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Trump’s sweep could be a big setback to Tesla and Elon Musk

• rgbrenner 10y ago
  It talks about Tesla, but I'm not really sure how much oil prices can really decline. I would be more worried about SolarCity and solar in general. Trump says he wants to expand coal, nat gas, etc.. and cheaper prices for those (and perhaps discontinuation of credits for renewable energy) would discourage new solar installations. What would be really sad is if this policy change causes bankruptcies in renewable energy companies... it would take a while to rebuild that, even if the policies are restored later on.
  • hx87 10y ago
    Natural gas would have to be really cheap in order to beat spot prices for solar on sunny days, especially in the southwest. It's still good for peaker plants though. Coal, on the other hand, I don't see being profitable unless Congress starts taxing solar directly, since it still can't beat solar spot prices and it's categorically unprofitable to run coal plants as peakers.
    • JoeAltmaier 10y ago
      If we harvest Methane Hydrate deposits undersea and pipe them into coastal cities, then natural gas could become essentially free. That would be hard to beat.
      • hx87 10y ago
        The capital costs though...and if you ignore capital costs, sunshine is free.
        • JoeAltmaier 10y ago
          They're huge and convenient. Capital costs paid once; gas flows for centuries. It'll amortize to almost nothing.
      • ajross 10y ago
        You have a cite for that? Gas is extraordinarily transportable already. If this were true, we'd be sucking those deposits already and shipping or pipelining the LNG already.
        • JoeAltmaier 10y ago
          Just discovered and mapped. Japan is harvesting them.
      • acchow 10y ago
        Under your definition of "free", aren't current forms of natural gas "free"? Or any other form of hydrocarbon mining?
        • JoeAltmaier 10y ago
          These deposits happen to be freakishly convenient (offshore coastal cities) and the technology to harvest is ready (offshore drilling). Also they are essentially endless (centuries of supply). Its like they were planted there to tempt us.
    • rgbrenner 10y ago
      Coal, on the other hand, I don't see being profitable I was looking up the numbers.. and was happy to see renewables cost being lower. But take a look at this 2015 report from the EIA: http://www.eia.gov/forecasts/archive/aeo15/pdf/electricity_generation_2015.pdf http://www.eia.gov/forecasts/archive/aeo15/pdf/electricity_g... At the time at least, "clean coal" is more expensive than solar.. but if you eliminated the carbon capture requirement (ie: "conventional coal"), it significantly reduces the price, bringing it in under solar. There is a 2016 version of this report.. but it gets rid of the conventional coal costs, because regulation prevents plants without carbon capture from being built. http://www.eia.gov/forecasts/aeo/pdf/electricity_generation.pdf http://www.eia.gov/forecasts/aeo/pdf/electricity_generation....
      • toomuchtodo 10y ago
        Coal does not compete against renewables, it competes against combined cycle natural gas plants. Natural gas pushes the rest of coal out, with the benefit of being lower carbon impact and has the ability to throttle quicker before the evening peak when solar generation recedes. Wind and solar will of course continue to come down in cost, pushing out natural gas, with battery storage replacing the last of natural gas eventually.
        • rgbrenner 10y ago
          Coal does not compete against renewables, it competes against combined cycle natural gas plants. According to the 2016 report, it's tax credits that brings solar PV within 5% of combined cycle plants. Without the credits it's 33% more expensive. (And this is for plants entering service in 2022.)
          • toomuchtodo 10y ago
            Maybe I'm missing your argument? I'm arguing moving to natural gas is a win regardless, even if it takes longer for the cost of solar to come down.
            • 10y ago
  • k8t 10y ago
    I agree. Tesla's whole philosophy, I think, was to get people to buy their cars simply because it's a better car, not for any environmental reasons. Oil prices will affect them, but can't destroy them
    • chronic6l 10y ago
      Oh, come on. A major reason people buy Tesla vehicles because they "want to do their part" for the environment.
      • gph 10y ago
        Yea, but those folks won't change their behavior. If anything they will probably be more encouraged to do more. I think what OP is getting at is that Tesla isn't aiming for just that demographic. Musk has always wanted to produce his cars so that they are desirable to everyone.
