Taxpayer cost for California's High-Speed Rail project revealed
The Federal Railroad Administration has since issued a scathing 315-page report which cites key issues with the troubled project including missed deadlines, budget overruns and unreliable ridership projections. The White House has now initiated a review to determine whether to rescind an additional $4 billion in federal grants allocated for the project's completion. The embattled rail line faces further roadblocks with a $7 billion funding gap for the Merced-to-Bakersfield segment, even before the Trump administration considers pulling the $4 billion in federal funds.
The entire San Francisco-to-Los Angeles project was initially supposed to be completed by 2020 for $33 billion, Reuters reported - but the project is far from completion of any phase. The Transportation Secretary emphasized that if the California High-Speed Rail Authority (CHSRA) cannot demonstrate progress, the federal government may redirect funds to other infrastructure projects.
'CHSRA is on notice - If they can't deliver on their end of the deal, it could soon be time for these funds to flow to other projects that can achieve President Trump's vision of building great, big, beautiful things again,' he said. 'Our country deserves high-speed rail that makes us proud - not boondoggle trains to nowhere.' In response, CHSRA defended the project, asserting that over 15,000 jobs have been created and 119 miles are under active construction.
'There is active civil construction along 119 miles in the Central Valley, resulting in over 15,000 construction jobs, and design and pre-construction activities are underway on the extensions to Merced and Bakersfield totaling 171 miles,' as per a CHSRA statement. The CHSRA added that most of its funding comes not from federal origins but rather from the state of California. 'We remain firmly committed to completing the nation's first true high-speed rail system connecting the major population centers in the state. While continued federal partnership is important to the project, the majority of our funding has been provided by the state. To that end, the Governor's budget proposal, which is currently before the Legislature, extends at least $1 billion per year in funding for the next 20 years, providing the necessary resources to complete the project's initial operating segment,' a CHSRA spokesperson told the DailyMail.com.
'The Authority will fully address and correct the record in our formal response to the FRA's notice,' the authority added. The federal government has given California until mid-July to respond to the review - if the CHSRA fails to provide satisfactory evidence of progress, the $4 billion in federal grants may be rescinded. In 2021, then-President Joe Biden restored a $929 million grant for the high-speed rail, funds which Trump had revoked in 2019 after he called the project a 'disaster,' Reuters reported. Now, all eyes are on the Golden State's response and whether the innovative rail project can overcome its financial and logistical challenges. The California High-Speed Rail System is a planned two-phase 800-mile system with speeds of up to 220 miles per hour that aims to connect San Francisco to Los Angeles/Anaheim and in the second phase extend north to Sacramento and south to San Diego .
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Reuters
9 minutes ago
- Reuters
Trump says he is ending government funding California's High-Speed Rail project
WASHINGTON, July 16 (Reuters) - U.S. President Donald Trump announced on Wednesday that he is ending government funding for California's High-Speed Rail project. The announcement follows the release of a U.S. Transportation Department report from the Federal Railroad Administration that cited missed deadlines, budget shortfalls and questionable ridership projections. "Thanks to Transportation Secretary Sean Duffy, not a SINGLE penny in Federal Dollars will go towards this Newscum SCAM ever again," Trump said in a Truth Social post.
