A flippant Elon Musk takes shots at Biden, the SEC and anti-nuclear sentiment
Elon Musk, Tesla CEO, stands in the foundry of the Tesla Gigafactory during a press event. year.
Patrick Pleul | picture alliance | picture alliance | Getty Images
SpaceX and Tesla CEO Elon Musk criticized President Joe Biden on Tuesday, deeming his administration “biased” against Tesla and saying it appears to be “controlled” by unions during a speech on stage at the Code Conference in Beverly Hills, California.
Musk, in his typically irreverent form, also repeated several of his prior taunts against federal financial regulators at the Securities and Exchange Commission, reiterated his support for cryptocurrency and nuclear energy, and said he is optimistic about Tesla and tech in China despite recent antitrust and cryptocurrency crackdowns there.
Code host and Recode editor-at-large Kara Swisher asked Musk to explain recent tweets in which he chided President Joe Biden.
Musk sighed. “You know, Biden held this EV summit — didn’t invite Tesla. Invited GM, Ford, Chrysler and UAW. An EV summit on the White House! Didn’t mention Tesla once, and praised GM and Ford for leading the EV revolution.”
“Does this sound maybe a little biased or something? And you know, just — it’s not the friendliest administration. Seems to be controlled by unions, as far as I can tell.”
Swisher asked him if he is waiting to get former President Donald Trump back or to be president himself, and he said no on both counts.
Swisher asked Musk — who is currently the wealthiest person in the world, according to Bloomberg — to respond to criticism that while his companies have received a good deal of government contracts and subsidies, the CEO has avoided paying some taxes personally in the U.S. through creative, if legal, accounting practices.
In June, the investigative news site ProPublica reported on Musk’s tax bill as part of a massive analysis of billionaires’ finances. They found that Musk’s income tax bill amounted to zero in 2018.
Musk insulted ProPublica’s reporting, calling it “tricky” and “misleading.”
Then he said that the number was so low because he does not draw a salary, so his cash compensation is basically zero. Musk borrows money against stock options that vest over time instead.
As he has amassed more and more shares in Tesla and SpaceX, he said, he has “not really bothered” to take money off the table by selling a stake. The success of SpaceX and Tesla was far from assured, Musk said. “They skirted bankruptcy many times. But I never tried to take money off the table. And now this is trying to be turned around and made into a bad thing.”
Publicly traded Tesla never issued a notice to shareholders that it was near bankruptcy.
When Musk’s stock options expire at Tesla, the CEO said, his marginal tax rate will be over 50%. “I have a bunch of options that are expiring early next year, so … a huge block of options will sell in Q4 — because I have to or they’ll expire.”
“So you will eventually pay a lot of taxes?” Swisher said.
“Massive, yeah,” Musk said. “Basically, a majority of what I sell will be tax.”
He said critics may believe that wealthy people borrowing against their stock is “a trick to get away from paying taxes.” But, he said, this is not uncommon and can be a risky move. “Borrowing against stock is all sort of fun and games until you have a recession and you hit the margin calls and then you go to zero, which happens basically every time there’s a recession.”
“I’ve definitely gone on record and said I think our stock price is too high in my opinion, and this did nothing to stop the rise of the stock price,” he said. “So … I don’t know — what am I supposed to do, you know? I’m not the one making it go up!” The audience laughed.
“I think it’s important to bear in mind, my actual tax rate is 53%. They’re trying to make it sound like I was paying very low taxes, but in fact my taxes are very high. … A huge amount will be paid in the next three months because of expiring options,” he said.
When asked for comment by CNBC, ProPublica responded with the following statement from Editor-in-Chief Stephen Engelberg:
“Elon Musk’s remarks confirm the accuracy of our reporting, which disclosed that he paid no federal income taxes in 2018. As we pointed out in our story, Musk has supported his lifestyle by borrowing money against his stockholdings, a textbook example of the strategy known as ‘buy, borrow and die.’ We noted in our story that his tax payments to the government in recent years were a tiny portion of his multi-billion dollar gains in wealth.”
ProPublica sent Musk detailed questions before publishing their June story, and he did not reply. At the conference on Tuesday, Musk said ProPublica had “no interest” in the truth about his finances.
“We remain interested in any comment he might have on the U.S. tax system or his own strategies for minimizing his tax obligations,” Engelberg said Wednesday.
Swisher also asked Musk about his copious, and sometimes combative, use of Twitter. “Walk us through when you decide to do a tweet,” she said.
Musk replied to Swisher in a sarcastic tone.
