of them, and the Rives acquired another
$38 million. To raise the cash, Musk bor-
rowed against both Tesla and SolarCity
stock, increasing his personal credit lines
from $85 million to $475 million. He also
used his own reputation to shore up the
stock: In February 2016, when SolarCity
stock plunged to its lowest level in three
years, Musk bought $10 million in shares.
A week later, when the news became pub-
lic, the stock soared by almost 25 percent.
At the same time, according to the
shareholder lawsuit against Tesla, the
company faced “significant liquidity
concerns”—meaning it was running out
of money. An accounting inquiry from
the SEC noted that SolarCity was burn-
ing through cash—$659 million in the
first quarter of 2016 alone. That Febru-
ary, at a Tesla board meeting, Musk pro-
posed a solution: Tesla, he said, should
acquire SolarCity.
The board balked. But Musk kept
pushing. Two weeks later, he proposed
the acquisition again. Once again, the
board said no.
It was a hopelessly conflicted situa-
tion. Musk owned more than 20 percent
of both SolarCity and Tesla. His brother,
Kimbal, served on both boards, as did sev-
eral investors, including Antonio Gracias,
a close friend of Musk’s. As a judge in the
shareholder lawsuit ruled, it is “reason-
ably conceivable” that Musk effectively
controlled the Tesla board when he
pushed it to acquire SolarCity. (Tesla,
which has dismissed the allegations in the
lawsuit as false, insists that “all appropri-
ate parties” recused themselves during
the acquisition.)
At the time, Musk was still a heroic fig-
ure to many. As former Tesla board mem-
ber Nancy Pfund once said, “He’s always
been a master of the universe in my
mind.” Even Tesla skeptics admit that the
Model S, which was launched in 2012, will
go down in history as an absolute classic,
followed by the equally celebrated Model
X in 2015. In those days, Tesla’s stock was
trading at well over $200 a share, giving it
a market value of more than $30 billion, a
stunning figure for a company that hadn’t
proven it could make money.
But over the years, many skeptics have
come to see Musk’s stunts—from smok-
ing pot during an interview to calling a
diver who helped rescue kids trapped
in a Thailand cave a “pedo guy”—as
more unhinged than iconoclastic. One
close observer of Musk recalls how he
promised, back in 2001, to give away half
of his equity in PayPal—dividing it evenly
between “the people that have worked
hard to build the company” and “causes
I believe make the world a better place.”
But Musk never made good on the pledge,
and the observer came to see the episode
as “symbolic of Musk’s penchant for mak-
ing grandiose statements that he either
knows are not true at the time he makes
them, or that he has no real intent of fol-
lowing through on.” Others see Musk’s
promises as purposefully manipulative.
“Musk has a habit of overstating Tesla’s
operational capabilities and its prospects
for profitability, especially when the com-
pany is preparing to raise capital, collect
customer deposits, or secure regulatory
benefits,” says Brian Horey of Aurelian
Partners, an investment firm.
Now the brewing problems at Solar-
City threatened to give skeptics real
ammunition against Musk—unless
those problems could be buried. In May
2016, the Tesla board finally agreed to
acquire the company for almost $5 bil-
lion, including the assumption of nearly
$3 billion in SolarCity debt. On a con-
ference call on June 22, the day after the
deal was publicly announced, Musk told
analysts and investors that the company
had “the best technology out there for
high-efficiency, low-cost solar panels.”
He didn’t say anything about the liquidi-
ty crisis at SolarCity. Nor did he mention
something else that shareholders allege
the Tesla board came to learn as it did its
due diligence on SolarCity: The cost per
watt of solar modules being produced
in Buffalo was actually projected to be
20 cents above the rest of the industry.
On October 28, 2016, just before share-
holders were set to vote on the acquisitionof SolarCity, Musk strode onto a platform
erected on the set of Desperate Housewives
at Universal Studios’ back lot in Los
Angeles. He talked about the existen-
tial threat presented by global warming
and the desperate need for sustainable
energy. Then he gestured to a group of
houses that had been set up around him.
They might look normal, he said, but they
actually featured a revolutionary new
product called the Solar Roof—shingles
that would last longer and cost less than
a regular roof, even before factoring in
electricity. Tesla expected production to
begin the following summer.
The next month, shareholders approved
Tesla’s acquisition of SolarCity. “Vote
tally shows ~85% of unaffiliated share-
holders in favor of the Tesla/SolarCity
merger!” Musk tweeted. The deal dou-
bled Tesla’s debt load, but it was good
for Musk, who converted his stake in
SolarCity into more than $500 million
in Tesla stock. By preventing SolarCity
from collapsing, he also shored up his
most valuable asset: investor faith in
his own genius. If any piece of his empire
had faltered—if Musk were shown to
be fallible rather than superhuman—it
would have cast doubt on the narrative
that enables him to raise cheap capital for
his money-losing enterprises.
“Thanks for believing,” Musk tweeted
to his shareholders.T
hat October, as Musk was
making his pitch about the
Solar Roof, a former For tu ne
500 executive was watching it online at
a friend’s barbecue. The former execu-
tive, who had spent years researching
solar technology, understood what it took
to make the Solar Roof work—and he was
confident that Musk hadn’t figured it out.
“He spewed total BS,” says the executive,
who asked not to be identified. “I was
flabbergasted. I was convinced in the
moment that the shingles were fake.”
Adopting the Twitter handle
@TeslaCharts, the executive began
drawing on his Ph.D. in science, and
his background as a financial analyst, to
share infographics that detailed Musk’s
overreach. His follower count mush-
roomed, and he became a core member
of a group of outspoken Tesla critics who
go by the Twitter hashtag #TSLAQ—
Tesla’s stock symbol followed by the Q
that companies pick up when they are
delisted due to bankruptcy.He spewed
total BS,” says a
solar expert who
watched Musk’s
presentation to
investors. “I was
flabbergasted.
110 VANITY FAIR OCTOBER 2019