        • goshx 10y ago
          Tesla needs to make desirable cars because otherwise the environmental reason alone is not sufficient for more people to make the move. Musk's goal is to get more people to use sustainable energy.
      • erikpukinskis 10y ago
        Yes, true! But that's not the goal. The goal is the Model 3, which should have an industry leading TCO per mile, below the Prius, Honda Fit, etc. Tesla has been explicitly thanking current buyers of Model S and Model X for doing their part providing cash for this environmentalist project. Elon's earliest statements admit that they can't compete on price as a startup. But they have been driving costs down rapidly and their philosophy as OP stated, is to be the best car available in all senses, and not rely on environmentalist good vibes for sales. They already did this for acceleration, automation, and running costs. They still have some categories to go. But that doesn't invalidate the suggestion that their philosophy is about feature parity, as opposed to environmental charity.
      • 10y ago
  • piotrjurkiewicz 10y ago
    > Trump says he wants to expand coal, nat gas, etc.. and cheaper prices for those would discourage new solar installations. This is completely illogical. Increased usage of coal or gas will result in higher prices of those resources, not lower. In addition, switching back to coal and gas as electrical power sources means lower energy costs. Lower energy costs mean lower manufacturing costs, what will finally result in lower electric car/batteries and solar panels production costs. Lower electricity costs will also result in lower operational costs of electric cars.
    • _fizz_buzz_ 10y ago
      He wants to increase supply, which will lower prices.
      • piotrjurkiewicz 10y ago
        This makes rest of my statement even more true (lower resources costs -> cheaper electricity -> cheaper manufacturing of electric vehicles -> better business for Tesla). All they need to do is keep being focused on their primary business, instead buying SolarCity.
        • yessql 10y ago
          Electricity is basically free compared to gasoline. If you cut the price of electricity in half, it wouldn't move the needle at all on EV sales.
          • piotrjurkiewicz 10y ago
            Energy used for production of electric cars/batteries (or any other thing manufactured in modern factories) isn't made from gasoline...
          • vonmoltke 10y ago
            It's significantly cheaper, but it is far from free (unless you are actually not paying for it). Even at a generous $0.10/kWh a Tesla costs about $0.029/mile. At $2.20/gallon, a 30MPG cat costs about $0.073/mile.
  • drzaiusapelord 10y ago
    Tesla and its customers enjoy a fair bit of subsidies. According to the LA Times that number is around $5bn. Trump has stated he wants to cut these types of subsidies and others for renewables as part of his belief that climate change is a "Chinese hoax." I think Elon has a right to worry here as his products are probably too expensive without these subsidies. Even the Model 3 is pricey without that $7,500 tax break. Probably bad news for the Lead and Bolt as well.
    • mikeash 10y ago
      The Model 3 is going to blow through those subsidies within a year of shipping. They're only available for a limited number of cars, then they go away. Tesla clearly thinks that they're viable without the tax credit.
      • yessql 10y ago
        Yes, this is important. Tesla could blow through all of the credits in 2018. Tesla could technically benefit from the EV tax credit being cancelled after that, since its products would no longer qualify, but the other OEMs that have sat on the sidelines waiting for cheaper batteries would not be able to jump in and take advantage of having a subsidy available to them, but not to Tesla, Nissan, and GM that would have used up their credits. The design of the EV tax credit is really bad.
        • mikeash 10y ago
          The benefit to competitors would be limited, since as soon as they created a product that sold in high volumes, they'd use up their subsidy too.
    • caseysoftware 10y ago
      Isn't getting rid of corporate welfare a good thing?
