“It would be interesting to get the facts about how much California has invested in Tesla — the hundreds of millions in tax subsidies that we have given to this company,” Newsom said. who loves touting his longstanding relationship with Musk, told reporters at an event last fall.
Musk has provided financial backing to California’s ambitious governor, increasing donations to Newsom’s 2018 campaign and frequently donating to other Democratic lawmakers. And despite the tumultuous nature of the headquarters move, Tesla continues to expand its operations in California.
Here are some of the ways Musk came forward in his famous Twitter feud with Sacramento:
1. Tesla and tax breaks
Hundreds of millions of dollars of California regulatory loans for electric vehicles support Tesla’s quarterly profitaccording to Trefis, a financial analysis service.
Tesla can sell government loans for electric vehicles to traditional auto companies that would otherwise be unable to comply with the government’s zero-emissions sales regulations.
In 2019 and 2020, Tesla’s profitability depended on loans, although now the company’s margins would remain healthy enough without them.
The sheer scale of these benefits has become a sore point for progressive lawmakers. Former Assemblyman Lorena Gonzalez, a Democrat from San Diego, complained when Musk announced he was moving his headquarters to Texas that the billionaire “made $200 billion from California taxpayer subsidies.”
Online spats aside, Musk’s subsidies don’t seem to pose any risk, given California politicians’ aggressive support for electric cars and their equally aggressive opposition to fuel-powered cars.
2. Labor disputes
Musk’s lack of union sympathy made him enemies in the Legislative Assembly. (Last month, he called on the United Auto Workers to vote at his plant in the Bay Area.)
In 2017, lawmakers linked California’s regulatory loans to the state’s evolving labor practice standards in a budget bill that many see as being aimed at Tesla. The legislation required the California Secretary of Labor to “first certify manufacturers as being honest and responsible in their treatment of their workers before their vehicles are included in any publicly funded rebate program.”
That efforts fizzled out. According to the California Air Resources Board, the state has never enacted appropriate regulations to enforce the measure, nor has it set any standards to uphold the fair labor practices of Tesla or any other electric vehicle manufacturer. Officials started writing rules in fiscal year 2017-2018 but stopped when the Legislature didn’t expand on that tough talk in the next budget bill.
3. Covid orders
Strict restrictions in California annoyed Musk, as did many business owners. But unlike many businesses across the state, Musk openly ignored orders.
Despite the Newsom administration shutting down schools, restaurants and playgrounds, senior management did nothing when Musk violated his county’s public health orders and reopened his Fremont plant in May 2020 while insulting his local health officer.
And he dared the government officials to try to stop him. “I will be on the line with everyone else,” he wrote at the time. “If anyone is arrested, I ask that it be only me.”
4. Auto insurance policy
Tesla has rolled out an auto insurance business in seven states using driver data to price products, a technique known as telematics.
California is banning telematics because of a 1988 ballot initiative, and Musk told investors earlier this year that he was lobbying for change. This attracted the attention of the state Insurance Commissioner Ricardo Lara, criticized by consumer advocates after a 2019 recording captured him telling insurance executives it was open to reviewing the ban. Lara is up for re-election this year and is facing a challenge from a fellow Democrat.
“Yesterday @elonmusk reportedly told investors that he is “very strongly pushing” for a change in telematics rules for drivers in California.” Lara tweeted in January. “Promote whatever you want, but we won’t give up on consumer data protection, privacy, and fair pricing.”
Musk responded bluntly: “You should be removed from office.”
The topic is still alive. Consumer Watchdog published a recording of a webcast from Root, a telematics insurance company, saying that Lara “support what we do“. A spokesman for the California Insurance Department did not immediately respond to a request for comment.
5. Down the Pike: Social Media Brawls
Sacramento is debating a list of social media bills aimed at combating alleged misinformation and other online abuses that could lead to the type of censorship Musk cited as the reason behind the Twitter purchase.
Proposals to suspend medical licenses for doctors who post what is considered misinformation about Covid, crack down on “spread of malicious content” and curb alleged cyberbullying are facing a surge against industry opposition and legal challenges.
However, the wave of proposals shows where the state’s power players are heading, promising future clashes with Musk’s avowed commitment to unfettered free speech.
Jeremy B. White contributed to this report.