If there's one way to incentivize innovation, it's by giving out tax breaks—if you do them right, anyway. Those could be for corporations who want to build a new factory in a desolate town, or a $7,500 credit for a consumer to buy a qualifying EV. But as you get ready for April 15, you may start to question what Tesla has been paying in all these years.
Welcome to Critical Materials, your daily roundup for all things EV and automotive tech. Today, we're talking dollars—or how some of America's largest corporations, including Tesla, haven't paid them to Uncle Sam in a while, according to a new study.
We're also going to chat about General Motors' latest executive loss, and Volkswagen's push for an entry-level EV as soon as 2027. Let's dig in.
30%: Tesla Paid its Executives $2.5 Billion Over Five Years, But $0 in Federal Income Tax
Despite Tesla ranking as the world's most valuable automaker and raking in $4.4 billion in profit between 2018 and 2022, a new study suggests that Tesla may not be paying its fair share in U.S. federal income tax.
The study, originally reported on by The Guardian, slams various large corporations for tax dodging based on data collected from the U.S. Securities and Exchange Commission. These companies include Tesla, T-Mobile, Netflix, Ford, and more.
In Tesla's case, the report claims that the automaker has not only paid zero dollars ($0) in federal income tax in the past five years but has actually received $1 million back from the U.S. government for overpayment.
While corporate tax avoidance might be one of the main topics of the study, it also calls out the burden that egregiously high executive pay causes to the tax system. Tesla, for example, is criticized for paying out $2.5 billion to its executives:
[C]orporate boards have more money to spend on their highest-paid employees when they don’t have much or anything to pay in taxes. Until this self-reinforcing cycle is broken, we’ll have a corporate tax and governance system that works for top executives—and no one else.
Tesla CEO Elon Musk, who has had quite the run-in with the SEC in the past, has called out tax burden displacement before.
Last year, Musk replied to a post on his social media platform, X, from U.S. President Joe Biden that called for "the super-wealthy [to] start paying their fair share." Musk blamed "elaborate tax-avoidance schemes" for the loophole, and noted that the burden will be placed on "lower to middle-income wage earners."
I know, I know. We're all trying to find the guy who did this.
At the end of the day, Tesla is a publicly traded corporation, which means that it has a fiduciary responsibility to its shareholders. If there's a tax law that Tesla is legally entitled to, it's likely going to—whether it's deferring tax to another year, or writing off executive pay as a payroll expense.
But to see such a large company pay out nothing in federal income tax while its CEO recognizes the burden it puts on the lower and middle-class earners, it could easily feel like a slap in the face for the millions of Americans who chant "eat the rich."
60%: GM Loses Executive in Charge of Software Division
Just as GM starts rebooting its software efforts to fix the troubled Ultium platform, its VP of Software and Services has stepped down.
Mike Abbott, the former Apple exec GM poached just last year, has announced on LinkedIn that he will be stepping away from his role due to health issues:
It’s with great disappointment to share that I’m stepping down from my role at GM. since late last year, I’ve been facing some serious health issues involving my heart that have not improved. as a father and husband, I need to prioritize my recovery and be with my family with the hope that my health will improve over time.
The news comes just as GM begins to fix a trove of software issues, all while ditching core consumer functionality like Apple CarPlay. The automaker has been slammed for a myriad of software-related problems in cars like the Chevy Blazer EV and Cadillac Lyriq.
While GM searches for a replacement, they've made Baris Cetinok the interim replacement for Abbott. Cetinok recently spoke with InsideEVs about the automaker's deep delve into the Chevy Blazer EV's software issues after our reporter, Kevin Williams, was left stranded in Virginia with a "bricked" press car. He outlined just how the automaker used its fleet data to reproduce problems and help troubleshoot "rare, but very disruptive" issues, some days logging more than 16,000 worth of data.
Despite Abbott's departure, he says that he still believes GM has a lot of good work to be done, and that he has full confidence in its CEO, Mary Barra, to stand at the helm. GM has reeled in quite a portfolio of Silicon Valley talent under Barra's umbrella in an attempt to bring the legacy automaker to the forefront of cutting-edge automotive software.
90%: VW Warns EU Not to Back Out of ICE Ban, Will Soon Decide on an Entry-Level EV for 2027
Volkswagen, like many global brands, is heavily investing in electrification. The automaker says that it plans to launch 11 new EVs over the next three years, including some lower-cost options with Chinese partners, and the Volkswagen ID.2, which is expected to launch somewhere in the neighborhood of $27,240 (25,000 Euros).
VW Group Chief Executive Oliver Blume says that the automaker is also working to reach a decision regarding another entry-level model which could be priced at around $21,795 (20,000 EUR) and be ready to hit the road as soon as 2027. Thomas Schaefer, CEO of Volkswagen Passenger Cars, says that VW plans to decide which concept it may move forward with as its entry-level offering in the coming weeks.
Meanwhile, the brand is working to balance its existing offering of combustion-powered models throughout the transition to electrification. Chief Financial Officer Arno Antlitz says that the company is planning to ramp up electromobility across its brands, especially as it reaches all-time-high proportions of EV sales—8.3% in 2023.
The CEO proclaims that battery-powered cars are the future. "Electromobility as the right technology. It will be superior to combustion engines in a short time," he said.
To ensure a successful transition to battery-electric fleets, Blume says automakers require “multifaceted support” from politicians, especially those in Europe.
Blume is calling on the EU not to back down on its planned phase-out of combustion engines in 2035. He notes that if the EU backs out of the 2035 ban, it could have a serious economic impact not just on one of Europe's largest export industries, but also on the jobs created to support the transition.
100%: What's the Most Compelling EV on the Market Today?
There are a lot of reasons we buy cars. Maybe they're practical, fast and fun, or perhaps they're just items that fit in our budgets. Regardless, there's no shortage of options on the market today, and the offerings will only get more competitive over the next several years.
That being said, if you were to buy an EV today, which car would you have your eye on? And what makes that offering most compelling to you, even globally? Let me know in the comments.
