Public Seminar: Tesla’s Latest Rip-Off

June 8, 2020 State and Local Policy

“They’re groveling.”

That’s how one resident of Tulsa, Oklahoma, reacted to the city repainting a seventy-five-foot statue of an oil driller, erected in 1966, to look like Tesla CEO Elon Musk. Tulsa is reportedly on the short list—along with Austin, Texas—for a new Tesla Cybertruck factory, so local leaders are pulling out all the stops to woo the famously eccentric and egomaniacal businessman.

During the best of times, competition between cities and states to win new corporate facilities or poach existing ones results in the giveaway equivalent of a race to the bottom, with the financial price paid far exceeding the benefits local communities enjoy. In this instance, it’s far worse. In their effort to win Tesla’s favor, state and local officials are combining America’s cult of CEO worship with pandemic profiteering, allowing Musk to receive new benefits even after he explicitly threatened jobs and worker safety.

Recently, Musk chafed against coronavirus-imposed restrictions on reopening a Tesla plant in Alameda County, California. He attempted to blackmail the state into letting him open up, threatening to move Tesla’s headquarters to Nevada or Texas if his wishes weren’t met. He then simply re-opened the factory anyway, putting his workers at risk of contracting the virus. California officials backed down and gave Musk permission to start production again after other lawmakers, such as Colorado Democratic Governor Jared Polis, offered to poach Tesla’s California facilities.

It’s impossible to know, of course, how much of that decision was satisfaction with Musk’s coronavirus mitigation efforts and how much was fear that Musk was serious about leaving the Golden State. But that’s precisely the problem: because states engage in a competition for corporate favor, CEOs drive the agenda.