Beyond Our Wildest Imaginings, but not to Elon Musk

TSLA has risen substantially since Elon Musk returned. Next stop: the all-time high of $488.54

Tesla's stock price rose 3.6% to $410.04 yesterday after CEO Elon Musk bought more than $1 billion of its shares.

The move expresses Musk’s commitment to the company as the board prepares for a shareholder vote on a lucrative new pay package that could deliver as much as $1 trillion in stock to him over the next decade.

“To us, this sends a strong signal of confidence in the most important part of Tesla’s future business, robotaxi,” Jed Dorsheimer, an analyst with William Blair, wrote in a note Monday.

Musk has outlined his vision for transforming Tesla from the world’s most valuable electric-vehicle maker into an artificial intelligence and robotics company with a focus on autonomous driving and humanoid robots.

Elon Musk is a brilliant tactician and is well aware of the positive psychological effect of buying ONE BILLION DOLLARS of his company's stock on the open market. But $1 billion represents "only" 0.2% of his net worth, that is, how a person with $1 million might worry about an investment of $2,000. Sure, he would prefer not to lose it, but it's not the end of the world if he does.

Elon Musk has far bigger game afoot than you or I.

Musk: Something More

Elon Musk has been attacked from all sides during his time at the Dept. of Government Efficiency (DOGE) in Washington. Interest groups are fighting to keep every dollar of over-$6 Trillion in annual government spending, while shareholders in his companies want him to return to tending his businesses.

Elon Musk's last day as a temporary government employee was today, but he may have a few ideas about how he wants to spend his time that don't include Tesla or SpaceX.

The Tesla Diner under construction (Jessie Alcheh/SFGATE)

Elon Musk continually surprises with his list of priorities, but I doubt that many had Tesla Diner on that list.

But there’s something … different about the diner under construction at Santa Monica Boulevard and Orange Drive in Hollywood. For one, it’s got a striking two-story silver Space Age design and electric car charging stations aplenty. Large outdoor screens are set to show movie clips. And then there’s the mercurial owner, controversial Tesla and SpaceX CEO and Department of Government Efficiency architect Elon Musk...

The Tesla diner project has been in the works since 2018, when Musk announced on what was then Twitter that he was “Gonna put an old school drive-in, roller skates & rock restaurant at one of the new Tesla Supercharger locations in LA.” Progress has been slow since that first public idea, but lately, tidbits about the space have been trickling out on social media. The announcement of [Eric] Greenspan as chef was first floated on X and picked up later by the New York Times. In March, Sawyer Merritt shared on X that the “diner will feature a ‘1950s retro charm, dazzling neon lights, the unmistakable scent of freshly grilled burgers & hand-spun milkshakes.’” Merritt also noted the launch of a Tesla Diners Instagram account, which remains post-free...

The restaurant’s alien-spaceship design, courtesy of Stantec, is growing more visible by the day, despite the fencing and security around the busy corner lot. In late 2023, the restaurant was still very much a steel shell, but recent photos reveal that the building has not only been topped out but is already filling up with furniture and other finishing touches. Large movie screens affixed above the chargers are roughly in place, and word is that the screens will show films for 30 minutes, or the time it takes to charge a car.

It may have the tastiest burgers and unique decor, but I doubt that was enough to excite Elon Musk. There is undoubtedly something more to Tesla Diner.

Has Austin Peaked?

Downtown Austin, 2022 (American Statesman)

Within the past five years major companies such as Oracle, HP, Tesla, and Wells Fargo have moved from the Bay Area to Austin, Texas. There are signs, however, that Austin may have peaked. [bold added]

Nearly five years after Austin, Texas, became a darling of the tech industry, luring companies out of California with the promise of lower taxes and a better quality of life, the city is now bleeding tech talent that is flowing back to the coasts.

A new report from venture-capital firm SignalFire shows that in 2024 Big Tech employment declined 1.6% in Austin, and startup employment fell 4.9%. Tech employment in Dallas and Houston also declined, along with cities like Denver and Toronto. Tech employment grew, on the other hand, in New York and San Francisco.

It is a shift from five years ago, when Texas seemed like a growing Sunbelt beacon for tech, luring companies like Tesla, Hewlett Packard Enterprise and Oracle from California, and inspiring a number of remote tech workers and startups to follow them. But many of those companies have since laid off workers and Oracle actually relocated from Texas to Nashville, Tenn.