      • kd0amg 10y ago
  • cossatot 10y ago
    I think the talk of expanding coal production in particular was mostly talk aimed at a segment of the electorate (although I haven't followed Trump closely enough to realize the extent to which he realizes this). The demise of Appalachian coal was mostly due to the rise of both natural gas and Wyoming coal, as well as exhaustion of readily available resources. Though Appalachian coal is higher grade, it requires expensive and dangerous mining practices such as room and pillar mining, mountaintop removal, or more traditional practices in increasingly small and geometrically complicated seams. The coal from Wyoming is basically at the surface and can be strip mined at scale very cheaply, with lots of automation. Unconventional oil and gas production is also at odds with coal production. As you've said, oil can't get that much cheaper, and gas is pretty similar, and has more substitution with coal. Many of the restrictions on unconventional production (i.e. fracking regulations) are done at the state level, and given the concern over recent seismicity in associated with injection of post-fracking wastewater, the states probably won't budge that much. If as pro-oil a state agency as the Oklahoma Corporation Commission (the main regulatory agency in OK) is tamping down on production processes, there is very little a Trump administration can do to shift the needle. Similarly, we (he) won't be able to simply deregulate and re-invigorate mining. Too much of the demand is based in China, and a trade war there will simply depress prices further. Additionally, many of the resources are in states that are not overly favorable to Trump, and the state EPAs have a lot of sway, especially in a more 'states rights' environment. Rare Earths, for example, are mostly found in the US near Las Vegas but across the state line in Mountain Pass, California. And NV isn't as red as it used to be either. Lithium production could increase, but I think the problems there are there just aren't a lot of good sources, not environmental regulations. Lithium is tied up with salts or brine (salty water) from hypersaline lakes that dried up and concentrated metals that were already especially abundant due to particular geology. Lithium mining is often just pumping salty water out of aquifers or dredging it from lakeshores. It's not like copper or gold mining/processing that involves nasties like mercury and arsenic. Trump's policies will probably mostly involve somewhat symbolic, macroeconomically insignificant, and locally damaging exploitation of currently off-limits areas like ANWR, offshore CA and the east coast, and possibly many of the new national monuments in the West that may have uranium or other metals. Eliminating the tax incentives for renewables is also likely, but may not yield as much permanent damage as environmental degradation; some companies may lose market share or capitalization, some may bust, but this won't turn the tide.
  • mbostleman 10y ago
    Agreed. But ironically the biggest pressure on solar now (and in the last 5 years) is price manipulation by China - something he promises to fight (though not necessarily for the sake of green tech).
  • jsight 10y ago
    I think that the lack of competition for consumers in the energy sector will reduce the impact on solar. I don't expect utility companies to necessarily pass along their savings (if there are any) to consumers.
  • f_allwein 10y ago
    Interestingly, much the same thing happened in Germany in 2010 - a new chancellor called Merkel decided to revise her predecessor's decision to exit nuclear power. This led to massive phobic protests and upheaval among green energy companies. The decision was only revised after Fukushima, some 6 months later. https://www.theguardian.com/world/2010/sep/06/germany-extend-nuclear-power-stations https://www.theguardian.com/world/2010/sep/06/germany-extend...
  • Steel_Phoenix 10y ago
    The US, under Obama, has nearly doubled our oil production, largely through fracking, to the point where we are now producing more than we use, and also lifted the ban on exports. We're not in the business of trying to make oil cheaper anymore. Fracking is an expensive way to get oil (compared to drilling), and we're near the break even price. The Saudis, who have been manipulating our politics for years by threatening to cut production to raise prices, have now started flooding the market with cheap oil in an effort to starve out both our fracking and our emerging electric car market. Our response has been to pass a law making foreign nations liable for damages caused by their involvement in terrorism committed on US soil, and declassifying the 9-11 report, which shows enough Saudi involvement to open the door for a lawsuit. Considering how much they have in US assets, this could potentially be collected on. It's a threat. We're trying to pressure them into ending their flood of the market so prices will rise. The Saudis know it and have threatened to drop a trillion in US debt and holdings. Say what you want about Trump's social issues, but he understands this kind of game. He's not going to expand a US product that is struggling to break even with intent to lower the sale price. He'll continue pressuring the Saudis to drop their production, oil prices will rise, and it will benefit both the US oil industry, and Elon Musk.
• johansch 10y ago
  I was really surprised by TSLA not taking a very rough and immediate hit. It took a slight hit after a while though,
• toomuchtodo 10y ago
  Counterpoint: https://www.bloomberg.com/gadfly/articles/2016-11-09/trump-cannot-halt-the-march-of-clean-energy https://www.bloomberg.com/gadfly/articles/2016-11-09/trump-c...
• tlack 10y ago
  He doesn't seem totally opposed to renewable energy sources: "It should be the goal of the American people and their government to achieve energy independence as soon as possible. Energy independence means exploring and developing every possible energy source including wind, solar, nuclear and bio-fuels. A thriving market system will allow consumers to determine the best sources of energy for future consumption." From https://www.scientificamerican.com/article/how-president-elect-trump-views-science/ https://www.scientificamerican.com/article/how-president-ele...
