WEBVTT - Tesla, and why "Elon Musk doesn't care about you" with Linette Lopez 0:00:01.360 --> 0:00:04.720 Thanks for downloading Making a Killing. I'm Bethany McClain. We've 0:00:04.760 --> 0:00:08.200 had some amazingly fun conversations so far in this series, 0:00:08.280 --> 0:00:11.000 but other shows that are really fun is when my 0:00:11.119 --> 0:00:14.520 interview collides with a topic I've written about for Vanity Fair, 0:00:15.160 --> 0:00:19.240 and this upcoming episode will feature Lynette Lopez talking about Tesla. 0:00:21.320 --> 0:00:24.919 In modern English, the term cult has usually been used 0:00:24.960 --> 0:00:27.920 in reference to a social group that is defined by 0:00:27.920 --> 0:00:33.120 its unusual, religious, spiritual, or philosophical beliefs, or by its 0:00:33.159 --> 0:00:38.080 common interest in a particular personality, object or goal. So 0:00:38.120 --> 0:00:41.280 that's how Wikipedia answers the question what is a cult? 0:00:42.080 --> 0:00:45.720 I was thinking about that because, well, because I'm thinking 0:00:45.760 --> 0:00:50.360 about Elon Musk, who isn't a Tesla and the rest 0:00:50.400 --> 0:00:54.000 of Elon's empire. I recently finished a piece for Vanity 0:00:54.040 --> 0:00:57.680 Fair about Solar City, which was a mostly forgotten piece 0:00:57.720 --> 0:01:01.800 of the puzzle until recently. Back to them anyway. The 0:01:01.840 --> 0:01:05.080 headline of the piece was He's full of s blank 0:01:05.120 --> 0:01:09.920 blank blank, How Elon Musk fooled investors, built taxpayers, and 0:01:10.080 --> 0:01:13.440 gambled Tesla to save Solar City. I guess my point 0:01:13.480 --> 0:01:18.360 of view is pretty clear. Criticizing Musk is an interesting exercise, 0:01:18.840 --> 0:01:21.560 because Musk, who is going to save the planet with 0:01:21.680 --> 0:01:25.920 solar energy, self driving electric vehicles, artificial intelligence, and if 0:01:26.000 --> 0:01:28.520 all else fails, a way to get to Mars, is 0:01:28.560 --> 0:01:31.080 in many ways the leader of a cult. Let's call 0:01:31.120 --> 0:01:34.640 it the Muscuans. Musk is their leader, their icon, or, 0:01:34.680 --> 0:01:38.120 as one put it on Twitter, the most genius man alive. 0:01:39.600 --> 0:01:42.440 During the course of my reporting, I learned about another group, 0:01:42.760 --> 0:01:46.760 a group called Tesla Q Tesla stock symbol followed by 0:01:46.800 --> 0:01:49.800 the queue that stocks pickup when they are delisted due 0:01:49.840 --> 0:01:54.840 to bankruptcy. Obviously, these are not Muscians, these are skeptics, 0:01:55.360 --> 0:01:59.000 and the battleground between the believers, the Muscians and the 0:01:59.040 --> 0:02:03.200 skeptics is Twitter. Of course, as is the case with 0:02:03.280 --> 0:02:06.360 any cult. To the believers, it's Tesla C that is 0:02:06.360 --> 0:02:09.520 the real enemy. And so the dark side of fintwit, 0:02:09.800 --> 0:02:13.080 which is what people call financial Twitter, is that cult 0:02:13.120 --> 0:02:17.520 members target people, particularly female journalists, who dare to write 0:02:17.600 --> 0:02:21.600 or say anything negative about their leader. As listeners of 0:02:21.639 --> 0:02:24.360 this podcast know, one of the questions I'm obsessed with 0:02:24.480 --> 0:02:27.320 is what is the line between a visionary and a fraud. 0:02:28.000 --> 0:02:29.960 I don't have a view on the rest of Elon's 0:02:30.000 --> 0:02:33.400 empire beyond Solar City. The one thing I do know 0:02:33.520 --> 0:02:36.360 is that if any piece of it works, Elon Musk 0:02:36.400 --> 0:02:38.720 will go down in the history books as a visionary. 