“I think that promise was never realized,” said Asher Bantock, SignalFire’s head of research. “This idea that it would become a new startup hub didn’t materialize.”

Return-to-office requirements combined with the burgeoning artificial-intelligence industry centralizing in Silicon Valley drew workers back West, while Austin’s fluctuating living costs and outdated infrastructure left new transplants frustrated, Bantock said.

It's too soon to say that one data point marks the beginning of a trend reversal. California's high taxes, regulatory regime, and housing costs haven't changed and for many businesses more than offset the benefits of staying. The large public companies aren't coming back, and it's a safe bet the ones that do remain in California have contingency plans to move if business conditions get worse.

Because California politicians don't feel compelled to change, I predict we'll see more departures from California in the next decade.

Just Nibbling

My entry points for four stocks

Since the stock market began dropping in February I've been nibbling at stocks that I formerly believed were too expensive relative to their growth prospects. Of course, I had not anticipated the stock market rout from the Trump tariffs announced yesterday, in which case I have bought too soon. (Analysts expect more declines as other countries, especially China, respond with "retaliatory" tariffs.)

I've invested less than 2% of my retirement monies so far and will close my eyes and buy more if declines continue. I am still confident that stock prices will be higher in a year, and though they were not bought at the bottom I will be glad I nibbled.

Elon Musk: the Wisdom in His Vision

(Citrin-Safadi/WSJ image)

Elon Musk has so many irons in the fire--Tesla, SpaceX, Starlink (part of SpaceX), and DOGE--that it's fair to wonder of he's one of those serial inventors (maybe the most brilliant and successful in history) who gets an idea and tries to make a business out of it.

What makes more sense is that everything that Elon Musk has done is directed toward establishing a human colony on Mars during his lifetime.

Musk founded SpaceX in 2002 with the mission of taking humanity to other planets. The company infused its culture with that long-term goal and completed a successful launch of its first rocket in 2008. It eventually developed the Falcon 9 rocket, which could be partially reused, lowering the cost of launches and taking market share from incumbent rocket operators.

Musk’s other businesses have contributed to the Mars goal. Musk has described Starlink, a SpaceX division that uses thousands of satellites to provide high-speed internet connections, as a cash machine for a future Mars mission. After Tesla, his electric-car company, gave Musk a stock award in 2018 valued at up to $55.8 billion, he later said it would be used for his space project. “It’s a way to get humanity to Mars,” he said in court in 2022.

Elon Musk has already stated that the goal of colonizing Mars is to preserve the human race when the earth inevitably experiences an extinction-level event. In that light Tesla and Starlink are "cash machines" to fund SpaceX, and DOGE will reduce concerns about the national debt and help the American government fund NASA.

For those who support DOGE and the space program, however, there is a legitimate disagreement with Elon Musk whether Mars should be a higher priority than colonizing the moon:

The White House plans to propose killing a powerful Boeing-built rocket designed for NASA to launch astronauts to the moon and beyond in a coming budget plan, according to people briefed on the plans. Canceling the vehicle, called the Space Launch System or SLS, would potentially free up billions for Mars efforts and set up a clash with members of Congress who support it...

NASA’s program known as Artemis, its long-range plan to explore the moon and eventually Mars, is being rethought to make Mars a priority. One idea: Musk and government officials have discussed a scenario in which SpaceX would give up its moon-focused Artemis contracts worth more than $4 billion to free up funds for Mars-related projects, a person briefed on the discussions said.

NASA’s long-range plan to explore the moon and eventually Mars is under the microscope. NASA has been working on the Artemis program and its predecessors for years. The cost from the government’s fiscal years 2012 through 2025 is estimated at $93 billion, according to the agency’s inspector general.

In January, Musk called the moon program a distraction in a post on X. Days earlier he had criticized Artemis, saying “Something entirely new is needed.”

SpaceX, Boeing and others have billions in contracts to build rockets, ships and lunar landing vehicles, among other technologies, for the program.

Musk has discussed with officials the idea that SpaceX’s moon-focused contracts, valued at more than $4 billion, could be dropped in favor of Mars plans.