  • lingben 10y ago
    if you have been paying attention to what he says, then you would have heard that he is incredibly against renewable energy sources, especially wind (he has a major grudge against wind farms ever since his battle with them in Scotland) http://www.wsj.com/articles/trump-loses-battle-to-stop-wind-farm-near-his-scottish-golf-resort-1450275439 http://www.wsj.com/articles/trump-loses-battle-to-stop-wind-... https://www.theguardian.com/environment/2016/jul/22/trump-resumes-fight-against-windfarm-near-his-golf-course https://www.theguardian.com/environment/2016/jul/22/trump-re... it is notoriously difficult to pin down what Trump stands for because it really depends on the day and time and situation since he only truly cares about himself and only thinks about what will benefit him. but his pronouncements against renewables and his penchant for "clean" coal, opening up drilling on public lands, fracking, etc. is crystal clear
    • flukus 10y ago
      > it is notoriously difficult to pin down what Trump stands for because it really depends on the day and time and situation since he only truly cares about himself and only thinks about what will benefit him. I think it's more that he knows his audience. He isn't going to talk up renewable in coal mining areas for instance. He isn't talking to the media, he's talking around them.
      • mbostleman 10y ago
        Agreed. I don't think he has any discernible political position. That would be too constraining. He's a salesmen and a deal maker. He's going to say what he needs to get support, then make hay while the sun shines. He and Musk will get along fine. They're peers. If there's a way to make money, increase economic growth, or otherwise trade the currency of Musk's brand, Trump will totally use it imo. Then he'll explain why it's the right thing to do to his followers and they'll be all in.
• dreta 10y ago
  If Tesla’s not competitive, then it’s not competitive. I’m glad to see the government involvement being reduced. Let the free market handle things.
  • deepnotderp 10y ago
    And yet subsidies for fossil fuels continue...
  • rch 10y ago
    It's much easier to make a buck if you're not held accountable for negative externalities.
  • toomuchtodo 10y ago
    If you're not paying for the carbon externalities, the free market has failed.
  • codingdave 10y ago
    Letting the free market handle things works, IF your only goal is economic. And while that is important, there are bigger pictures to worry about. Like, preserving a habitable planet.
    • merc285 10y ago
      yes because we can undo china and india's record breaking smog and pollution. /s
      • flukus 10y ago
        Assuming manufacturing got moved back to America then yes, it can be solved.
        • codingdave 10y ago
          Even if not, giving up on doing the right thing just because other countries aren't helping is a very short-sighted approach to worldwide leadership. We can lead the efforts towards a better world.
• vvanders 10y ago
  I think Tesla will do okay, they've got a solid product that stands on its own. What I'm worried about is rooftop solar tiles. One of the thing that can make it cheaper than a traditional roof is that the whole thing will qualify for solar subsidies. If that goes away it could make things incredibly difficult for Solar City.
  • terravion 10y ago
    I guess it depends on whether you think that net metering is a subsidy and whose eyes are beholding the payments. Those tiles are generating electricity, why shouldn't they get paid same as large generators?
    • eli_gottlieb 10y ago
      > Those tiles are generating electricity, why shouldn't they get paid same as large generators? Because they haven't bribed the governor.
    • icebraining 10y ago
      My understanding is that the extra complexity of the network to support a multitude of small generation points precludes most of the gains from the extra energy supply.
    • stcredzero 10y ago
      I don't think that's the critical subsidy. My understanding is that with a solar roof, your whole solar freaking roofway is subject to the solar installation subsidies.
    • maxerickson 10y ago
      Large generators get paid wholesale prices and have to deal directly with the market (which means they occasionally sell electricity for $0, or pay someone to take it). There are prices below 20 per Megawatt-hour here right now http://www.pjm.com/about-pjm/learning-center/price-ticker.aspx http://www.pjm.com/about-pjm/learning-center/price-ticker.as... That's less than $0.02 per kw-h. As the amount of solar installed increases, that will be $0 on cooler sunny days that don't create a lot of demand for cooling.
