additional funds. However, in December, using two credit lines at Deutsche Bank, Musk collected another $ 500 million of debts. And in January 2017, SolarCity announced plans to raise $ 145 million through a bond issue.
The situation was worsened by the fact that in the fourth quarter it turned out that Tesla had not reached the planned production targets. The 83,922 cars produced by 3,300 did not reach the plan. Because of this, Bank of America / Merrill Lynch issued a sharp indictment: “The Model S has been in production for four years now, and explanations about production problems are becoming less convincing. Production Model S just falls. Further, advertising statements about increasing production volumes by 64% to 83,922 in 2016 mask the fact that Tesla’s total production is less than one-third of the production of a conventional automobile plant ... We believe that in the near future, production will need to reach high-quality critical mass in order to create a constant real profit and turnover, which will be able to finance the future plans of the company ".
The shaky state of the business empire Mask explains well why he jumped on the Trump train. Musk may want short-term privileges from the government, such as tax breaks on solar energy. But if the Mask companies remain unprofitable, and by all indications, it will, and he will no longer be able to save capital, the Mask may have to turn to Trump and the government for more serious support. Therefore, in the near future we should not expect a gap Mask with Trump. Unfortunately for Mask, this can ruin his relationship with the progressives, who until recently were his most loyal supporters.
NOTE: I understand perfectly well that the article is quite sharp, and the topic is holivar. Therefore, in the comments I would like to hear not the labeling of "crook / savior of mankind," but a constructive discussion with references to facts.
Source: https://habr.com/ru/post/401165/
All Articles