Your humble blogger bows to the genius of Elon Musk but believes that the priority should be the moon, not Mars. It does the U.S. no good to be focused on Martian settlements if, say, the Chinese became the dominant lunar power. The latter could well jeopardize the former, just as Iwo Jima and Guadalcanal had to be taken before going after the real, distant objective of the Japanese homeland.

Elon Musk probably believes that Mars needs to be done while he's alive because the project could be abandoned without him, just as NASA lost its mojo after the Apollo program. He needs to have faith that the American people will see the wisdom in his long-term vision after we win the new moon race.

NASA’s role regarding the moon must be reimagined. As we are starting to see in LEO [Low Earth Orbit], Congress must shift funding and priorities so that the centerpiece of U.S. lunar policy becomes enabling private efforts. These pioneering initiatives cannot remain sideshows to the Artemis-Apollo rerun. It’s time to move American enterprise to center stage and let people lead...

Meanwhile, NASA can turn its central focus to putting the first people on Mars. Even if the first mission is a relative sprint, we’ll be learning skills on the moon we’ll need to go further.

LOLOCT7 Wasn't What Everyone Thought It Meant

(Photo from KABC LA)

Am antisemitic group complained about a personalized license plate spotted in Culver City:

the advocacy group StopAntisemitism shared a photo of the plate, “LOLOCT7,” spotted at a busy intersection in Culver City (Los Angeles County). The organization suggested that the plate celebrated the deadly terrorist attack [by Hamas on October 7, 2023], which it described as a “vile mockery” of the tragedy...

But the son of the car’s owner, who spoke anonymously to KABC-TV in Los Angeles, explained that the plate’s meaning had been misinterpreted.

He clarified that “LOLOCT7” was intended to reference “Lolo,” the Tagalog word for grandfather, “CT” for the Cybertruck model and “7” to signify the number of grandchildren the owner has.

The Filipino family said this explanation was shared with the DMV when the plate was first requested. The Cybertruck owner is in the process of getting new plates.

For most Americans the plate is likely interpreted as "laughing out loud" re "October 7", the date of a murderous terrorist attack. To the Filipino family the characters were an abbreviation for "grandfather." "Cybertruck," "7 [grandchildren]." The dispute was resolved quickly because the owner agreed to change the license plate.

In a multicultural society these misunderstandings can easily happen. Sometimes the dominant culture says or writes something that offends a minority group; in this rarer case the minority makes an expression that offends the dominant culture and the dominant culture cares. We are used to both sides being intransigent, and it's a relief that the "offending" side agreed readily to modify its material.

Twitter Be Gone

After moving Tesla and SpaceX to Texas, Elon Musk has completed his divorce from California by moving X (Twitter) headquarters to Austin:

The light goes out on Market Street

Twitter, now known as X, is expected to close its San Francisco headquarters this month, leaving behind the Mid-Market neighborhood it has called home since 2012. The company is reportedly moving its headquarters to Austin, Texas, but plans to relocate its San Francisco employees to San José and Palo Alto, where it has already listed job openings.

The departure is another blow to a city that has been buffeted by high-profile business departures and that once held up Twitter as a key part of its revival. Downtown San Francisco’s vacancy rates have ballooned as tech companies slashed their real estate expenses and halted office expansion plans as the pandemic has relented.

Confronted with a falloff in foot traffic, major retailers such as Nordstrom and Anthropologie also shut their stores amid heightened concerns about crime, theft, vandalism, drug use and homelessness.

X is the second-largest tenant in the Mid-Market neighborhood, leasing 457,793 square feet, according to CoStar, which tracks real estate trends. Vacancy rates in Mid-Market are at their highest in decades at 62%, according to CBRE.

California is so invested in its Progressive politics that it rather let megabillion employers like Tesla depart than change its ways.

(In an infamous exchange, California Progressive Congresswoman Lorena Gonzalez tweeted “F—k Elon Musk” in 2020 when Musk threatened to move Tesla because of California's COVID lockdown rules.) He responded "exactly" and Tesla departed for Texas.

IMHO, the biggest loss to California is privately held SpaceX, which is the leading American space exploration company. Its current valuation is estimated to be $210 billion, and $1 trillion is well within reach after it goes public.