• anon1253 10y ago
  Hey Elon, just move all your assets and manufacturing to Europe!
• avmich 10y ago
  > he will roll back regulations on fossil fuels Does it mean no more subsidizing fossil fuel companies?
• deleted 10y ago
  [deleted]
• pklausler 10y ago
  On the plus side for Tesla, though, there's probably going to be fewer liberals buying cars from the Rust Belt states.
• loourr 10y ago
  This is based on completely the wrong premise, Tesla is an unsubsidized car company. Even if the Solar City deal goes through and the value goes to $0 within a year Tesla will still be a great thriving company. Not only is Tesla a shinning example of American manufacturing (a main Trump tenant), they create cars that are better and more performant then competing gasoline cars, they do it at much higher margins. Tesla is hopping to produce about 500k cars within 2 years while the average automobile manufacture produces about 10MM cars per year. And they plan to do it at a 20-30% margin. Even if gas prices go down by 75% they would then only match the price of fueling a Tesla, which in itself would be an incredible feat given how subsidized oil already is.
  • dcosson 10y ago
    > Not only is Tesla a shinning example of American manufacturing (a main Trump tenant) Except that they use a ton of automation. I'm very curious how this will play out under Trump. Because even if he does all the things he's been talking about (pulling out of trade deals and raising tariffs) and even if it has the intended short-term effect of bringing more manufacturing back to America, there will be a lot of automation and it probably won't look very much like it did in the pre-globalization good-old days that his base wants to revert to. What then? They'll need somewhere other than trade deals to point the blame.
    • loourr 10y ago
      That's a good point though they still employ a lot of people. It'll be interesting when people start trying to deal with the job loss from automation. I'm not sure how you can practically restrict the use of software and robots.
  • botty_throwaway 10y ago
    Sure, oil is subsidized. But it's disingenuous to claim Tesla doesn't play the regulation arbitrage game either. Not only is demand for Tesla's cars _partially_ sustained through consumer tax rebates, but Tesla's _profitability_ has historically relied on selling ZEV credits. Both of these factors may be cut short by the changing political tides now that the [federal] executive, legislative, and (soon) judicial branches will be majority led by a party that has a rough consensus on switching priorities from the past decade or so. I'm not trying to antagonize against Tesla specifically, nor prop up the virtues of a truly ecologically-damaging industry that plays by a similar rulebook, but anytime a company's business model relies on a certain political climate rather than _solely_ on efficiency gains through technological innovation, the door swings both ways given a long enough time scale. Cue discussion about how innovative R&D is not possible without initial government investment, especially against already subsidized industries that don't have to factor in tremendous externalities... but that's a more politically subjective debate compared to just stating how I don't agree with the claim of Tesla being 'unsubsidized.'
• merc285 10y ago
  More typical anti-trump propaganda. Tesla is a private company. Trump supports free market and private business. He even went as far to say he wants to improve our efforts in space. This is also from the Washington Post. The mainstream media has zero credibility at this point.
  • saretired 10y ago
    Trump received a 40-year, $120 million full tax abatement from NYC for the Grand Hyatt (Newsweek 6/17/90) . He sought a residential tax abatement for Trump Tower, an abatement designed for low- and middle-income housing (NYT, 8/6/1983), and an abatement for another luxury tower, Trump Palace, and for Trump International Hotel (NYT 7/17/94). He sought a $356 million low-interest loan from the federal government for the West Side Yards, received a $34 million tax abatement in Florida, and had the assessed value of a Las Vegas property lowered from $180 million to $8.6 million (LA Times, 5/11/2011).
    • merc285 10y ago
      please explain to me how this has anything to do with tesla
      • saretired 10y ago
        Well, if you read the article, it mentions the tax breaks that Tesla buyers get, and that the "future of these tax credits may come into question based on Trump's opposition to the government picking winners and losers." How is constantly seeking government hand-outs capitalism? How is taking those hand-outs not allowing the government to pick winners and losers?
    • nostromo 10y ago
      I'm shocked that a businessperson would take the tax breaks and cheap loans provided to them.
• pman2000 10y ago
  Awesome! Another reason for outrage. That's exactly what we need. At this point, shouldn't he be trying to get the 'other' half of the country on his side instead of pissing them off further?