Sky News
11 minutes ago
- Sky News
TESLA FACES LOSING BILLIONS AFTER TRUMP-MUSK FALLOUT Sky News analysis reveals the carmaker's benefit from state subsidies is threatened after its founder's row with the president Kate Schneider and Sophia Massam, Data & Forensics Unit, and Paul Kelso, business and economics correspondent
Elon Musk's Tesla faces the loss of billions of dollars in government subsidies, following his explosive fallout with Donald Trump, after the president cut state support for green industries. Subsidies have been central to Tesla's rise from upstart manufacturer to the world's largest electric vehicle (EV) producer in less than 20 years. But analysis by Sky News' Data & Forensics team reveals the president's cuts could leave a significant gap in its future earnings, raising questions about its business model and market valuation. Revenue from state subsidies accounted for at least 38% of Tesla's profits of $7.1bn in 2024 as the company banked $2.8bn from trading "regulatory credits", a state-level subsidy paid to encourage production of electric vehicles. Accounts for the first quarter of this year meanwhile show Tesla earned $595m from regulatory credits, almost 50% more than its net earnings of $409m, suggesting that without the subsidy Tesla would be operating in the red. Tesla's total revenues in 2024 were $98bn, of which automotive sales made up $72bn. Tesla has also benefited from a federal tax credit of $7,500 available to consumers buying any electric car. If applied to all of the more than 630,000 Tesla cars sold in the US last year, it would have been worth $4.7bn in discounts. The federal tax credit was axed in Mr Trump's flagship tax and spending bill, while California's powers to issue credits as part of zero-emission vehicle schemes were revoked last month, threatening state-level schemes across the country. Amid the public fallout between Mr Trump and the man who helped bankroll his election campaign, the president renewed his efforts to cut green industry subsidies. In a Truth Social post, Mr Trump said: "Elon may get more subsidy than any human being in history, by far, and, without subsidies, Elon would probably have to close up shop and head back to South Africa." Pic: Reuters Speaking to reporters on the White House lawn, where previously he had posed with Mr Musk alongside a selection of Tesla models, the president added: "Elon hates that the electric vehicle mandate is going to be terminated." Tesla's worldwide sales have also declined in the face of increased competition and consumer unease about Mr Musk's previous support for the president. ' Elon's playing a very dangerous game ' Ross Gerber, early Tesla investor Gordon Johnson, an investment analyst and prominent Tesla sceptic, told Sky News: "The changes that Trump is proposing have significant implications – negative implications – for Tesla's fundamentals. "If all of these government programmes were taken away, Tesla would go into losing money and burning cash and the stock would implode." Ross Gerber became one of Tesla's earliest investors after having what he calls "an amazing epiphany" when he saw the Tesla S-Class for the first time. "I thought, 'wow, this could actually change the way we travel'," he said. Now he is selling his Tesla stock and considering offloading his Tesla Cybertruck because of the hostility it attracts. "Elon's playing a very dangerous game," he added. GREEN INCENTIVES DROVE TESLA'S GROWTH Tesla has long benefited from subsidies offered in the US, and by governments around the world, to incentivise the take-up of electric vehicles and low-carbon technologies. In America, regulatory credits are an incentive intended to encourage car manufacturers to meet targets for EV production. Several states, led by California, use them to enforce a "zero-emission vehicles mandate", under which manufacturers are required to produce a certain proportion of EVs as part of their overall output. Because Tesla only makes electric vehicles, it earns credits at no cost and profits from selling them to manufacturers producing petrol and diesel vehicles, which need them to meet any shortfall against state targets. Around a dozen US states and numerous European governments, including the UK, operate similar programmes. In June, however, the president signed resolutions removing California's authority to set mandatory targets - a move that endangers similar programmes in other states. Tesla customers also benefited from the federal grant of $7,500 available to buyers of any electric car. Mr Johnson said: "The $7,500 subsidy that you get if you buy an electric car - that doesn't go to Tesla. But removing it means Tesla's cars immediately increase by $7,500 in value which would have significant implications for their demand." "The EV subsidies are just crucially important," Mr Gerber said. Tesla also has a burgeoning energy business selling domestic and commercial solar that could be impacted by the withdrawal of a tax credit worth up to 60% of the cost of a system. Tesla's energy division generated $10bn in revenue last year. CUTS AND COMPETITION CHALLENGE TESLA'S 'TECHNOKING' The withdrawal of subsidies is one of many challenges Tesla and its self-appointed "Technoking" Mr Musk face to its dominance in a market it helped create. It is only 18 years since the