On the other hand Twitter's valuation has fallen from $44 billion to an estimated $19 billion. (He can't admit this to the bankers and investors, but IMHO Elon Musk's primary objective wasn't to make money from the purchase but to make Twitter a free-speech platform.)

Although the Musk family of companies retains substantial operations in California, the loss of their headquarters is a blow to the tax base. Not only do headquarters support a host of ancillary businesses (hotels, printers, law firms, banks, etc. etc.) repatriated international income and intangible income such as royalties and licenses are attributable to the state of the company's residence.

Progressives rather lose the tax base upon which their carbon-free equality-of-result dreams depend than admit they are wrong. Unfortunately, when the majority of the people of California realize that, it will be too late.

Ignoring the Politics When Buying a Car

The 2024 Tesla Model 3 starts at $38,900 (kbb)

In the modern era politics infects (infests?) even minor decisions. Artists speak out on controversial issues, and even if their books, movies, or music are critically acclaimed, some segment of the market will avoid their products simply because it despises their politics.

Not seeing a specific movie or reading a specific book has no lasting impact on a consumer's life. But will he let politics be the deciding factor on what may be the best value on a car? Car critic Dan Neil cites the example of his sister.

When it came to buying a replacement, safety was her top priority. Who makes the safest car on the market? she asked. I warned that she might not like the answer.

Tesla. Tesla models have earned five-star ratings from regulators in every global market, the highest cumulative scores in the industry. These marks capture Teslas’ crash resilience, their inherent stability (low center of gravity) and advanced driver-assist systems. Tesla’s standard suite of optical sensors and automatic braking would have at least mitigated the collision that took out her Kia.

“How about a Model 3?” I suggested. Kathy rolled her eyes. “I will never buy a car from that man,” she said, referring to Tesla CEO Elon Musk. “You’ve never even met the man,” I said, knowing that wouldn’t help.

Last week Kathy and her husband, Bill, signed a three-year lease on a 2024 Tesla Model 3 Rear-Wheel Drive: $331 per month, with a $4,400 down payment. Their modest monthly includes a $7,500 federal tax credit, a 15,000-mile annual mileage allowance and $1,000 incentive from Tesla, since expired...

She admitted it was a case of enlightened self-interest. “It’s just that when you look at how much car and how much money,” she explained, “you’d be crazy to buy anything else.”

...This is the first U.S.-market Tesla to rely on lithium iron-phosphate (LFP) batteries, which are broadly superior to nickel-manganese-cobalt (NMC) cells in cost, safety, climatization, charging speed and durability. My sister’s car extracts 272 miles of range from a comparatively small battery, a reported 57.5-kWh of usable storage. At a Tesla Supercharger it can add up to 175 miles of range in 15 minutes. If you were waiting for the proverbial game to change, pay attention...

Build quality: Kathy’s car was one of 32 delivered by the local Tesla center that day, handed over with little ceremony by hustling Tesla team members. In other words, a random sample. It looked perfect to me. Door and panel gaps, window glazing and trim, fit and finish? All flush and razor straight...

Charging [at home] at overnight rates, roughly 10 cents per kWh, it will cost $5.85 to fully recharge the battery, or 2 cents per mile. Even if my arithmetic is 100% wrong, that’s still only 4 cents per mile. Isn’t it?

At $38,900 the basic Tesla Model 3 is cheaper than the last two internal-combustion cars that I purchased in 2018 and 2019. If I were in the market for an EV, and even if I found Elon Musk's recent antics upsetting (I don't), I'd buy a Model 3.

The fEVer has broken

New EVs in Liuzhou, China (Globe and Mail)

Our suburban cul-de-sac has six homes, and three have Teslas. In the Bay Area Teslas are everywhere and have long ceased to be status symbols.

As we mentioned four months ago, we're having second thoughts about joining the parade, and millions of potential EV-buyers are apparently feeling the same way. [bold added]

Ford Motor said Friday it is slashing production of its F-150 Lightning, the electric pickup that has generated major buzz since its launch nearly two years ago. Tesla in recent days cut vehicle prices in Europe and China, and its stock has fallen sharply this month. Hertz last week said it was dumping 20,000 EVs from its rental fleet, replacing them with gas-engine cars.

