Elon Musk has had a rough year. The Tesla CEO has been dogged by a seemingly unending list of setbacks. There were leaks showing how the company was covering up its high rates of worker injuries, a fatal accident involving its Autopilot driver-assist system, fires in the paint shop and a catastrophic failure of Musk’s plan to automate final assembly of Tesla vehicles — an intricate process which robots can’t easily perform. And that’s to say nothing of the headlines generated by Musk’s unfiltered and combative tweets, including one in which he accused a diver who aided the Thailand cave rescue of being a pedophile.
Then on Aug. 7, in an attempt to reduce the mounting pressure from both investors and critics, Musk tweeted that he was taking Tesla private at $420 per share — a significant premium on the market price — without first consulting his board or notifying shareholders. “Funding secured,” he assured his followers via his social media account. This promise, like so many others, was a lie. But unlike in the past, it would have consequences.
Musk has benefited immensely from a myth of unique brilliance that the tech press and business media, in particular, helped him build. This myth has long shielded him from true scrutiny but is unraveling as Tesla’s problems and Musk’s unhinged tweets have forced a more critical assessment of his actions. Yet as much as he tries to direct the blame at others, his narcissism makes him unable to accept the inconvenient truth that the responsibility is ultimately his own.
Musk has benefited immensely from a myth of unique brilliance that the tech press and business media, in particular, helped him build.
Let’s first take a look at why Musk’s financing tweet was such a big deal. In the days following his declaration, it became clear that he was hoping for Saudi money to fund his plan; but the Saudis put $1 billion into Lucid Motors instead. To make matters worse, Azaelia Banks, who claimed she was at Musk’s mansion in early August to record music with his musician girlfriend Grimes, alleged that Musk was franticly calling potential investors to secure funding after sending the tweet.
Since Tesla was and remains a public company, these actions were illegal, leading the Securities and Exchange Commission (SEC) to launch an investigation that recently came to a close — but not without more antics on Musk’s part.
On Sept. 27, the SEC sued Musk for securities fraud for making “false and misleading” statements to investors and sought to bar him from serving as an officer or director of a public company. But it didn’t have to get to that point.
Musk had negotiated a settlement with the SEC where he would have paid $10 million and resigned as chairman for two years, but he was incensed that it would require him not to admit guilt or innocence. He wanted to declare he hadn’t done anything wrong, so he told his board he would resign unless they publicly supported him and backed his decision to reject the settlement. They promptly agreed.
However, when the stock crashed after the lawsuit was filed, Musk sent his lawyers back to the SEC to negotiate a new settlement. This time he was required to pay $20 million, along with a matching $20 million from Tesla; resign as chairman for three years; and the company would have to add two independent directors and a lawyer to review Musk’s communications — including his tweets. Talk about a great dealmaker.
But for anyone who’s been following the billionaire, this didn’t come as a surprise.
Faced with critical assessment instead of blind praise, Musk now claims that the media has been bought off by traditional auto and fossil fuel companies looking to smear him.
For much of the past decade, Musk has been plastered across magazine covers; praised as a visionary whose ideas were remaking the world. Yet, faced with critical assessment instead of blind praise, Musk now claims that the media has been bought off by traditional auto and fossil fuel companies looking to smear him. He even floated the idea of starting a website to rate journalists on their “credibility.”
But the media isn’t Musk’s only enemy. His Twitter account has become the site of a conspiracy parroted on supportive blogs and forums that “short sellers” — investors which make money by betting that a stock price will decline — are behind Tesla’s negative media coverage and are trying to bring the company down to make a profit. After settling with the SEC, Musk called the institution the “Shortseller Enrichment Commission,” showing the company needs to hurry up and hire his tweet monitor.
Musk has been consumed by his narcissism to a degree that any criticism, no matter how reasonable, is an attack on the very core of his being; a fact which has become ever clearer as his addiction to Twitter — and who knows what else — has gotten worse. This week Musk said Twitter had briefly locked down his account because his tweets seemed suspicious. In fact, it was just Musk being Musk.
But Bitcoin and Japanese anime are the least of Musk's social media worries. After being called out for getting involved in the Thai cave rescue for good press, Musk lashed out at the British diver who helped lead the successful mission, branding him a “pedo” — slang for pedophile. He issued a half-hearted apology before doubling down on the accusation and asking why the diver hadn’t sued him if his claims were untrue. What Musk didn’t realize was that he was being sued — the diver’s lawyer had already sent the notice.
So what caused Musk to take to Twitter with such erratic outbursts? Banks claimed Musk was on acid when he sent the infamous tweet, and Musk himself admitted that the $420 share price was a reference to cannabis culture. In an interview with the New York Times, Musk denied that he smoked marijuana: “There’s a reason for the word ‘stoned.’ You just sit there like a stone on weed.”
Yet, in September, when Musk took a puff of a joint on Joe Rogan’s podcast, claiming he’d only tried it once, his demeanor didn’t inspire confidence. He came off twitchy and awkward and later came under fire for smoking marijuana when Tesla’s workers are drug tested and could be fired for doing the same.
What is clear is that the pressure from running Tesla is getting to him, but that pressure doesn’t originate with investors, customers, or short sellers; it’s generated by Musk himself.
Musk sets the expectations that customers and investors judge him by, but his timelines are notoriously overoptimistic. Tesla Model 3 production was supposed to hit 5,000 cars per week by the end of 2017; that number wasn’t hit until June 2018, and production fell off again soon after.
Tesla has also been selling a “full self-driving” package for two years, even though the cars don’t have such capabilities and they don't seem to be coming anytime soon — the option was pulled from Tesla’s website in mid-October. Most recently, Musk promised “full self-driving” features would be delivered in August 2018 — they weren’t — and a planned coast-to-coast self-driving trip was set for the end of 2017, then mid-2018 and now who knows when it will happen.
In short, Musk never hits his timelines, but that doesn’t stop him from throwing out new ones that will likely suffer the same fate.
Musk never hits his timelines, but that doesn’t stop him from throwing out new ones that will likely suffer the same fate.
It doesn’t help that Tesla is currently in "logistics hell." The company can’t figure out how to get vehicles to customers all of a sudden — but don’t worry, Musk has a solution: building car carriers. Forget that the trucking industry says there’s plenty of capacity. Musk’s plan to bring repairs in-house is a similar mess that doesn’t address the real problem. Customers are angry because so many Model 3s are damaged on delivery or have issues soon after, yet third-party repair shops say they could do the repairs more quickly if only they could get the parts from Tesla in a timely manner.
When you consider Musk and Tesla’s net worth, Musk got off easy with his SEC settlement. But it seems only a matter of time before Tesla starts to really suffer as a result of its mad genius CEO’s mismanagement. The SEC is reportedly still looking into Tesla’s production output over more potential false claims, while the Department of Justice is still investigating the $420 tweet — the SEC settled civil charges against Musk, but the DOJ could still bring criminal charges.
Tesla may be holding on for now, but as its financial situation deteriorates, its leadership jumps ship, never-ending problems keep it from getting cars to customers and Musk’s tweets find the company in PR hot water more and more often, it remains to be seen how long the company can stay the course. Musk assures his followers that nothing bad is going to happen, but can anyone still trust his assurances?