How much of Musk’s wealth comes from tax dollars and government help?
By Chris Isidore, CNN
New York (CNN) — Elon Musk is the world’s richest person partly due to his companies’ impressive innovations. But his wealth is also due to government contracts and programs that affected his two main businesses – electric vehicles and space travel.
Now President-elect Donald Trump has tasked the Tesla and SpaceX CEO with eliminating waste from the federal government. In the new role, Musk will help direct policies on a wide range of issues and government bodies, including those that regulate his many business interests.
For example, Musk and Trump watched SpaceX’s launch Tuesday night of the rocket that could someday take people back to the moon and even to Mars. The amount the US commits to those efforts will greatly affect SpaceX’s financial success.
Government crucial to Musk’s net worth
It’s worthwhile to ask just how much of his world-leading net worth comes from government help over the last 10 to 15 years. The answer is not simple.
By some measures, little of his wealth is thanks to taxpayers. Musk is worth an estimated $326 billion, according to Bloomberg’s real-time billionaire tracker. His companies have received “only” tens of billions from government contracts and programs.
But in other ways, virtually all of his net worth can be pinned to government help. Tesla and SpaceX got started – and survived their early days – with assistance from state and federal policies, government contracts and loans.
“The foundation for Musk’s financial success has been the US government,” said Daniel Ives, tech analyst for Wedbush Securities.
And the value of Tesla and SpaceX doesn’t come from their profits so far.
Instead, their value comes from investments in their future worth, such as Tesla’s publicly traded stock and private funding rounds for SpaceX.
Since Trump’s election, Musk’s net worth has increased $64 billion, or nearly 25%, according to Bloomberg’s estimate. This is partly based on the assumption that future growth will be easier with Musk offering advice on topics including artificial intelligence, self-driving vehicles and funding for agencies that have given his companies regulatory trouble.
Tesla’s early survival
Tesla has received relatively modest government contracts in the past. But it got a lot of help getting started, critical help.
In January 2010, Tesla was starting out and had sold less than 2,000 cars in its history. Then the company received a $465 million low-interest loan from the Department of Energy, months before its initial public offering. With the loan, it developed its Model S car, its first major success, and paid back the loan early through proceeds from an additional sale of stock in 2013.
As Tesla started to sell cars, a $7,500 tax credit for EV buyers allowed the company and other automakers to sell American-made EVs at a higher price than the market might‘ve allowed otherwise.
Tesla buyers received federal tax credits worth an estimated $3.4 billion before the perk disappeared entirely for Tesla buyers at the end of 2019. Even if that only allowed Tesla to raise prices by half that amount, that’s another $1.7 billion in federal help when the company was facing a cash crunch.
The tax credit was restored in 2023 as part of the Biden administration’s Inflation Reduction Act. But Musk has encouraged the incoming Trump administration to end the $7,500 tax credit, which would seem to be against Tesla’s interests but would be a blow for established automakers seeking to get a share of the US EV market. Those legacy automakers would have to accept bigger losses on their EV sales or pull back on offerings, which would reduce competition for Tesla.
“Take away the subsidies, it will only help Tesla,” Musk posted on his social media platform X in July.
Financial windfall from EV regulations
But Tesla’s most significant financial support is not from tax credits for EV buyers. It comes from the sale of regulatory credits that other automakers buy to comply with state and federal regulations aimed at reducing greenhouse gases.
The money doesn’t come from taxpayers. But without the government regulation, there would be no billions flowing into Tesla’s coffers, and straight to its billion lines.
Those credit sales literally kept Tesla’s lights on, and its paychecks being cashed, in the company’s early days. They accounted for nearly 25% of its revenue in 2008 and 10% of its revenue over the course of the next five years.
Between 2008 and 2019, sales of regulatory credits generated more than $2 billion for the company.
Tesla might have died without those funds. Don’t take our word for it. Ask Musk himself.
In a tweet in 2020, Musk admitted that Tesla was nearly forced to file for bankruptcy as recently at 2019. The stock price had been floundering as the company had difficulty ramping up production of its Model 3 sedan.
“Closest we got (to bankruptcy) was about a month,” he said in the tweet. “The Model 3 ramp was extreme stress & pain for a long time — from mid 2017 to mid 2019. Production & logistics hell.”
Even when the threat of bankruptcy lessened, it wasn’t until 2021 that the company was able to post a profit without the help of credit sales.
In Tesla’s history, sales of regulatory credits have brought in nearly $11 billion, with all of it falling pretty much directly to its bottom line.
“If it didn’t have regulatory credits, Tesla would not be the brand it is around the globe and Musk wouldn’t be the richest person in the world,” said Ives, who is a bull on Tesla shares today. In 2019, he was still skeptical.
SpaceX’s value depends on NASA
Even without his shares and options in Tesla Musk would still likely be worth more than $100 billion and one of the richest people on the planet. SpaceX will likely be valued at about $250 billion in an upcoming round of funding from investors, Reuters said. Ives said while SpaceX has not disclosed Musk’s holdings, his estimate is close to 50%.
Taxpayer support for SpaceX comes from direct government contracts that are worth billions.
According to USASpending.gov, the government database that tracks federal spending, SpaceX has signed contracts worth nearly $20 billion. The most crucial one came just before Christmas in 2008, when SpaceX and Musk were both virtually out of cash.
That contract was worth $1.6 billion and involved flying 12 supply missions to the International Space Station. The deal allowed SpaceX to complete the Falcon 9 rocket, its main workhorse, and the Dragon capsule, said Casey Dreier, senior space policy advisory for the Planetary Society, a public interest group advocating space flight.
“They were right on the edge of insolvency,” Dreier said. “Elon has pointed out at that moment they were on the edge, and that helped to save the company.”
Dreier said the ISS deal and other contracts have allowed NASA to transport US astronauts without relying on Russia.
SpaceX has since gotten numerous additional contracts from NASA, the military and other US government agencies. It won a $3 billion contract to develop the next vehicle to carry astronauts to the moon. And Dreier said the company and other NASA contractors benefit from access to the agency’s employees and expertise.
Ives said that if the Trump administration increases funding for NASA’s efforts to return to the moon and travel to Mars, SpaceX’s value could easily increase to $500 billion or more.
“The $250 billion estimate is pretty conservative,” he said.
CNN’s Jackie Wattles contributed to this report
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