Meanwhile, the Arctic blast affecting much of the northern U.S. offered a visceral reminder of one inconvenience of EV ownership: Reduced battery performance in cold weather. That phenomenon has left some EV owners out of juice—and the industry with a jolt of bad publicity for electric cars.

EV sales in the U.S. and globally continue to climb, but the pace of that growth—and the fervent enthusiasm around the EV story—has faded. The long wait lists and accelerated factory schedules that characterized the budding EV market in recent years have given way to a backlog of inventory and downsized ambitions.

Carmakers say they remain committed to going electric while calibrating their plans amid multiplying signs that not as many consumers as anticipated are ready to rush into EVs.

Surveys show many car buyers are interested in the technology, but are hesitant to make the switch because of concerns over charger availability and higher prices.

It's very early, but California's mandate to restrict purchases only to "zero emission" vehicles beginning in 2035 looks like it will be extended, cancelled, or riddled with so many exceptions as to be toothless.

Elon Musk is Gloomy

Elon Musk worries about asteroid strikes. Unlike you or
me he can do something about them (Harvard/NASA).

Elon Musk's big ideas to save it have made him the richest man in the world: [bold added]

Musk has framed his business endeavors as striving to prevent calamity, a motivating ideal that helps inspire employees, investors and fans while inducing eye rolls among critics and rivals.

For him, Tesla is about trying to save humanity from global warming while SpaceX is about making humanity a multiplanetary species in case things don’t work out on Earth.

A year ago, with the purchase of Twitter-turned-X, Musk couched the decision as keeping the social-media platform as a bastion for free speech in what he sees as a larger battle against cultural forces trying to squash diverse thought—or, as he calls it, the “woke mind virus.”

Despite his current wealth of $221.9 billion (Forbes) Elon Musk is far from content:

Musk sounds worried—about everything from cyclical business jitters to existential global concerns. He choked with emotion during a recent public conference call with Tesla analysts about the economy. This past week he warned during a forum on X about “civilizational risk” stemming from the Israel-Hamas war cascading into a wider conflict that would pit the U.S. against a united China, Russia and Iran.

“I think we are sleepwalking our way into World War III,” Musk said Monday.

Elon Musk worries that the human race won't survive. He has the wealth and knowledge to affect the future and feels the responsibility. Centi-billionaires are different from you and me.

An EV Will Have to Wait

Filling a tank is easy, charging a Tesla needs parking instructions.

Buying an electric car has been the medium-term plan, but lately I've been having second thoughts that have nothing to do with range anxiety.

Operating an electric car means learning a new way of performing basic functions, like opening the door, turning on the "engine," and braking. [bold added]

On the Ford Mustang, you press a circular button on the door and it pops open.

On the Kia EV6 and Hyundai Ioniq 5, the handle is flush with the car and pops out when the car is unlocked. With the Tesla Model Y, you need to push in the wide part of the handle then pull the longer skinnier part toward you. Thankfully, there’s a GIF for that...

Instead of a physical key fob, Tesla provides a hotel-style keycard. You can also use Tesla’s smartphone app as a key. As soon as you open the Model Y’s door, the touch screen powers on and you can operate all controls...Ford, Hyundai and Kia stick to start/stop push buttons. There are key fobs, but you can also set up the apps as keys...

OK, you know how traditional automatic-transmission cars creep forward when you take your foot off the brake? That generally isn’t the case with EVs. To move, you tap the accelerator. (Even in reverse, which can be a little unnerving.) As soon as you take your foot off the accelerator, the car slows and brakes on its own. You only hit the brake pedal itself if the car isn’t slowing quickly enough. Most EVs let you do “one-pedal driving”—that is, driving with only the accelerator.

In our three-car non-EV family it's already crucial to be aware of which car I'm driving. The oldest, a 2004 Camry, doesn't have infrared sensors that trigger beeps when the car gets too close to a stationary object or pulsing sounds when a vehicle or pedestrian approaches. I've caught myself counting on a warning light in the side view mirror, then remembering to turn my head to check the blind spot in the old car.

If I got used to driving an EV, I'd have to remember that our ICE (internal combustion engine) cars won't automatically brake when I take my foot off the gas pedal. The variation would be extensive if we got an EV, so for safety's sake, we'll wait until more user-friendly and standardized controls are developed.

