Elon Musk’s Political Clout Wins Him NASA Contract, Nevada Tax Breaks

Elon Musk / AP
• September 16, 2014 3:07 pm


Paypal founder Elon Musk frequently leverages his political clout to the advantage of his various business ventures, and a pair of announcements this week suggests the strategy is still paying off.

Musk’s commercial spaceflight company SpaceX won a major contract with the National Aeronautics and Space Administration (NASA), while Tesla, his luxury electric vehicle firm, got a huge package of incentives to build a factory in Nevada.

SpaceX will reportedly share the multi-billion-dollar NASA contract with Boeing. The companies will build "taxis" to shuttle American astronauts into space.

Details of the contract are not yet available, but it marks a major victory for SpaceX, which has worked to break into the federal launch vehicle market in part by working Musk’s connections to President Barack Obama, to whom Musk was a major campaign donor.

The NASA contract award came on the heels of an announcement by Nevada Gov. Brian Sandoval (R.), who unveiled a package of tax incentives for Tesla worth $1.3 billion.

Those incentives were the product of what the Wall Street Journal described as "a secret bidding war among southwestern states" encouraged by Musk and his company.

Politicians bribing businesses to locate in their state is an old if unfortunate story. Tennessee this year offered Volkswagen $274 million to expand its Chattanooga plant. Last year Washington awarded long-time employer Boeing $8.7 billion over 16 years to build its new 777X jetliner in Puget Sound.

But the Tesla giveaway is in a category of its own, coming in an unproven market for a company that has never recorded an annual profit (based on generally accepted accounting principles), notwithstanding various subsidies. Nevada's gift is 15 times larger than any incentive package the state has awarded and among the richest nationwide.

Musk also worked recently to secure incentives for a SpaceX facility in Texas, in part by courting favor with key state legislators and employing connected Austin lobbyists.

"Maybe Mr. Musk really is a genius, of the political kind at least," the Journal’s editorial board wrote.

"He's figured out that as long as you pick a politically favored industry you can be one of the world's richest men and still get taxpayers to finance your operations and become even richer."

Published under: Boeing, Democratic Donors, Elon Musk, NASA