News
Tesla and the danger of soft budget constraints
The Wall Street Journal is not always friendly to Elon Musk and Tesla Motors. In an article published August 16, staff writer Holman Jenkins, Jr. suggests that Tesla is one election away from extinction. Why? Holman bases his analysis on a study of John Z. DeLorean and an economic principle known as soft budget constraints.
The study by Graham Brownlow of Queen’s University Belfast was published in October, 2014. It says one of the foundations for DeLorean’s start-up car company was the willingness of the British government to subsidize the enterprise with grants, tax breaks, government backed loans, and other political incentives.
In 1975 when DeLorean Motors began, conflict between Protestants and Catholics in Ireland was at a fever pitch. The economy of Northern Ireland was in tatters and the British government was desperate to attract manufacturing jobs to the area. DeLorean promised to do just that and the government responded with open arms.
Brownlow says the support from the government amounted to what economists refer to as soft budget constraints, meaning the company never had to turn a profit. In effect, as DeLorean boasted at the time, the government was in so deep, it had no choice but to continue funding the operation. In layman’s terms, its like having rich parents and knowing they will cover your losses no matter how foolishly you spend your money.
Jenkins says Tesla Motors is similarly positioned. It is the beneficiary of several indirect government subsidies such as federal and state tax credits, HOV stickers, and the like. He also claims the company benefits from direct government support in the form of loan guarantees and corporate tax credits. Taken together, they provide Tesla with the ability to exceed normal budgetary constraints on a regular basis.
He prefers what he would term the more traditional model, as laid out by Brownlow. “The more [an entrepreneur] expects that the existence and growth of the firm will depend solely on production costs and proceeds from sales, the more he will respect the budget constraint,” Brownlow writes.
Jenkins hints darkly that Musk’s recent decision to bring the start of production of the Model 3 forward by 2 years is a ploy designed to force the federal government to extend the tax credit program for buyers of electric cars. Tesla will be bumping up against the 200,000 vehicle limit in total US sales by the time that car goes on sale.
He also thinks the merger between Tesla and SolarCity is intended to mute the criticism that Teslas are not as environmentally friendly as they are touted to be, since the majority of electricity in the United States comes from burning fossil fuels like natural gas and coal.
Jenkins reminds readers that John DeLorean’s dream came crashing down once Margaret Thatcher came to power. She turned off the financial spigot that had propped him up, with predictable results. The implication is that Tesla is just one election away from a similar fate.
Jenkins could be the designated cheerleader for all the people who have shorted Tesla stock. The comments appended to his story in the Journal make it clear his opinions have plenty of enthusiastic supporters, many of whom view Elon Musk as little more than a scam artist.
In his efforts to advocate for a level playing field where every corporation pays all its bills on time, pays all its taxes, never accepts a hand out from the government, and always does the right thing, he conveniently overlooks the $5 trillion a year in direct and indirect subsidies the International Monetary Fund says are provided to the fossil fuel industry every year.
There is a coda to the DeLorean story, one that is seldom told. It is said that John Z personally selected the spot where his factory in Northern Ireland would be built. The Irish have a long and steadfast belief in what they call “the little people.” We call them leprechauns.
According to the story, the site DeLorean chose required the removal of a whitethorn tree. Now, everyone knows the little people build their homes in the roots of whitethorn trees. Uprooting one is guaranteed to bring some seriously bad mojo down on your head.
What happened to DeLorean only proves that legend may be more powerful than economic theory. The antidote to Jenkins’ gloomy predictions may be to inform Elon he must never cut down a whitethorn tree to build one of his factories.
Source: Wall Street Journal
Elon Musk
SpaceX’s next Starship launch is about to attempt its biggest leap yet
SpaceX targets September 22 for Starship Flight 14, its first attempt to reach real orbit.
SpaceX has set September 22 as the target date for Starship’s 14th test flight, and this one carries a different goal than any of the 13 that came before it. Every previous Starship mission has intentionally flown a suborbital arc, reentering the atmosphere within the same hour it launched. Flight 14 is designed to send the craft into a genuine orbit around Earth for the first time.
The launch window opens at 7:15 a.m. Central time at Starbase in South Texas and runs for 75 minutes, pending regulatory approval, according to SpaceX’s mission description published Tuesday. If the flight goes as planned, Starship will circle the planet roughly six times at an altitude near 275 kilometers over about ten hours before a deorbit burn sends it toward a splashdown in the Pacific Ocean west of Chile, a departure from the Indian Ocean recoveries used on the last several flights.
The mission also marks the first attempt to put a working batch of Starlink V3 satellites into actual service. Flight 13 carried 20 of the new satellites in July, but because that mission never left a suborbital trajectory, the payload reentered along with the ship instead of separating into orbit.
SpaceX tells the FCC that Starship Flight 14 is going to orbit
Each V3 satellite is rated for roughly one terabit per second of downlink capacity, so a successful deployment on Flight 14 would be SpaceX’s largest single jump in network bandwidth since Starlink began flying on Falcon 9.