[Side note: why don't we at least get rid of the pre-sensor pre-GPS 2004 Camry? We need an old car to drive into and park in San Francisco, where windows are smashed and catalytic converters are cut off with impunity.]

"Be the House"

(NY Post image)

One common characteristic of getting older is that people become more conservative--politically, culturally, and financially. As life's expiration date approaches, this perspective makes sense.

Older people, including your humble blogger, are less willing to take chances because they have more to protect. If a risky bet turns out wrong, recovery--physical and financial--is difficult and sometimes impossible.

That's why Elon Musk is unique. At 51, his enterprises and his wealth are an order of magnitude bigger than they were ten years ago, yet he's still willing to bet the farm to fulfill his vision(s):

In the span of 24 hours this past week, Elon Musk made three very big bets with three very different companies, together showing his penchant to plow ahead despite sizable risks.

Between Wednesday and Thursday evenings, he stripped celebrities, journalists and other high-profile users of their free, legacy verification on Twitter, risking a VIP revolt on the social-media platform. He promised that the electric-car maker Tesla Inc. increase; green up pointing triangle would chase sales volume at the expense of profitability. And he launched SpaceX’s first of its kind giant space rocket, which exploded on the way to the heavens.

Making big bets doesn't mean that Elon Musk isn't aware of the risks:

“If the odds are probably in your favor, you should make as many decisions as possible within the bounds of what is executable,” Mr. Musk said a few years ago. “This is like being the house in Vegas. Probability is the most powerful force in the universe, which is why the house always wins. Be the house.”

Although he's one of the richest people in the world, amassing wealth was not the goal, just a means to get to his destination. Elon Musk's aspirations are grand indeed: interplanetary space travel, efficient autonomous transportation, and a platform for the free-wheeling exchange of ideas.

Along the way Elon Musk doesn't care how foolish he looks to others. Blowing up a rocketship to find out whether it functions (without hurting anybody) is a necessary step on the way to Mars, and crashing cars is the price for making millions of authomobiles self-driving.

Wealth often induces billionaires to become philanthropists and lift individuals out of poverty. Elon Musk's way of using his wealth, IMHO, will enrich humanity's future.

Making Nice in Palo Alto

(Mercury News photo)

It's not as noteworthy as the lion lying down with the lamb, but the most prominent businessman and one of the most prominent politicians in the U.S. made nice today:

Tesla has decided to base its engineering headquarters in Palo Alto at a former Hewlett-Packard site, the company’s top boss Elon Musk announced on Wednesday.

Musk made the announcement in Palo Alto during an unusual joint appearance with Gov. Gavin Newsom. The pair have sparred in the past over California’s business climate...California and its political establishment...were jolted in 2021 when Tesla decided to decamp its headquarters from the Golden State and move the company’s corporate offices to Texas.

Both men have attracted attention by making public statements that inflame political activists on the left and right. But they didn't get to where they were by passing up opportunities to make a win-win deal.

IMHO, the "real" Gavin Newsom and the "real" Elon Musk are both shrewd, calculating individuals who measure both the short- and long-term consequences of their actions. The next time they issue a provocative tweet that makes you cheer or sputter, that's exactly what they wanted you to do.

San Francisco: Where Bureaucracy Reigns Supreme

Tesla's Powerwall battery.

When we visited the Tesla dealership in 2017, I saw our path to going green.

During the day rooftop solar panels would produce excess power. The power would not be sold to PG&E (and repurchased that evening) but would be stored in batteries in our garage, where our Tesla EV would be charging at night time. An added benefit is that we would be independent of unreliable brown-out prone PG&E.

The dream would wait, as solar and battery technologies were improving rapidly. Besides we had a fairly new natural-gas water heater and furnace that were reliable and inexpensive to operate. Their useful lives would expire in the mid-2020's, which would be a good time to execute the solar panel==>battery==>EV vision.

But if we lived in San Francisco, one of the greenest cities in America, the dream would be impossible. [bold added]

San Francisco needs power when the fog comes out and after the sun sets. Meeting that demand without fossil fuels will be impossible if we don’t start storing our solar energy for off-hours use.

And yet for the past three years in San Francisco, it has been illegal to install a battery storage system over 20-kilowatt hours on a one- or two-family home. For context, that’s not even enough to power a 2013 Nissan Leaf, one of the smallest electric cars on the market.