0:02:39.080 --> 0:02:42.520 But will the problems he has created and Tesla's desperate 0:02:42.560 --> 0:02:45.400 need for cash catch up with him? And is the 0:02:45.440 --> 0:02:48.480 way his critics are treated, whether with his explicit or 0:02:48.480 --> 0:02:51.480 implicit consent, a clue to how all of this might 0:02:51.480 --> 0:02:54.640 turn out. My guest today is Lynette Lopez, who has 0:02:54.680 --> 0:02:58.360 been covering Musk fearlessly and skeptically for Business Insider for 0:02:58.400 --> 0:03:02.160 several years. A year ago, after she wrote a particularly 0:03:02.240 --> 0:03:06.040 skeptical story, the Muskins came after her, so she's also 0:03:06.080 --> 0:03:09.400 experienced the dark side of fintwit. I'm curious as to 0:03:09.480 --> 0:03:12.640 her views on his empire, but also her experience with 0:03:12.639 --> 0:03:16.880 the cult and what, in her view it all means. Selenette, 0:03:16.960 --> 0:03:19.480 your pin tweet is pretty astonishing. It's from about a 0:03:19.560 --> 0:03:22.040 year or so ago, and it's I'd just like to 0:03:22.040 --> 0:03:25.120 point out that right now, right at this very moment, 0:03:25.560 --> 0:03:28.880 at Elon Musk is going through my Facebook history and 0:03:29.040 --> 0:03:34.360 screen tell us about that. So Elon Musk doesn't engage 0:03:34.400 --> 0:03:41.360 on Twitter like most CEOs or adults. He targets people 0:03:41.560 --> 0:03:45.160 who don't have nearly the following that he has. He 0:03:45.880 --> 0:03:49.880 relies on information that he gets from his Twitter followers, 0:03:49.920 --> 0:03:53.520 who are as you might call them, members of his cult. 0:03:54.160 --> 0:03:59.920 And his very rapid response to that tweet was, I'm 0:04:00.080 --> 0:04:03.200 not grabbing from your Facebook profile. Someone is sending me 0:04:03.320 --> 0:04:09.200 pictures and that's what I'm seeing. That is not the 0:04:09.240 --> 0:04:13.800 response of a normal adult, let alone a normal CEO, 0:04:14.160 --> 0:04:18.960 let alone a normal CEO. So, regardless of what you 0:04:19.000 --> 0:04:22.640 think about Elon Musk, let's establish right now that he 0:04:22.760 --> 0:04:27.160 is not normal. And that's a really good starting point. 0:04:27.880 --> 0:04:31.920 Not normal, and no interaction that you will have with 0:04:32.040 --> 0:04:36.799 him or his company will be normal. The entire thing 0:04:37.400 --> 0:04:41.359 runs as an appendage to his body and brain and 0:04:41.680 --> 0:04:45.880 heart because he's a very emotional man. So you have 0:04:46.000 --> 0:04:51.680 to think about every single person who interacts with you 0:04:51.760 --> 0:04:57.120 from Tesla as an agent of Musk. So they're all 0:04:57.160 --> 0:05:01.279 just appendages, appendages, and that they are that way because 0:05:01.279 --> 0:05:04.479 they're afraid. They're afraid of losing their jobs, they're afraid 0:05:04.480 --> 0:05:07.080 of incurring his wrath, as members of the cult are 0:05:07.120 --> 0:05:10.800 afraid of their fearless leader, right exactly exactly, So what 0:05:10.920 --> 0:05:13.200 was it that led to this. What was it that 0:05:13.320 --> 0:05:16.480 caused Elon Musk? If causes the right word, as if 0:05:16.520 --> 0:05:20.400 there's some linearity about this? What caused Elon Musk's followers 0:05:20.440 --> 0:05:22.800 to start going through your Facebook? Well it's a little 0:05:22.800 --> 0:05:27.320 bit complicated and has resulted in a lawsuit against a 0:05:27.320 --> 0:05:30.120 man named Martin Tripp, who is a former Tesla employee. Ye, 0:05:30.240 --> 0:05:32.760 a whistle blower, right, yes, he is a whistle blower. 0:05:32.920 --> 0:05:38.560 He approached me in May of twenty eighteen with documents 0:05:38.600 --> 0:05:44.440 that proved that Tesla was just generating an unbelievable amount 0:05:44.480 --> 0:05:48.360 of scrap in order to build the Model three. And 0:05:48.400 --> 0:05:50.440 what does it mean that they were generating a lot 0:05:50.480 --> 0:05:53.080 of scrap, that they were wasting a lot. Yes, roughly, 0:05:53.080 --> 0:05:55.760 it meant that for every two cars Tesla was making, 0:05:56.080 --> 0:05:58.640 it would throw away a third of a car. Oh, 0:05:58.680 --> 0:06:01.880 that's stunning, stun stuff. And is there a sense what's 0:06:01.960 --> 0:06:04.279 normal in the Is some scrap normal? In the an 0:06:04.279 --> 0:06:08.840 automobile manufacturing, some scrap is normal. But that was it 0:06:08.880 --> 0:06:12.560 blew the Detroit guys away. Okay, that level