By Andrew Ross Sorkin
Donald Trump: Please think about calling Elon Musk. President-elect Trump has spent a lot of time talking about how he plans to reinvigorate the manufacturing sector, repeatedly telling the public on the campaign trail, “We are going to bring back jobs that have been stolen from you.”
And yet the group of business luminaries he named recently to advise him on “job creation”—which included Jamie Dimon of JPMorgan Chase, Robert Iger of Disney and Mary Barra of General Motors—was missing a key name: Musk, the real-life Tony Stark behind Tesla, the electric car company; SolarCity, the solar power provider; and SpaceX, the rocket company.
Musk, 45, is arguably the one person in the nation more responsible than anyone else for generating a vision for the re-emergence of manufacturing in the United States en masse. And he is revered among most of his peers here in Silicon Valley and elsewhere.
In the last decade, Musk has created nearly 35,000 jobs among his various enterprises—and most of those jobs are classic manufacturing ones. His Tesla Gigafactory, a 5.5-million-square-foot battery factory under construction outside Reno, Nevada, is expected to employ 6,500 people in manufacturing jobs by 2020.
After the factory is complete, 95% of the parts contained in Tesla vehicles will be made in the United States. His company’s leading-edge advances have pushed the entire auto industry to innovate, with rivals seeking to copy many of Tesla’s best features. This is the future of manufacturing—much more so than the 1,000 jobs saved at the Carrier plant in Indiana last week.
And Tesla’s challenges are a microcosm of the trade issues that confound so many US manufacturers: To sell its cars in China, Tesla faces tariffs and other disincentives that make its vehicles 40% more expensive than locally produced electric cars, according to Musk. If you flip it around, China faces only a nominal tax to sell electric cars and parts in the United States. The situation is fairly similar in much of Europe.
Still, conservative groups and individuals have taken to the internet with a litany of real and fake stories attacking Musk for the government subsidies Tesla receives, and for his vocal warnings on climate change.
Robert E. Murray, chief executive of Murray Energy Corp., the largest privately owned coal company, called Musk “a fraud” for accepting $2 billion in government subsidies for Tesla.
Musk, fighting back on Twitter, wrote of Murray, a Republican who doesn’t believe human activity is affecting the climate: “Real fraud going on is denial of climate science. As for ‘subsidies,’ Tesla gets pennies on dollar vs coal. How about we both go to zero?”
Indeed, while Musk gets painted as a benefactor of crony capitalism and the Obama administration’s efforts to promote green energy, he is—perhaps counterintuitively—a prime example of everything we want our business leaders to be.
What other chief executive do you know who takes only $1 a year in salary and has never sold a share of Tesla except to pay taxes? Yes, he pays taxes—to the tune of some $600 million in just the past year. He has about as much skin in the game as any CEO in the country. (If you’re asking how he pays to live, he has taken out a series of loans from Morgan Stanley and Goldman Sachs, using his shares as collateral. For some, that raises its own corporate governance concerns. However, the loans represent only about 5% of his net worth, so unless shares of Tesla fall precipitously, he should be able to cover the loan amounts.)
And when questions arose about whether Tesla would be able to pay off SolarCity’s debt after the two companies merged, Musk declared, “I would pay it personally if need be.” That’s putting your money where your mouth is.
As for the government subsidies offered to the electric car industry, Musk has made a compelling case that he would benefit more if the subsidies didn’t exist.
“Ironically, if all incentives and subsidies were removed for Tesla, Tesla’s competitive position would increase, not decrease,” he said recently at a shareholder meeting. “We do believe there should be government incentives for electric vehicles, but we believe they should be there for the good of the industry and to accelerate the advent of sustainable transport—not because Tesla needs them.”
All that may be hard to square in the short term: Tesla turned a $22-million profit last quarter, in part after selling $139 million from zero-emission vehicle credits to other car manufacturers. But it is undoubtedly true in the long term.
Whether Musk’s various businesses will succeed, of course, remains an open question. But it is his kind of businesses—which offer the chance to restore real manufacturing jobs in the United States, and which integrate meaningful technological innovation—that we should all be encouraging.
I sent an email to Musk in hopes that writing this column wouldn’t be for naught. After all, when I had spoken to him at a Vanity Fair conference in 2015 about the election, he told me he was not a supporter of Trump’s candidacy.
In a note back to me, Musk said he was heartened by Trump’s recent acknowledgment that human-driven global warming may be real.
Would he want to engage with the president-elect?
“I’d be happy to talk to Trump,” Musk wrote.
© 2016 The New York Times
Image credits: Mark Ralston/Agence France-Presse/Getty Images, Toshifumi Kitamura/Agence France-Presse/Getty Images