San Francisco's fire-safety concerns over battery storage are "unproven" and not subscribed to by any other Bay Area city. They're emblematic of a City bureaucracy that prevents its own citizens from doing the very things that City leadership advocates.

Meanwhile, San Francisco faces a budget deficit of $200 million in the next fiscal year and is looking for places to cut.

San Francisco: Exodus of the Rich

(WSJ graphic)

California, and particularly San Francisco, have become undesirable places to live.

The people who pay the highest overall taxes (income, sales, property, gasoline) in the country have to endure a quality of life that is worse than average according to some indicators (crime, housing cost, air pollution). A sampling of previous posts on this blog:

February, 2018: Warning Signs
January, 2020: California Peaked 1-2 Years Ago
February, 2021: Urban Decline and Fall

Today the Chronicle confirmed the suspicion that rich people, those most desired by communities across the nation, left San Francisco in meaningful numbers: [bold added]

From 2019 and 2020, the number of people listed on a tax return in San Francisco fell by 39,202, a drop of 4.5%, according to data from the Internal Revenue Service. Residents who left made an average of about $138,000 per year in 2019, up 67% from the prior year, when departing residents had an average annual income of around $82,000. San Francisco’s net out-migration, which is the number of people on filings who moved out subtracted by the number of people who moved in, nearly tripled in one year...

The total income in 2019 of people who had left the city by the time they filed their 2020 returns was about $10.6 billion, which compares to $3.8 billion for those that came to the city. A net loss of almost $6.9 billion. The net loss in the previous year was also negative, but much less at $2.6 billion, according to the IRS.

Because the City doesn't collect an individual income tax, the effect of losing high-income people will largely be felt by local businesses. (The direct hit to San Francisco government will be in sales taxes, which fell "from $165 million in 2019 to $88 million in 2020," although some effect is undoubtedly due to working from home by out-of-town commuters.)

Perhaps more meaningful to a leave-or-stay decision than any statistic is the perception of how welcoming California is towards successful businesses.

The Progressives who hold sway in the big-city and state halls of power continue to harp on inequality as the source of California's problems. They focus on raising taxes on the prosperous instead of thanking them for their contributions to the community.

Emblematic of this antipathy was the exchange between then-assemblywoman Lorena Gonzalez and Elon Musk, who threatened to move Tesla out of state because of California roadblocks to Tesla operations. After her tweet in 2020 (below), the company, currently valued at $839 billion, moved to Texas.

Message received

— Elon Musk (@elonmusk) May 11, 2020

Californians continue to vote Progressives into office, so they must be getting the policies they wanted.

Back to Work

Elon Musk via email has ordered Tesla employees back to the office. Asked for confirmation, he responded with the tweet shown at the bottom, "They should pretend to work somewhere else."

="ltr">They should pretend to work somewhere else

— Elon Musk (@elonmusk) June 1, 2022

Comments:

1) I hope that vaccinated workers who have COVID co-morbidities (or who live with someone who has) can be accommodated by maintaining physical distance, allowing them to mask, and ventilating their workspace.

2) If (1) is true, then there's little justification for workers complaining; showing up for work on time was the minimum requirement pre-COVID.

3) Elon is implying not very subtly that remote workers "pretend" to work.

4) One of the criteria for being classified an employee, according to tax law, is that the employer dictates the working hours and location of the job. If recalcitrant office-goers otherwise like working for Tesla, perhaps they can work out a deal to be classified as self-employed contractors.

Looking But Not Buying

The toniest part of Kalakaua Avenue is a place to look and touch, but rarely to buy. The main boulevard of Waikiki is rife with upscale stores, and none are ritzier than those in the International Market Place.

The location used to be an open-air bazaar (photo on right), filled with merchants hawking wares of questionable origins. Haggling was permitted, and cash was highly preferred as the medium of exchange.

At the new International Market Place haggling is gauche, and one needs a wheelbarrow to haul around the cash necessary to make some purchases.

For prudent's sake I brought only two credit cards. Maturity is not giving in to temptation, and wisdom is removing its opportunities.