blew anybody 0:06:12.560 --> 0:06:15.520 who had any experience in automotive away. But one thing 0:06:15.520 --> 0:06:17.360 I will note that is that a lot of Tesla 0:06:17.400 --> 0:06:19.800 employees do not have a lot of experience in automotive, 0:06:20.240 --> 0:06:23.640 but those that did would speak to me in kind 0:06:23.640 --> 0:06:26.680 of hush tones. I remember I spoke to one guy. 0:06:27.240 --> 0:06:30.400 He was the manager of the line in Fremont that 0:06:30.440 --> 0:06:34.600 manufactured the doors on the Model three, and I asked him, 0:06:34.839 --> 0:06:37.560 you know, so what's your fail rate? And he kind 0:06:37.560 --> 0:06:40.680 of just mumbled percent and I was like what, Like 0:06:40.760 --> 0:06:43.039 I thought he was going to say like point three 0:06:43.120 --> 0:06:47.960 percent or something like that. It was fifteen percent. Wow. Yeah, 0:06:48.000 --> 0:06:51.920 and again is standard something approaching five percent zero percent? 0:06:52.200 --> 0:06:55.520 It's something between I would say one in three. Okay, 0:06:55.560 --> 0:06:58.119 So this is a huge number. This is a huge 0:06:58.160 --> 0:07:00.280 and one that makes it really hard for test let 0:07:00.440 --> 0:07:02.600 make money, which is already the problem, right because I 0:07:02.600 --> 0:07:05.000 would assume that the more you're wasting, the harder it 0:07:05.200 --> 0:07:08.080 is to actually turn a profit. Right. Yes, And you 0:07:08.120 --> 0:07:11.040 have to also remember that it Tesla, nothing is final. 0:07:11.560 --> 0:07:15.160 Everything is always in flux and also subject to the 0:07:15.160 --> 0:07:19.200 whim of Elon Musk. So if a car look ridiculous 0:07:19.320 --> 0:07:23.600 or become too complicated with butterfly doors, doesn't matter. If 0:07:23.640 --> 0:07:26.880 Elon wants the butterfly doors, you're getting. Butterfly doors come 0:07:26.960 --> 0:07:29.840 hell or high water. So Martin Tripp came to you 0:07:29.920 --> 0:07:33.240 and with the stunning number about the waste. Okay, yes, 0:07:33.360 --> 0:07:38.320 stunning number, he started leaking all sorts of information about 0:07:38.360 --> 0:07:41.240 what was going on inside of Tesla because he was 0:07:41.320 --> 0:07:47.000 very concerned. He joined Tesla because he wanted to save 0:07:47.000 --> 0:07:49.640 the earth. He was a huge Musk fan when he 0:07:49.800 --> 0:07:53.080 joined up, and it took several months for the company 0:07:53.120 --> 0:07:55.760 to kind of wear him down to the point that 0:07:55.800 --> 0:07:59.960 he was overworked, depressed, and felt like he really wasn't 0:07:59.720 --> 0:08:03.080 get the whole story about what Tesla was about. So 0:08:03.160 --> 0:08:05.640 he wanted to be a Muscan, but he was then 0:08:05.680 --> 0:08:08.840 refold very much wanted to be a Muscan. And after 0:08:08.960 --> 0:08:13.160 having spoken with dozens of Tesla employees, former, current, etc. 0:08:14.160 --> 0:08:16.760 It's a familiar story. They go in, they have a 0:08:16.920 --> 0:08:19.640 high opinion of Elon Musk, and they come out of 0:08:19.680 --> 0:08:26.360 there just stunned at how just massive the chaos is 0:08:26.720 --> 0:08:30.240 inside of the company. So the trip was eventually found. 0:08:31.200 --> 0:08:35.400 Musk hired a third party service to hunt him down 0:08:36.040 --> 0:08:38.760 and they used a detail in one of my stories 0:08:38.800 --> 0:08:44.720 and corroborated with his searches inside the company's database, and 0:08:45.080 --> 0:08:48.440 they found him. They sued him and they thought that 0:08:48.480 --> 0:08:53.360 would probably shut me up, but no. So that was 0:08:53.400 --> 0:08:58.079 in June of last year, and around July, after having 0:08:58.080 --> 0:09:01.640 collected other sources around the company, I published a story 0:09:01.720 --> 0:09:05.880 that said, in order to factory gait, which is a 0:09:05.920 --> 0:09:10.320 Tesla term, so get five thousand cars finished at the 0:09:10.400 --> 0:09:12.720 end of the factory lines. It's what they had a 0:09:12.720 --> 0:09:16.000 goal of