SpaceX and Tesla CEO Elon Musk expressed his displeasure with President Joe Biden on Tuesday, deeming his administration “biased” against Tesla and saying it was “controlled” by unions during a speech on stage at the Code Conference in Beverly Hills, Calif.
Musk, in his typically irreverent form, also repeated several of his prior taunts against federal financial regulators at the SEC, 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.
Beef with Biden
Code host and Recode editor-at-large Kara Swisher asked Musk to explain recent tweets where 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.”
Musk continued, “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 if he was waiting to get former president Trump back or to be president himself, he said no on both counts.
Taxes and tweets
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 US 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 billionaire’s finances. They found that Musk’s income tax bill amounted to zero in 2018.
Musk insulted ProPublica’s reporting as “tricky” and “misleading.” (ProPublica did not immediately respond to a request for comment on Musk’s contentions.)
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. Success of SpaceX and Tesla was far from assured, Musk reminisced. “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 percent. “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.”
Swisher said, “So you will eventually pay a lot of taxes?”
Musk said, “Massive, yeah. Basically, a majority of what I sell will be tax.”
Critics may believe that wealthy people borrowing against their stock is “a trick to get away from paying taxes,” he said. But Musk emphasized that 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.”
He replied, “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. 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 percent. 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 continued.
Swisher also asked about the CEO’s 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 laughed 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.”
Previously, the Securities and Exchange Commission 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.
Crypto and China
Tesla made waves when it purchased about $1.5 billion worth of bitcoin. After it disclosed the holdings, the price of bitcoin skyrocketed. 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 virtual currency-related activities illegal. Swisher asked Musk if he has any concerns about working in China, or if he was worried about U.S.-China relations.
After praising Tesla’s employees and vehicle assembly plant in Shanghai, Musk said, he was “not especially” worried about China right now. As the pandemic wanes, enabling a culture of in-person meetings to resume, Musk predicted “trust levels” in China with tech companies and foreign businesses would “start heading in a more positive direction.”
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 noted cryptocurrency could decrease the power of centralized governments.
When Swisher noted Musk individually can “change the shares” in cryptocurrency more than China can, he acknowledged this. She asked him if that was a good thing. He quipped, “If it goes up, I suppose it is.”
Space and energy
Swisher and Musk discussed SpaceX, its competitors, plans to expand Starlink (a satellite internet service) and ambitions to make humanity a “multi-planet species” at length.
During the course of their SpaceX discussion, Musk took the occasion to mock the phallic shape of Blue Origin’s rocket, and berate Jeff Bezos for his aerospace company’s litigiousness.
Swisher asked, “Can you explain from a technological point of view why it’s that shape?” 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 noted, which would have ten 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 gonna create a lot of challenges with the grid,” he said. He saw the demand as “unworkable” unless significant local power generation is added at houses 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.”