Trump and Tesla

Nevada, which incessantly markets itself as the Saudi Arabia of solar power and benefits from federal research funding, received a boost in the new federal budget, over the objections of the Trump administration. Indeed, Donald Trump’s recommendations were overridden by the Republican Congress in so many areas that it is dubious to call it the Trump budget any more.

Meanwhile, Tesla is experiencing serious troubles, with its publicly subsidized Nevada plant in Storey County the subject of considerable speculation.

Donald Trump’s recommended budget for the Office of Energy Efficiency and Renewable Energy—credited with leading efforts to reduce the cost of solar—was $696 million, a decline from $1.3 billion in fiscal year 2017. The Republican Congress instead gave the office either an 11 percent increase (according to the Natural Resources Defense Council) or 14 percent (New York Times).

Congress also shielded both the Energy Star program and the Advanced Research Projects Agency-Energy from elimination, which Trump had recommended. In fact, ARPA-E got a 15 percent increase in its budget. ARPA-E provides funding for projects that show promise but are unlikely to get commericial funding.

Stymied by Congress’s willingness to defy his attempts to cripple clean energy research and revive coal, Trump said, “I say to Congress, I will never sign another bill like this again. I’m not going to do it again.”

During processing of the budget, legislators also scrutinized Trump’s plan to revive the proposed nuclear waste dump at Yucca Mountain.

The Washington Post reported, referring to U.S. Sen. Dean Heller, “The Nevada Republican is the most vulnerable senator up for reelection in 2018, and he blocked efforts by the Energy Department to revive the unpopular nuclear storage program at Yucca Mountain.”

Energy Secretary Rick Perry faced questioning in committee from Nevada legislators about the project, and in one case he conceded to U.S. Sen. Catherine Cortez Masto that no planning for the facility after restart had been done.

“Wouldn’t it be appropriate to actually evaluate these things before asking Congress for money?” Masto asked.

Perry said the requested funding was for licensure, not operation—$110 million for licensing, $10 million for temporary storage—but that did not satisfy the senator.

The sums were small, given the budgets allocated to the project when it was still viable and functioning.

Republicans in recent years have increasingly been willing to fund programs to deal with climate change. They may not talk about it in those terms, fearful of stirring up the party base, but the votes show where they have migrated.

Heller is a prime example. He seldom expresses skepticism of climate science any more. Green Tech Media reported that he “came to the defense of clean energy credits. His website announces that he wants to work to ’develop renewable resources efficiently and affordably.’ In February he won an award from the Solar Energy Industries Association for his support of clean energy.”

Musky plant

Tesla’s troubles were reflected in a number of ways, including rapidly declining share prices, a vehicle recall, a court ruling, a federal investigation, and news coverage that was rough. Headlines included:

“Tesla’s ’day of reckoning’ is near as its plunging stock increases financing risk” (CNBC).

“Tesla Looked Like the Future. Now Some Ask if It Has One” (New York Times).

“Tesla recalls almost half the cars it ever built, as shares tank and Musk’s billions shrink” (NBC News).

Tesla shares lost more than a fifth of their value in less than a month.

A federal investigation is underway of a Tesla crash in which a California driver was killed.

More than 100,000 vehicles were recalled for bolt replacement prompted—according to the corporation—by caution, not by accidents or crashes.

In Delaware Chancery Court, Vice Chancellor Joseph Slights found that a stockholder lawsuit can go forward because CEO Elon Musk is effectively in control of Tesla even though he is not a majority stockholder. The issue came up in a suit against Tesla over Musk’s $2 billion acquisition of Solar City, which was regarded as having little value. Delaware case law protects some corporate boards from litigation if the company is controlled by a majority stockholder. As a result, Tesla revealed that—to the surprise of many—Musk holds only 22 percent of the corporation’s shares. His dominance of the company derives from his personality, not his shares, the corporation argued.

“CEOs (especially good ones) often exercise significant day-to-day control over a company’s operations; they often have significant stockholdings; and they are often the public face of their companies,” the Tesla brief said. “That’s their job. Such facts do not make them controlling stockholders under Delaware law.”

Slights disagreed, finding information submitted on behalf of the litigants to be a credible showing that Musk firmly controls the company.

Electrek reported that Tesla has resumed earth-moving at its Nevada plant site after a year of dormancy. The industry site said “the company’s giant battery factory in the middle of the Nevada desert is still only ~30 percent completed and the building hasn’t expanded throughout the last year. The current structure has a 1.9 million square-foot footprint. Including several levels, the factory currently is about 4.9 million square feet of operational space. This represents only ~30 percent of the planned completed Gigafactory, according to Tesla.” Electrek’s report was accompanied by satellite images of the plant site.

Bloomberg News obtained an email written by Tesla engineering chief Doug Fields in which he reacted like Donald Trump to industry analysis and criticism: “I find that personally insulting, and you should too. Let’s make them regret ever betting against us. You will prove a bunch of haters wrong.”

Fields apparently did not consider the possibility that scrutiny of the corporation is proper, given that it is using shareholders’ money.

The New York Times recalled that just a year ago, “Wall Street was enraptured. Tesla’s market value rose to surpass that of either General Motors or Ford, car companies with a century of experience.”

Those are conditions that often conceal troubling factors that are out of sight of the public. Shortly before the 2008 Wall Street meltdown, Wall Street ratings services like Moody’s gave enraptured ratings to firms that soon collapsed. The Times quoted Investing.com senior analyst Clement Thibault: “Tesla has been living on borrowed time and money for quite some time.”