factory getting five thousand cars. To get to 0:09:16.040 --> 0:09:19.040 that number, they stopped doing this test called the brake 0:09:19.080 --> 0:09:22.880 and roll test, which is a test that tests the 0:09:23.440 --> 0:09:28.120 car at different rotations per minute the wheels. You connect 0:09:28.200 --> 0:09:32.040 the car to a computer, the wheel starts spinning, and 0:09:32.120 --> 0:09:35.000 the computer tells you how the alignment's going, what the 0:09:35.040 --> 0:09:37.880 car's doing, how it's reacting to difference. And it's a 0:09:37.920 --> 0:09:41.360 standard test and an important test standard tests. Nobody I 0:09:41.640 --> 0:09:45.240 talk to anywhere in the world of automaking could tell 0:09:45.280 --> 0:09:49.800 me why anyone would stop doing I mean, the idea 0:09:49.920 --> 0:09:52.880 of it not being done was just like, I mean, 0:09:52.920 --> 0:09:55.840 there's no rule, but you know a little bit like 0:09:55.880 --> 0:09:59.480 putting a pharmaceutical product out without quality control exactly, there's 0:09:59.520 --> 0:10:02.480 no cool But who would do that was kind of 0:10:02.480 --> 0:10:07.400 the reaction. So I published the story and I don't know, 0:10:07.440 --> 0:10:11.040 the stock fell might have been just light trading Day 0:10:11.200 --> 0:10:14.720 was around the July fourth holiday that tends to get 0:10:14.720 --> 0:10:19.040 Elon's attention, though, and a few days later he was 0:10:19.120 --> 0:10:23.400 tweeting at me basically suggesting that I was being paid 0:10:23.440 --> 0:10:27.920 by short sellers to write negative articles about Tesla, which 0:10:28.000 --> 0:10:32.199 is always the favorite response to any immature CEO who 0:10:32.360 --> 0:10:35.920 is targeted, right who has anything skeptical said about him, 0:10:35.960 --> 0:10:38.679 which is that it must be the short sellers paying 0:10:38.679 --> 0:10:42.120 the journalist, rather than maybe there's some legitimate criticism here. 0:10:42.120 --> 0:10:44.480 Maybe journalism is a job that we do and we 0:10:44.559 --> 0:10:47.880 get paid for, and maybe it's something different than being 0:10:47.880 --> 0:10:50.760 a syncophan for the company. Right. I have student loans. 0:10:51.000 --> 0:10:54.400 I got to pay my bills. Unfortunately, these short sellers 0:10:54.400 --> 0:10:56.800 aren't out here paying like that. But they're not. They're 0:10:56.800 --> 0:11:00.240 just not. They don't do it. I've never experienced any 0:11:00.240 --> 0:11:04.360 short seller in my life to establish that. Actually, I've 0:11:04.400 --> 0:11:07.240 been doing this for twenty five years. I've never had 0:11:07.280 --> 0:11:10.600 someone offered to pay me. No, never, they don't do that. 0:11:10.920 --> 0:11:15.520 So Elon went on and on and on for what 0:11:15.720 --> 0:11:20.559 felt like two days, just like tweeting out screenshots from 0:11:20.559 --> 0:11:23.960 my Facebook profile. As you pointed, out and speculating, and 0:11:24.000 --> 0:11:27.640 then of course his twenty two million followers start speculating, 0:11:27.720 --> 0:11:31.440 and everyone's speculating. So now I have this really angry 0:11:31.520 --> 0:11:35.960 mob following me everywhere I go on Twitter, making fake 0:11:36.000 --> 0:11:40.840 accounts that purport to be me. Yeah, and you can 0:11:41.040 --> 0:11:44.360 complain to Twitter about this, but then they say that 0:11:44.440 --> 0:11:47.600 you are a public figure. So if people are making 0:11:47.679 --> 0:11:49.880 dummy accounts, like, what are you going to do? I 0:11:49.960 --> 0:11:55.760 have twenty two thousand followers. I am heartily a public figure, right, 0:11:55.880 --> 0:11:58.880 but you know, Okay, So just in case you're wondering, 0:11:58.920 --> 0:12:01.600 if you're ever bullied on Twitter, don't expect any help. 0:12:01.920 --> 0:12:06.400 That's a whole other Staddy Jack and and so that's that. 0:12:06.600 --> 0:12:08.880 I mean, that's been my relationship with Tesla ever since. 