Flight 13 still did the heavier lifting on the technical side. That July mission flew a deliberately more stressful reentry profile to test Starship’s heat shield, and the ship survived its softest splashdown yet, intact enough for drone inspections shortly after landing. Elon Musk said the flight delivered “all the heat shield data we needed and then some,” a result Teslarati covered in detail when he later said SpaceX had solved the vehicle’s biggest reusability challenge. Flight 14 is where SpaceX starts spending that confidence on an actual orbital insertion rather than another controlled fall back to Earth.
One thing Flight 14 will not attempt is a tower catch of the ship. Musk floated the idea right after Flight 13, but walked the timeline back in August, saying a catch attempt was more likely “in a few months.” The Super Heavy booster will still aim for its own recovery, targeting an offshore landing point in the Gulf of America, the same approach used on recent flights.
September 22 is SpaceX’s own target, not a locked date. Starship’s schedule has slipped before over hardware readiness and FAA sign off, and the company has said as much in its own mission notes. But the plan itself represents the clearest marker yet that Starship is moving from a suborbital test program into something meant to carry paying payloads and, eventually, people.
Elon Musk
Elon Musk gives his most telling Tesla-SpaceX merger conversation yet
Elon Musk hinted a Tesla-SpaceX merger could be coming, and Wall Street is taking notice.
Elon Musk gave his clearest signal yet that Tesla and SpaceX could eventually combine, telling the All-In Summit in Los Angeles that the two companies’ deepening collaboration makes the question worth asking. Sawyer Merritt first surfaced the highlight on X Tuesday.
Asked directly why Tesla and SpaceX remain separate given how closely they already work together, Musk told hosts at the summit: “Great question there. With all this collaboration, on so many levels, who can imagine what action one might take when there’s so much close collaboration in so many areas.” SpaceX President Gwynne Shotwell, who joined Musk on stage, added that SpaceX personnel have already moved into xAI to fill leadership and engineering gaps, saying the businesses are integrating “faster than I thought,” though “not fully integrated yet,”
The comments landed on top of merger speculation that has been building on Wall Street for months. JPMorgan has called a tie-up “strategically coherent on paper,” pointing to overlapping ambitions in AI, robotics, energy, transportation and space. Jefferies went further, estimating Musk could retain roughly 55.3 percent voting control in a deal structured without a premium, a scenario that would still leave room for Tesla shareholders to come out ahead. On Kalshi, traders now put the odds of a merger before 2028 at 66 percent.
Tesla’s stake in SpaceX, still under one percent, traces back to its earlier investment in xAI, which converted to SpaceX equity after SpaceX absorbed the AI company. The two are also jointly building Terafab, a chip facility in Austin meant to serve both Tesla’s AI computing needs and SpaceX’s satellite ambitions. Wedbush analyst Dan Ives has stood by a 2027 merger timeline for months, and Cathie Wood’s ARK Invest recently floated a similar case, an idea Musk pushed back on directly at the time.
Another Tesla SpaceX merger prediction by ARK Invest has Elon Musk talking
The timing adds another layer. Tesla has scheduled an October 1 unveiling for its next generation Roadster at a venue near SpaceX’s McGregor, Texas test site, using the phrase “Go for launch” in its promotional material. Both stocks dipped roughly 2 percent Monday before recovering slightly in premarket trading Tuesday, with SpaceX shares up about 0.4 percent and Tesla essentially flat.
Musk stopped short of confirming anything is in motion. But unlike his past denials of a corporate restructuring, this response didn’t rule one out, and it came with Shotwell sitting next to him describing an integration that’s already underway.
The Tesla Roadster unveiling is getting hyped up by the company’s CEO Elon Musk, who has been a big reason the product has such high expectations due to delayed timelines and a constant need to make it even more insane than before.
Tesla announced on September 12 that it would officially unveil the Roadster in Waco, Texas, on October 1, ending years of patience for fans and reservation holders who have waited for the all-electric supercar to enter production since 2017.
Musk has said that this event will be well worth the wait on several occasions, and last year on the Joe Rogan Experience, he said that there should be a closing chapter to supercars- the end of cars that aren’t focused on safety.
He said:
“Whether it’s good or bad, it will be unforgettable. My friend Peter Thiel once reflected that the future was supposed to have flying cars, but we don’t have flying cars. I think if Peter wants a flying car, he should be able to buy one. I think it has a shot at being the most memorable product unveil ever. This is some crazy technology in this car. Let’s just put it this way: if you took all the James Bond cars and combined them, it’s crazier than that.”
Musk’s teases have continued, and now that the event is roughly two weeks away, it seems like Roadster is finally going to show up and blow some minds:
It’s out of this world
— Elon Musk (@elonmusk) September 13, 2026
Excitement guaranteed
— Elon Musk (@elonmusk) September 13, 2026
Tesla has definitely dragged out the development of the Roadster, but there is a good reason for it.
Tesla has been working on many other projects, most notably self-driving efforts to increase passenger safety, and those simply took priority over the Roadster, a low-volume, high-performance sports car that has a lightning-fast acceleration rate of 0-60 MPH in just 1.1 seconds, could potentially fly, and contributes very little to the company’s mission.
However, many people have the Roadster on pre-order through the referral program or with their own money, and it is time that Tesla delivers on that.
SpaceX’s next Starship launch is about to attempt its biggest leap yet
Elon Musk gives his most telling Tesla-SpaceX merger conversation yet
