The Real Story Behind Elon Musk’s Flying Car

On Thursday, Tesla revealed its new Roadster at a SpaceX test site in McGregor, Texas. The footage is unbelievable.

It’s an engineering flex; it shows what science can do. It also allows Elon Musk to make the case that Tesla and SpaceX should be brought together as a company, which he has been promoting.

What he’s doing is an AI vertical integration play. Tesla tends to build physical AI, meaning robotaxis and Optimus humanoid robots. SpaceX does virtual AI infrastructure, such as Grok orbital data centers. 

They both partner with Intel on the Terafab project in Texas, which is a gigantic foundry to design and scale custom microchips that they’re using for everything from autonomous vehicles to robots to space-based computing.

What makes all of this possible? Free, available pools of capital in a deregulated economy. Those enormous ready pools of capital are what distinguish American markets from Europe. Elon is using those pools of capital to do awesome and cool things.

It’s not evil materialism that robs your soul to say, “This is cool.”

I’ve noticed many of the same people out there saying capitalism is somehow emptying out the human soul are celebrating this coolness. Why? Saying it’s cool for a car to fly doesn’t make you an evil materialist. It makes you a human. It is cool. In fact, it’s awesome.

We ought to point out that this has to do with capitalism.

Here’s how it works. If you have large pools of capital in a deregulated economy, you get massive innovation, as you saw with Tesla.

There’s a reason that Tesla is an American company. All the top AI companies are located in America because they require heavy capital expenditure.

Your capital expenditure has to be pretty high in order to grow. And that only happens in the United States. That’s how we end up with Tesla, Meta, and Google. That is an excellent thing.

The other kind of economic system that can generate pretty nice cars is something called state capitalism. State capitalism, or mercantilism, is what you currently see in China. China has run up its debt in order to subsidize development in particular areas, just as Hitler’s Germany did.

Economically speaking, Hitler’s Germany could produce nice cars because if you take a bunch of money and you pour it into one particular area, then you can end up with a pretty nice car.

China has a competitive automotive company called BYD. BYD has the target goal of selling five million vehicles, about three times more than Tesla. They dominate the lower end of the electric vehicle market. Half of the cars are priced under $25,000.

Here’s the point: If Tesla fails, another company right on its tail will move into its space. That is not true for BYD in China because there’s no competition there. So China will just keep pouring money into BYD.

There is a problem with state capitalism, which so many Americans seem to want, a sort of economic fascism: It’s wrong. It also ignores the fact that China has to rack up these enormous debts in order to pick and choose winners and losers in its own economic development.

The debt-to-GDP ratio in the United States is above 100%. Capital Economics has indicated that China’s total debt-to-GDP ratio across the public and private non-financial sectors is over 300% of GDP. China simply lies about it because, in the end, they will cram it down on their citizens.

In the United States, if we spend too much money, we’ll end up ruining our bondholders. China tends to fund its debts internally by making its own citizens suffer, and they don’t care.

The likely outcome for China is state stagnation over time. If we rank innovation across economic systems, free market capitalism is at the top, followed by state capitalism, then the heavily regulated economy, where you allow some private industry but regulate it so heavily that the government runs it, as you see in Europe.

On Thursday, Emmanuel Macron announced an agreement between France and Germany on the automotive sector. He said, “We are driven by a clear ambition: to successfully transform our automotive industry, while upholding our climate goals and our production in Europe. … Europe must be a continent that innovates, invests, produces while protecting the climate and safeguarding our jobs.”

The electric vehicle from Citroën does not look like a Tesla. It looks like a piece of junk. Even Macron looked distinctly unimpressed.

At the bottom of the heap of innovation in economic systems you’ll find communism, in which the government nationalizes the means of production.

It turns out that communism sucks and government ownership of the means of production sucks, which is why California has built no functional track for its high-speed rail project after 18 years — and is $95 billion over budget.

Communist countries have tried to develop cars before. Yugoslavia (now Serbia) once built a state-subsidized car called the Yugo, and it became a punchline; a piece of junk. The Yugo tended to fail. The replacement cost several hundred dollars. Quality control was awful; parts of the interior could snap off in your hands. The body would actually corrode because it had no rustproofing.

It took 17 seconds to accelerate from 0 to 60 mph.

You might as well have a horse-drawn carriage.

One woman was driving a Yugo across the Mackinac Bridge in Michigan. She was blown off the bridge by a gust of wind and died.

Here’s reality: Capitalism is great, and communism sucks.

One of the great lies that some capitalists tell themselves is that capitalism is great because of a kind of noblesse oblige, the idea that if you go out and you build a successful company, the best thing that you’re going to do with that is to give to charity.

That is wonderful. I give a lot to charity; I’m privileged to have the opportunity to give a lot because, thank God, I do really well.

But the main way I help other people economically is through my day job, because roughly 200 people rely on this company directly. We likely have a thousand others who rely on this company indirectly.

Elon keeps tens of thousands, if not hundreds of thousands, of people employed. He is ensuring that tons of people get better products. He’s also ensuring safety. Human driving is so much worse than full self-driving that it’s not even close.

I literally entrust my family’s lives to full self-driving; I have it on the Tesla we own. After my dad, who is 70, was in a car crash this summer that destroyed his traditional vehicle, I urged him strongly to get a full self-driving Tesla because its reaction times and judgment, particularly at night, are going to be better than his own.

Technology is amazing. It’s great. If everyone were on full self-driving, we’d save roughly 40,000 lives a year in the United States.

Then we have completely useless people like Senator Elizabeth Warren (D-MA), who is very wealthy because she owns a bunch of rental properties in Oklahoma. She has suggested that Elon is wealthy only because the economy is rigged.

Or maybe he’s wealthy because he has founded several extraordinarily successful companies.

If you like Emmanuel Macron in his own version of the Yugo in France, you can have it.

Not a single capitalist is responsible for the debt in which the United States now finds itself. Governments rack up government debt.

The premise for leftists is that wealth confiscated from the people who create and innovate is better in the hands of the government.

That’s a lie.

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