Elon Musk has many individuals to thank for changing into the world’s first trillionaire — his firms’ engineers who produced technological breakthroughs, Wall Street traders who have been desirous to bathe him with their {dollars} regardless of questionable financials, however most of all, American taxpayers and government policymakers.
“There would not be (Tesla and SpaceX) if it weren’t for the government,” stated Ross Gerber, CEO of funding agency Gerber Kawasaki and an early investor in Tesla.
The federal government awarded SpaceX greater than $500 million price of grants in its early years. And that $500 million is only a fraction of what Tesla obtained from government grants, loans, contracts and regulatory insurance policies.
That’s to not say SpaceX’s success and Tesla’s roughly $1.5 trillion valuation are fully as a consequence of federal spending, however each firms teetered as startups earlier than receiving taxpayer subsidies.
The query of how much Musk’s $1 trillion web price comes from the government is just not so simple as it sounds. By some measures, solely a small portion of his wealth is because of taxpayers. His firms have obtained “only” tens of billions from government contracts and packages.
But it’s not simply the greenback quantity that issues — it’s when it was obtained.
SpaceX’s first main windfall was a $278 million grant from NASA in 2006 to develop the Falcon rocket system and Dragon area capsule. The Space Shuttle program was ending, and the US wanted a brand new option to get astronauts and cargo to the International Space Station.
It was the primary of greater than $500 million in grants SpaceX would obtain, in accordance with information from PitchBook, which tracks the valuation of personal firms.
“That was about half of their capital that they raised to that point,” Casey Dreier, chief of area coverage on the Planetary Society, a public curiosity group advocating area flight, stated forward of the SpaceX IPO. “This was a substantial commitment that NASA provided.”
And whereas NASA has loved the advantages of SpaceX’s success, with dozens of people ferried to the area station aboard the corporate’s rockets, it didn’t profit like these personal traders.
“The people who put in the other half of the capital from that era are about to be made multi-billionaires,” Dreier stated.
And the help from NASA didn’t cease with the grants. Musk has acknowledged the corporate was virtually out of money on the finish of 2008 when it obtained a vital, and then-unprecedented, $1.6 billion contract from the American area company.
“The fact (is) that we could not have started SpaceX, nor could we have reached this point, without the help of NASA,” Musk stated in 2012 when launching the corporate’s Falcon 9 rocket to the ISS for the primary time.
By comparability, Tesla has obtained comparatively modest government contracts prior to now. But it obtained loads of assist getting began — vital assist.
In January 2010, Tesla had bought lower than 2,000 vehicles in its complete historical past, nearly all of them electrical oddballs primarily based on sports activities vehicles from Lotus, a comparatively obscure British firm. Then Tesla obtained a $465 million low-interest mortgage from the Department of Energy, months earlier than its preliminary public providing. With the mortgage, the corporate developed the Tesla Model S sedan, its first main success. Tesla paid again the mortgage early by means of proceeds from a further sale of inventory in 2013.
A $7,500 tax credit score for EV consumers allowed the corporate and different automakers to promote American-made EVs at a better worth than the market might need in any other case allowed.
Tesla consumers obtained federal tax credit price an estimated $3.4 billion earlier than the perk resulted in 2019. Tesla then minimize costs to take care of demand. Given how much it needed to minimize costs, the tax credit score possible allowed Tesla to usher in greater than $1 billion on vehicles bought in America than it may have with out the tax credit score.
The tax credit score was restored in 2023 as half of the Biden administration’s Inflation Reduction Act. But Republicans in Congress and the Trump administration ended the credit score throughout the trade on September 30, 2025.
But Tesla’s most vital monetary help was not from tax credit for EV consumers. It was from a government program to cut back carbon emissions throughout the automotive trade.
Under the regulatory framework, automobile firms needed to meet emissions limits. If they didn’t, they must purchase “emissions credits” from firms that did adjust to the boundaries. And the one firm that all the time got here below the emissions limits and had credit to promote was Tesla, since all of its autos are electrical.
That meant nearly each different automobile firm within the US was lining as much as pour cash into Tesla’s coffers consequently of the rules.
Those credit score gross sales accounted for practically 25% of the corporate’s income in 2008 and 10% of its income all through the following 5 years.
Between 2008 and 2019, gross sales of regulatory credit generated greater than $2 billion for the corporate.
Tesla might need died with out these funds — a reality not misplaced on Elon himself.
In a tweet in 2020, Musk admitted that Tesla was nearly forced to file for bankruptcy as not too long ago as 2019. Even after it survived the chapter scare, it wasn’t till 2021 that Tesla was in a position to post a profit with out the assistance of credit score gross sales.
Since 2019, gross sales of regulatory credit have introduced in one other $12.3 billion, with all of that cash falling fairly much on to its backside line. That credit score income is prone to dry up sooner or later, although, as Republicans in Congress have basically eradicated this system.
But Tesla’s worth now not has much to do with its vehicles. Instead, the corporate’s share worth relies on Musk’s promise that Tesla will quickly supply widespread self-driving “robotaxis” and humanoid robots, a promise he has lengthy sought to ship however to little avail.
Wall Street’s religion in Musk is the principle purpose his wealth has reached beforehand unimaginable heights — at the very least for the second, so long as his firms’ share costs stay close to the place they’re. But that religion comes as a result of in the beginning of his companies, when he wanted monetary help probably the most, it was the US government — not Wall Street — that offered the wanted assist.
“It turned out it was definitely good for the government, America, and society that these companies exist, so I don’t regret that the government gave him the money,” stated Gerber, the early Tesla investor who’s now a Musk critic. “The mistake the government made is they should have had an equity stake.”
– NCS’s Jackie Wattles contributed to this report