The Federal Reserve System is the central bank of the United States. It performs general functions to promote the effective operation of the U.S. economy and, more generally, the public interests such as conducting the nation’s monetary policy to promoting the safety and soundness of individual financial institutions and monitors their impact on the financial system as a whole.
It’s a different playing field for the company, which enjoyed closer relationships with the past two former administrations. It’s also part of a bigger twist for tech giants and Silicon Valley, which have generally faced an uptick in regulation, public criticism and overall scrutiny under the Biden administration.
Most recently, Tesla took advantage of the lower interest rates, plus a $60 million offered through the State of Texas to build its last Gigafactory in the city of Austin. Along with these two advantages, Musk sold $6 billion worth of government-based electric vehicle credits, these kept the Tesla in the green instead of losing money. Though Musk has repeatedly expressed concern about how much the government spends and the many rules and regulations it places on companies. But Musk rarely mentions that his companies benefit from government help.
References
Severns, M., Stiles, M., & Matthews, A. (April 30, 2022) Elon Musk hates government subsidies. His companies love them. https://www.grid.news/story/technology/2022/04/30/elon-musk-hates-the-government-his-companies-love-it/
Siddiqui, F. (September 15, 2021) The government helped Tesla conquer electric cars. Now it’s helping Detroit, and Elon Musk isn’t happy. https://www.washingtonpost.com/technology/2021/09/15/tesla-biden-administration/
This is a fantastic post and is very interesting. Anyone who knows of Elon Musk knows he is a great business man. He's very intuitive and your post shows that and how he takes advantage of the economic climate to better his company and keep them afloat. However, since the United States has officially entered a recession it will be interesting to see what Musk does to keep his business steady. On top of a recession, in a recent interview Musk said supply constraints are the biggest threat to growth for Tesla as he confirmed job cuts of up to 3.5% (Axios, 2022)." So again, it will be interesting to see how with all these negatives in play to see if Tesla can come out on top.
Reference:
Seeking Alpha. (2022, June 28). Tesla may have significant trouble during a recession (NASDAQ:TSLA). SeekingAlpha. Retrieved from https://seekingalpha.com/article/4520757-tesla-may-have-significant-trouble-during-a-recession
This post is interesting, and your last statement is even more interesting because Musk's companies do benefit from government help. Elon Musk is a large stakeholder in several companies including Tesla, SpaceX, The Boring Company, Neuralink, and Twitter. Tesla is his biggest company. Musk owns more than 43,000 Bitcoin, worth close to $2 billion. "As Tesla’s example reminds us, near-bankrupt or money-losing companies represent opportunity for investors and lenders. Investors are rewarded with greater amounts of equity when they liquefy what’s in trouble, and lenders enjoy higher rates of interest on loans made to companies in trouble. Markets work" (Tamny, 2022).
Works Cited
Tamny, J., 2022. Tesla Shows Why We Shouldn’t Enable The Fed’s Continued Search For A Purpose. [online] Forbes. Available at: <https://www.forbes.com/sites/johntamny/2020/12/06/tesla-shows-why-we-shouldnt-enable-the-feds-continued-search-for-a-purpose/?sh=319953693711> [Accessed 31 July 2022].
The FED's policies affect the growth of businesses in the economy. Some policies promote growth, while some cause stagnation. Fed policies influence the development of all companies including Tesla, by controlling the interest rates, thus affecting credit availability. When there is more money in circulation, the demand for Tesla products increases, enabling the company to make more sales and profit, thus promoting the economic growth of the company. The company’s profit also increased because gas prices have increased due to inflation. The demand for solar energy is increasing. Inflation has also affected Tesla because the price of the metals used for Tesla’s batteries has also increased. This caused Tesla to increase their prices on the electric vehicles. Inflation can be changed. The decrease in both consumption spending by consumers and investment spending by businesses decreases the overall demand for goods and services in the economy. With decreased demand for goods and services, upward pressure on wages and prices dampens. As these changes transmit to the broad economy, inflationary pressures diminish, and the inflation rate will fall. (n.d.).
Reference
Monetary policy basics. (n.d.). Retrieved July 31, 2022, from https://www.federalreserveeducation.org/about-the-fed/structure-and-functions/monetary-policy