“Well, I think about it for hours. And I consult with my strategy team,” he said, laughing with the audience. “Or maybe I’m wasted and then I brrrr—psshht! Gone! Let me shoot myself in the foot, bam! Now let me shoot myself in the foot, bam! That describes some of my tweets.”
In 2018, the SEC sued Tesla and Musk for securities fraud after the CEO wrote on Twitter that he was considering taking Tesla private for $420 per share and had funding secured.
They ultimately settled that lawsuit, with Musk and Tesla each paying a $20 million fine to the feds and Musk relinquishing his role as chairman of the board at Tesla. Musk also agreed to have his tweets reviewed by a compliance officer at Tesla before he posts them if they contain any material company information.
“Are you worried about any SEC involvement in your tweets going forward?” Swisher asked.
Musk said, “What does that stand for again? I know the middle word is ‘Elon’s’ but I can’t remember the other two words.”
She urged him to answer seriously. “Are you worried they’re gonna say, ‘Elon, stop … tweeting.'”
Musk said, “Are you talking about the shortseller enrichment commission?”
Both comments were allusions to insults Musk had lobbed at the financial regulator on Twitter in 2020 and 2018, respectively.
Tesla made waves in February when it revealed it had purchased about $1.5 billion worth of bitcoin. After it disclosed the holdings, the price of bitcoin skyrocketed. In May, when Musk said on Twitter that Tesla would stop accepting bitcoin as a payment for its electric cars, the price of bitcoin plummeted.
When Musk tweets an endorsement of a particular coin — as he has done with dogecoin — its price tends to increase, at least temporarily.
When Swisher asked about cryptocurrency regulation, Musk said that the SEC should back off.
“Just let it fly,” he suggested.
The People’s Bank of China recently declared all cryptocurrency-related activities illegal. Swisher asked Musk if he has any concerns about working in China or if he is worried about U.S.-China relations.
After praising Tesla’s employees and vehicle assembly plant in Shanghai, Musk said he is “not especially” worried about China right now. As the pandemic wanes, allowing in-person meetings to resume, “trust levels” in China with tech companies and foreign businesses would “start heading in a more positive direction,” Musk predicted.
Musk said he thought China may not be embracing cryptocurrency in part because of electricity shortages there and the massive amount of electricity needed for mining bitcoin. But he also said the potential of cryptocurrency to decrease the power of centralized governments could be making China wary.
When Swisher said that Musk alone can “change the shares” in cryptocurrency more than China can, Musk acknowledged this. She asked him if that’s a good thing. “If it goes up, I suppose it is,” he said.
Swisher and Musk discussed SpaceX, its competitors, plans to expand satellite internet service Starlink, and ambitions to make humanity a “multi-planet species” at length.
During the course of their SpaceX discussion, Musk took the opportunity to mock the phallic shape of Blue Origin’s rocket and berate Jeff Bezos for his aerospace company’s litigiousness.
“Can you explain from a technological point of view why it’s that shape?” Swisher asked.
The characteristically ribald Musk said, “If you are only going to be doing sub-orbital then your rocket can be sort of shorter, yes.”
Musk specified that he doesn’t really speak with the Amazon founder but instead subtweets him — meaning he posts tweets about Bezos without addressing him directly.
When asked about SpaceX creating light pollution that has interfered with astronomers’ work, Musk said, “We take great pains to make sure our satellites do not interfere with their telescopes.” SpaceX may launch some new telescopes using the Starship vehicle, he said, that would have 10 times the resolution of the Hubble. He said only amateur astronomers are complaining about SpaceX today.
As the session wrapped up, one audience member asked if Musk is concerned about utilities being able to generate and transmit enough electricity to power electric vehicles as they become more popular.
Musk estimated that electricity demand would approximately double as the world shifts from gas-powered to electric vehicles.
“This is going to create a lot of challenges with the grid,” he said. He said he sees the demand as “unworkable” unless significant local power generation is added in homes through means such as residential solar products, like those sold by Tesla.
Besides solar on rooftops, he said, we’ll need to add “large, sustainable power generation developments, primarily wind and solar” to the grid, pairing them with battery packs to smooth out the intermittent nature of renewable energy.
Musk added, as a closing thought:
“I’m also kind of pro-nuclear. And I’m sort of surprised by the public sentiment against nuclear. I’m not saying we should go build a whole bunch of new nuclear plants. But I don’t think we should shut down ones that are operating safely. They did this in Germany and had to create a whole bunch of coal power plants, and I don’t think that was the right decision, frankly.”