How Elon Musk Fooled Investors, Bilked Taxpayers, and Gambled Tesla to Save SolarCity
The controversy over SolarCity, which has dovetailed with questions about Musk’s mountain of debt and profit shortfalls, offers a window into the mindset of America’s most outlandish CEO.
It was a Saturday night last March in Buffalo, and Dennis Scott was sitting at home. A stocky veteran with salt-and-pepper hair and a close-cropped beard, Scott had been laid off from Tesla’s factory in Buffalo two months earlier as part of a global reduction in the company’s workforce. Since then, he had taken to sending Elon Musk emails and point-blank tweets, describing the pain the layoffs were causing.
Ten days after Scott was let go, Musk had tweeted a goofy picture of himself posing with what looked like a machine gun. Scott retweeted the image and called Musk a clown. “If I were CEO and someone told me my company wasn’t working right,” he explains, “I wouldn’t be clowning around. I’ve got people counting on me for their livelihood.”
Now, around 10 p.m., his phone rang. The call was from an unmarked number. Scott answered.
“It’s the clown,” the person at the other end informed him.
Scott, unfazed, figured that Musk must have gotten his number from the company. For the next 20 minutes, he recalls, he and his former employer had a civil conversation. “When are you going to fix your company?” Scott asked.
Musk was pleasant but offered no specifics about the Buffalo plant. Scott continued to ask frank questions. “You took $750 million from New York,” he told Musk, referring to the taxpayer money that the state handed Tesla as part of its Buffalo Billion program to revitalize upstate New York. “You gave us hope that you were going to do something.”
Musk’s responses left Scott unimpressed. “Musk is a nice guy when you talk to him,” he says. “But I think he’s full of shit. He’ll tell you whatever you want to hear.”
In public, Musk doesn’t talk much about Tesla’s factory in Buffalo—a place he once, in better times, dubbed Gigafactory 2. Gigafactory 1, of course, is Tesla’s much-hyped futuristic electric car plant outside Reno. Gigafactory 2, which is shrouded in silence and secrets, was a controversial side venture: a high-stakes move to dominate America’s growing market for solar energy. Tesla bought the factory’s main tenant, SolarCity, for almost $5 billion in 2016. The plan, in true Muskian hyperbole, was to turn the plant in Buffalo into what was billed as the largest manufacturing facility of its kind in the Western Hemisphere. SolarCity would build 10,000 solar panels per day and install them on homes and businesses across the country. In the process, it would create 5,000 jobs in an area that very much needed them. “This is one of the poorest cities in the country,” Scott says. “You get a big company here, and it’s a big deal.”
From the outside, the sheer scale of the Buffalo plant sparkles with promise. At 1.2 million square feet, it stands at the point where the Buffalo River bends through the city. The building is gleaming white, as if to signify its freshness amid a landscape of abandoned grain elevators and sprawling, desolate steel mills. The area around the factory is hardscrabble working class; until SolarCity was built, people only drove through it when the fierce wind off Lake Erie shut down the highway that residents take from the southern suburbs to downtown. Now three flags fly in front of the factory: those of the United States, New York State, and Tesla.
But three years after Tesla bought SolarCity, there are serious doubts as to whether the plant will ever fulfill its promises. The website CleanTechnica, which is mostly supportive of Musk, calls SolarCity “a disaster waiting to happen.” A potentially costly lawsuit alleges that Tesla acquired SolarCity at the expense of its own shareholders. And former employees want to know what happened to the massive subsidy Tesla received. “New York State taxpayers deserved more from a $750 million investment,” a laid-off employee named Dale Witherell wrote to Senator Kirsten Gillibrand. “Tesla has done a tremendous job providing smoke and mirrors and empty promises to the area”