Smart and smarter: Musk vs. Pickens
While Mr. Pickens is hardly unbiased in his opinion, electric vehicles are a subsidized mal-investment where people like Elon Musk have either duped idiotic government or used them like a coin Operated vending machine to get what he wanted. VC like returns.
From our previous article originally entitled "How Elon Musk Gamed a Broken Market"
Tesla borrowed Venture Capital (VC) money from Elon Musk at VC rates. It borrowed VC money from taxpayers at non-VC rates
Tesla needed $500MM to get started in 2008. The US Government lent $465MM to Tesla at 3% interest under its push for Green Energy. Elon Musk lent the company $38MM at10% interest plus stock options. Here are the profits on those loans:
- Elon Musk’s $38MM generates profit of $1.4BB, or 3,600% ROR- a VC payout
- Taxpayers’ $465MM- generates profits of $12MM or 2.6%ROR- not a VC Payout
Taxpayers took VC risk without VC returns. The table is set for Elon to arbitrage the Government’s largesse much more. All in, the US Government committed about $4.9BB to finance Tesla’s operations
Pickens here isn't showing issue with the poor returns for taxpayers as we did. We can guess why. But he is making a solid point that subsidies skew outcomes, and frequently the wrong way.
Electric vehicles do not reduce pollution better or any more efficiently than other alternatives out there. But, because they may be a future solution, they have been put to the forefront. And that impedes other solutions' organic growth. Subsidies are a tax on competition.
We wouldn't trust T. Boone with our water supply, but here we agree even putting aside our own bias against Tesla.
We just wonder what Pickens wants to "level the playing field".
His point seems to be that NGV and EV are about the same on NOx pollutant emissions, but EV cost a lot more.
Maybe he expects the US government to be more prudent in its spending?
An Open Letter To America's Governors
I have always been for an all-the-above approach to this nation's energy policy, but that doesn't mean we need to jam a square peg in a round hole. Solar, wind, electric and natural gas all have their place, but it must be in accordance with an appropriate application. President Obama tried to grease that square peg into a round hole, choosing energy favorites with a hefty $2.7 billion, supplied by Volkswagen. Now, there is an opportunity for the states to correct that mistake and implement a more effective energy plan.
As you likely know, Volkswagen was caught cheating on its emissions tests, resulting in vehicles on the road that far exceed federal NOx emissions standards. The German car manufacturer was sued by the Obama EPA and settled for $16 billion with $2.7 billion going to the states, primarily for the creation of medium and heavy-duty vehicle grants to mitigate the NOx.
Each state will receive an allotment of the $2.7 billion, and the Governor of each state must appoint a department to create a plan for spending the funds that follows the terms of the settlement. However, favoritism is standing in the way of a cost-effective, energy-efficient, market-driven plan.
While all alternative fuel types are eligible for grants of 25 percent of the vehicle cost, guess which technology was granted special treatment to receive 75 percent of the vehicle cost? You guessed it: electric vehicles (EVs). Some argue that they are cleaner because they have zero emissions. Well, they have zero tailpipe emissions, but plenty emissions are produced at the generation facility that creates the electricity. Keep in mind that many are still fired by coal and very few are utilizing even a small amount of solar or wind. In fact, when you look at the NOx emissions produced to create the electricity to power an EV compared to the tailpipe emissions of a near-zero natural gas vehicle (NGV), the NGV is at least equal and likely cleaner. For example, the South Coast Air Quality Management District of California views the new near-zero natural gas engines to be zero-emission equivalent based on the district's mix of electric generation supplying their grid - and they have one of the cleanest grids in the country. So, natural gas engines for heavy-duty trucks are far cleaner than diesel engines and as clean as electric vehicles.
While comparable in regard to NOx emissions, NGVs and EVs are miles apart on cost. An all-electric medium or heavy-duty vehicle can cost twice the amount or more of a similar vehicle powered by a near-zero natural gas engine. As for buses, an EV bus can cost you north of a million dollars.
So you can see, there is no environmental or economic case for favoritism of EVs over other alternative fuel vehicles. In fact, there should be no favoritism at all. I have always been for fair and equitable market competition - government should not reach in and pick the winners and losers. If the idea is to mitigate the most NOx emissions with a set amount of funds, states should be free to accomplish that goal in the most effective way. Now, it's becoming clearer that the focus should be on getting medium and heavy-duty trucks running on natural gas.
That's where America's Governors come in. The 75 percent funding level for EVs is a ceiling. Governors can correct Obama's multi-billion dollar give-away to the EV lobbyists by creating an even playing field for all alternative fuels, by providing grants in the amount of 25 percent of the vehicle cost regardless of whether it runs on propane, natural gas or electricity. Furthermore, providing the lower 25 percent will mean more vehicles get funded and thus more emissions reduced.
So the question presents itself: Will you, Governors, continue the Obama give-away or will you put in place a market-driven plan to deploy cleaner and cheaper vehicles on the road?
The choice is easy - it's up to each of you to do what's right for our nation.
Read more by Soren K.Group