first Tesla Roadster rolled off a production line to the delight of early adopters and the scepticism of America's established car manufacturers. Mr Musk's packaging of battery electric vehicles as not just virtuous but desirable and reliable too worked spectacularly, driven in large part by his personal popularity and profile on social media. His drive helped the company overcome the enormous technical challenges of establishing a mass vehicle manufacturer from scratch, and he was quick to exploit the advantages of placing production in China where an entire auto industry had been directed at electrification. "When I started with Tesla, there were no EVs, and it was Elon making EVs," recalls Mr Gerber. "And now, 10 years later, there are EVs everywhere. They're the fastest growing segment of the car market." Tesla's growth was aided by governments around the world offering subsidies and tax breaks to consumers and companies to accelerate the transition to low-carbon transport. By the turn of the 2020s, the company was established as the world's largest manufacturer of EVs, accounting for three-quarters of all those sold in the US. It was also firmly entrenched as one of the most important tech stocks in the world, its fluctuations as likely to be triggered by the chief executive's Twitter feed as production updates. In December 2024, Tesla's market value peaked at over $1.5trn, placing it among the most valuable companies in the world, but its indisputable success spurred rivals who have started to cut into its market share. While European and American legacy auto manufacturers have flooded Tesla's premium electric niche with competition, considerably cheaper Chinese EVs have overtaken all of them in recent years. Last year Chinese carmaker BYD passed Tesla's global market share for fully electric vehicles, according to market intelligence firm TrendForce. China is also a crucial market for Tesla, accounting for more than half of its non-US car sales, but that share is now falling. Pic: STAR MAX/IPx Calls for boycotts against Mr Musk prompted by his previous support for Mr Trump saw sales decline in other markets too. Year-on-year sales in the first four months of 2025 fell by 58% in Germany, 44% in France, and 62% in Australia. Sky News reached out to Tesla for comment on our findings but did not receive a response. INVESTORS DIVIDED OVER MUSK The combination of increased competition, the withdrawal of subsidies, and hostility from the president and potential customers has caused some investors to call time on Tesla. Despite being an early supporter, Mr Gerber, president of Gerber Kawasaki Wealth and Investment Management, has been reducing his firm's holdings in recent months. "We've had to sell more Tesla stock and we're going to continue to sell more," he said. "The stock's wildly overvalued and, still just on a business level, has lots of issues." ' It's the biggest disruptive technology company in the world, along with Nvidia. ' Dan Ives, financial analyst and well-known Tesla backer Tesla's valuation nosedived in the first few months of 2025 after Mr Musk joined Mr Trump's administration. By mid-March, its market value had essentially halved. Although the stock has rallied slightly since Mr Musk first suggested he would exit the government, the share price is two-thirds of its December peak. Other investors are far more positive, arguing that Tesla's worth should be judged not just on sales and productivity, but the value of Mr Musk's talent for innovation, particularly in the potential of AI and self-driving technology that he considers the next frontier for the automotive industry. Tesla trialled its self-driving RoboTaxi in Austin, Texas, in June with mixed results. Several incidents triggered an investigation by the US road safety agency, but many investors are undeterred. Dan Ives, senior analyst at prominent wealth management firm Wedbush Securities, is a long-term advocate whose view has not been changed by recent events. "The Trump feud is not getting in the way of this in our view. We believe Tesla remains the most undervalued AI play in the market today," Mr Ives wrote in a recent report with fellow Wedbush analyst Sam Brandeis. Mr Ives acknowledged in an interview with Sky News that state and federal tax breaks are "the roots of Tesla" without which the company would not be where it is today. But he said the larger part of its success is "innovation in everything they built". "It's the biggest disruptive technology company in the world, along with Nvidia," he said. Mr Gerber remains unconvinced and fears Mr Musk's pivot to politics has irreparably damaged the brand he built. While he can offload the stock, he has struggled to find a buyer for the Cybertruck he bought just last year. "I actually really like it," Mr Gerber said. "That said, I don't like the way it makes me feel when I drive it because people hate Tesla so much." CREDITS Reporting: Kate Schneider, Sophia Massam, & Paul Kelso Editors: Chris Howard, Isla Glaister, Tom Boadle, & Natasha Muktarsingh Production: Valerie Hamill, Thea Halpin, Michelle Inez Simon, & Reece Denton Graphics: Taylor Stuart, Eloise Atter, & Bria Anderson Photos from AP and Reuters. All videos courtesy of Tesla Inc. Top Built with Shorthand
Reuters
38 minutes ago
- Reuters