The Big Got Bigger

Except for Amazon, the "tera" cap stocks beat the indices

It was a very good year for stock market investors: [bold added]

the rollout of Covid-19 vaccines and low interest rates...helped the S&P 500 to close at a record 70 times this year, more than one-quarter of all trading days, according to Dow Jones Market Data, and pushed the index up 27% in 2021. The Dow and Nasdaq did well over the past 12 months too, rising 19% and 21%, respectively, handing all three benchmarks their best three-year performance since 1999.

Much of the broader market rally was also driven by a small group of massive stocks, such as Apple, Tesla and Microsoft. Microsoft and Tesla shares have each risen around 50% this year, while Apple has gained more than 30%.

Our stock holdings are weighted toward the so-called "megacap" tech stocks, so the portfolio has done well for the past decade. The 2021 performance of about 30% was way above expectations, since we did not expect the biggest of the big to go up that much. If we're up 10% in 2022, we'll be happy.

If you keep your expectations low, you aren't likely to be disappointed.

Elon Musk: The Excitement is Here Again

I never expected to see another businessman as important or as lionized as Steve Jobs, but ten years after Steve's death Elon Musk has filled that role.

The richest man in the world does not own a house and has recently been selling off his fortune. He tosses satellites into orbit and harnesses the sun; he drives a car he created that uses no gas and barely needs a driver. With a flick of his finger, the stock market soars or swoons. An army of devotees hangs on his every utterance. He dreams of Mars as he bestrides Earth, square-jawed and indomitable. Lately, Elon Musk also likes to live-tweet his poops.

Like Steve Jobs, Elon Musk nearly bankrupted his companies in pursuit of a vision that very few could see, much less believe in. Like Steve Jobs, he achieved extraordinary success, disrupting major industries, making himself a multi-billionaire and enriching many thousands of employees, investors, and suppliers. Both men also pushed people out of the way, thereby earning criticism for their acerbic ways and personal eccentricities.

Bill Gates, who knew both men, sees major differences:

“Elon’s more of a hands-on engineer. Steve was a genius at design and picking people and marketing,” Gates said. “You wouldn’t walk into a room and confuse them with each other.”

Indeed, Musk often talks about his demanding schedule and his hands on approach. For example, on a Tesla earnings call in November 2017, Musk said he was spending all hours in the Tesla battery production factory, even sleeping on the floor and skipping showers to catch up on Tesla 3 production in 2018.

“I am personally on that line, in that machine, trying to solve problems personally where I can,” Musk said on the call. “We are working seven days a week to do it. And I have personally been here on zone 2 module line at 2:00 a.m. on a Sunday morning, helping diagnose robot calibration issues. So I’m doing everything I can.”

As for Jobs, he “was such a wizard at over-motivating people ... I could see him casting the spells, and then I would look at people and see them mesmerized,” Gates told podcast host Dax Shepard Aug. 20.

As of this writing Steve Jobs has touched many more lives than Elon Musk. Over one billion people have an Apple device, while less than 1% that number have owned or will own a Tesla.

But with his single-handed revival of the space program, Elon Musk may very well have changed the course of human history. Ten years ago many asked, somewhat plaintively, "Without Steve Jobs, Where's the Excitement Going to Come From?" Time's Person of the Year has the answer to that question.

Tesla: It Makes Sense in Hawaii

The Tesla showroom in Waikiki wasn't busy on Wednesday night, but don't go by appearances. Tesla is the luxury car leader in Hawaii:

Tesla is also far and away the most popular luxury car brand in Hawaii with a 40% market share, followed by BMW with 18.7%, Mercedes with 13.3% and Lexus with 7.8%. And Tesla enjoyed the second-largest increase in new retail light vehicle registrations, trailing only the Lincoln.

Living on the Mainland, we are years away from buying an electric vehicle, primarily because they are range bound. Despite the vaunted infrastructure bill, I don't believe that charging stations will be widely available across the country any time soon. For at least the next ten years gas stations will continue to be ubiquitous, and so will be the information signs posted on the nation's highways. When I see a "Next gas in 30 miles" sign, and I'm down to a quarter tank, I know what to do. Not so much with an EV.

In Hawaii Teslas and other EVs make sense. The average road trip is 30 minutes or less, making it very unlikely an electric vehicle will be stranded. If we ever moved back, a Tesla would be one of the first purchases we make.