Is Elon Musk poised to protect his
companies through fudging data and calling in legislative favors?
In a recent interview with The New York
Times, the billionaire teared up while discussing the “excruciating” and
“painful” year that he has been through managing Tesla, his electric car
company. According to him, he worked through his entire birthday, nearly
missed his brother’s wedding, and is seeing his financial health
Judging by the recent news, it doesn’t
appear that Musk is going to run out of emotional moments anytime soon.
This week, reports showed that although
Tesla rushed to meet its 5,000-production target this summer, over 4,000
of those cars needed rework. Perhaps because of its lack of quality
control, JP Morgan lowered its price target for Tesla stock by 36
percent, all while 90 percent of surveyed Tesla suppliers confessed that
they believe Musk’s company now poses a financial risk to their
To say Musk has a lot to worry about is
an understatement. However, it’s important to remember that Musk is also
involved with SolarCity, a company specializing in solar energy
services, and SpaceX, a space transportation services company.
What’s going on with those entities? If
Musk is really spending 24-hour days at the Tesla factory, how is he
capable of presiding over them at an acceptable level?
The short answer appears to be that
he’s not and, to preserve his financing from both the government and
investors, is engaging in smoke-and-mirror charades and mafia-like
Recently, SolarCity has had nothing but
problems, which is why the company laid off 9 percent of its workforce
and closed a dozen of its installation facilities this summer.
Ostensibly desperate to give investors something to cheer for, it
appears the company took a page out of the mortgage industry’s
pre-housing bubble playbook by creating thousands of fraudulent accounts
with fake property owners’ names.
According to employees, this created
the illusion that SolarCity had millions of more dollars in revenue than
it really did, a practice that more than a dozen individuals reportedly
flagged to the human resources department and Elon Musk himself, who
Creating data that misleads investors
is bad but jeopardizing the fate of competition and innovation through
the force of government is even worse. Unfortunately, SpaceX has
seemingly attempted to do just that in the last three National Defense
Authorization Agreements (NDAAs), marking yet another dishonest way of
ensuring Musk’s flawed businesses remain protected as he works on
correcting Tesla’s shortfalls.
It’s no secret that SpaceX is today’s
leading advocate for reusable rockets. Coincidentally, one section
within the John S. McCain National Defense Authorization Act that passed
last week mandates that, when applicable, the Secretary of Defense must
“notify in writing the appropriate congressional committees” its
justification for not making use of reusable launch vehicles in the
Pushing the use of reusables is
certainly good for SpaceX’s financial status, but is it good for the
country’s taxpayers? While SpaceX claims it could bring costs down by a
factor of 100, others — such as Ben Goldberg, director of technology of
Orbital ATK, believe otherwise.
Orbital ATK manufactured the Space
Shuttle’s solid rocket boosters, which had to be picked out of the
ocean, cleaned up, and thoroughly inspected before being utilized again.
This was a costly process and part of the reason why the Space Shuttle’s
cost per mission reached an astounding $450 million to $1.5 billion.
To this day, Orbital seems doubtful
that reusable rockets can do what SpaceX professes. At a panel
discussion, Goldberg said, “[Orbital] ran a study, and a whole bunch of
interesting things jumped out … one really interesting thing is the best
you’re going to get is suborbital.”
While the current turmoil at Tesla is
unfortunate, Elon Musk has already taken enough money from taxpayers.
The law of the land should not be written to protect the rest of his
companies while he’s down no matter how laudable some of his goals may
That’s why it’s essential for the
Secretary of Defense to look over SpaceX’s history thus far in the
reusable rocket space and, in its report to Congress, detail the
company’s history on pricing and reliability. If the Department of
Defense cannot or fails to do so, the relevant congressional committees
should question SpaceX and demand copies of those data sets.
Musk might whimper at the prospect of
shedding some sunlight on this issue, but by no means does that mean
it’s not worth doing. Futuristic companies like SolarCity and Tesla
should not be held above the principles of free enterprise. A simple
gesture towards transparency from the DOD and Congress can go a long way
in fending off crony capitalism and protecting taxpayers in the years to
the former Executive Vice President of Citizens for the Republic