Steward Health gets green light to repay creditors with litigation proceeds
July 16 (Reuters) - Bankrupt hospital network Steward Health Care received court approval on Wednesday to proceed with a liquidation plan that aims to repay its creditors with the proceeds of lawsuits against its former owners and insiders. U.S. Bankruptcy Judge Christopher Lopez overruled objections to Steward's bankruptcy plan at a court hearing in Houston, Texas, despite uncertainty about Steward's ability to repay all expenses it racked up during its bankruptcy. Those expenses must be paid in full before a Chapter 11 plan can take effect, and Steward expects to be able to fully repay those costs by mid-2027. Several objectors had argued the uncertainty of Steward's success in litigation and the long delay between bankruptcy court approval and the payment of necessary Chapter 11 expenses were fatal flaws in the company's repayment plan. Steward, once the largest privately owned health network in the U.S., filed for Chapter 11 with $9 billion in debt, after its former private equity owner sold the land under its hospitals while embarking on an aggressive expansion strategy across 10 U.S. states. Members of Congress and state health officials have criticized the company for richly paying its executives while cutting medical services for patients. The company owed huge debts to both its primary landlord, Medical Properties Trust, and to lenders that had extended credit for Steward's hospital operations, and the dueling debts complicated its efforts to sell the hospitals. Objectors, including the state of Massachusetts, a group of doctors who are losing deferred compensation benefits promised by Steward, and the U.S. Department of Justice's bankruptcy watchdog, had argued that Steward was prioritizing payment of its bankruptcy lawyers over other mandatory expenses. Some objectors suggested that some legal fees could be clawed back to pay other creditors, such as vendors who continued to provide medical services to Steward after it filed for Chapter 11. Lopez rejected the idea that Steward's bankruptcy professionals were "picking themselves over everyone else," saying that Steward's lawyers had prevented the complete collapse of a 31-hospital network that served 2 million patients annually, many of them in rural areas with few other healthcare options. While Steward was not able to save all of its hospitals, most of them were transferred to new operators during the bankruptcy, work that was "extremely challenging," Lopez said. Steward's primary bankruptcy law firm, Weil, Gotshal & Manges, billed more than $100 million from May 2024 to April 2025, and Steward is also responsible for other costs, including $32 million billed by the lawyers and financial advisers of a court-appointed committee that represents the interests of Steward's junior creditors. Steward will pursue more than $3 billion in legal claims against a broad range of former insiders, insurers and creditors that received payments from the company while it was collapsing into bankruptcy. Steward estimates that it can fully repay its Chapter 11 expenses if it recovers just 13% of its asserted claims, and Lopez said Wednesday that its strategy seemed feasible. "You don't need a home run," Lopez said. "You just need a couple of singles, but I don't know if you're going to get them." Lopez acknowledged that Steward's litigation strategy may still fail, and he said he would have "no qualms" about converting the case to a more straightforward Chapter 7 liquidation if the litigation is proceeding too slowly or if Steward's expenses are higher than estimated. Steward's largest legal claims are against its former CEO Ralph de la Torre, its former private equity owner Cerberus Capital Management and other insiders that allegedly set the stage for Steward's downfall by loading it up with debt and taking payments for themselves. Steward sued de la Torre in Houston bankruptcy court on Tuesday, saying that he and other former insiders "pilfered Steward's assets for their own material gain, while leaving the Company and its hospitals perpetually undercapitalized and insolvent." De la Torre, through a spokesperson, disputed the allegations of wrongdoing in the lawsuit and said he will vigorously defend himself. Cerberus did not immediately respond to a request for comment, but it has previously said that Steward was in good financial shape when it sold its ownership stake in 2020. During its bankruptcy, Steward closed some hospitals in Massachusetts and Ohio. It sold some hospitals to outside buyers, and handed others over to Medical Properties Trust which continued as landlord while putting new hospital operators in place. The case is In re: Steward Health Care System LLC, U.S. Bankruptcy Court for the Southern District of Texas, No. 24-90213. For Steward: David Cohen, Clifford Carlson, Gabriel Morgan, Stephanie Morrison, Jeffrey Saferstein of Weil, Gotshal & Manges; Ray Schrock of Latham & Watkins For Massachusetts: Andrew Troop of Pillsbury Winthrop Shaw Pittman For the Office of the U.S. Trustee: Ha Nguyen of the Office of the U.S. Trustee Read more: Bankrupt Steward Health puts its hospitals up for sale, discloses $9 bln in debt Steward Health gets approval for landlord settlement, Florida hospital sales US Senate probes Steward Health bankruptcy, subpoenas CEO