0:12:09.440 --> 0:12:12.920 Unless I have a really really good scoop, they don't 0:12:12.960 --> 0:12:16.360 respond to my questions, they don't engage with me. And 0:12:16.400 --> 0:12:19.400 I guess that's fine because that establishes the nature of 0:12:19.400 --> 0:12:21.560 our relationship. I don't have to pretend to be nice. 0:12:21.960 --> 0:12:25.439 I'm not nice, very adult response just to ignore the 0:12:25.520 --> 0:12:29.000 journalists who just ignore me question. So since we're not 0:12:29.040 --> 0:12:31.800 going to play nice, that's fine. I know how to 0:12:31.840 --> 0:12:33.360 do that. I know how to play me. You have 0:12:33.400 --> 0:12:35.960 a line after your pin tweet which is great, which 0:12:35.960 --> 0:12:38.160 says you go on to say, if you're investing or 0:12:38.240 --> 0:12:40.600 Tesla or in a Tesla, you need to sit with that. 0:12:41.480 --> 0:12:44.520 Why do you think it's relevant how Musk treats you 0:12:44.800 --> 0:12:48.360 and treats other people. How the Muskians, not just Musk, 0:12:48.600 --> 0:12:51.880 treat people who ask questions they don't like. It just 0:12:51.920 --> 0:12:54.680 reminds me of Cicero. He said, to be, not to 0:12:54.760 --> 0:12:59.360 seem yep, and Elon is really focused on seeming and 0:12:59.520 --> 0:13:03.000 less focused on being, and you really need to consider 0:13:03.280 --> 0:13:06.679 why that is. That's why you need to know your philosophers. 0:13:06.960 --> 0:13:10.120 That's got to know you fast. Because let's back up 0:13:10.120 --> 0:13:11.960 and go back to I think the first piece you 0:13:12.000 --> 0:13:15.360 wrote about Tesla may not be for Business Insider. It 0:13:15.400 --> 0:13:19.240 was Sam z Allen Teaboon Pickens criticizing Tesla, and Sam's 0:13:19.240 --> 0:13:21.720 all was critical because of the government subsidies that Tesla 0:13:21.840 --> 0:13:24.200 was getting. But you also noticed both of them said 0:13:24.360 --> 0:13:26.200 he might be the smartest man in the world, the 0:13:26.240 --> 0:13:28.920 best dealmaker, and the best salesman. This was hardly a 0:13:29.200 --> 0:13:32.520 full on critical piece, right. What was your mindset at 0:13:32.520 --> 0:13:35.200 that point? At that point, I mean I was that 0:13:35.280 --> 0:13:38.360 had to be twenty fifteen, twenty sixteen. I think I 0:13:38.400 --> 0:13:41.400 was just at a conference watching these two guys talk 0:13:41.440 --> 0:13:46.200 about Tesla. Look, Sam's Allen Teboon, Pickens Rip Teaboon. They 0:13:46.200 --> 0:13:50.880 were both very, very, very successful men. But they are 0:13:51.200 --> 0:13:54.880 Rip Teaboon, Yes, very nice man of metals several occasions. 0:13:54.920 --> 0:14:01.880 But Old, oh my god, Old, and you know is 0:14:01.960 --> 0:14:05.400 not known for his kindness or charming personality. I know, 0:14:05.679 --> 0:14:08.840 he's known for being a battle axe. So as a 0:14:08.840 --> 0:14:12.040 young person, it's always fun to watch the boomers freak 0:14:12.080 --> 0:14:16.480 out about new things. Yeah, and I had no feeling 0:14:16.559 --> 0:14:20.040 about whether Tesla should or should not succeed at that point. 0:14:20.120 --> 0:14:22.960 It was just interesting to listen to them those statements 0:14:23.000 --> 0:14:25.119 from the two of them. He might be the smartest 0:14:25.120 --> 0:14:27.760 man in the world, the best dealmaker, the best salesman. 0:14:27.840 --> 0:14:32.160 At that time, there was pretty much unqualified adulation surrounding Musk. Right, 0:14:32.280 --> 0:14:34.520 Is that a fair summary? That's a fair summary. I 0:14:34.560 --> 0:14:37.080 think I don't think people everybody really understood the Solar 0:14:37.080 --> 0:14:39.520 City deal at that point, right. I think people were 0:14:39.520 --> 0:14:43.120 just seeing that he had created the first American car 0:14:43.160 --> 0:14:45.800 company in a hundred years. It seemed to have some success, 0:14:46.000 --> 0:14:49.080 and he had his hair plugs by then he was 0:14:49.800 --> 0:14:53.520 looking like a billionaire player. There's something in CEOs needing 0:14:53.560 --> 0:14:56.400 to redo their hair right. That has happened more than once, 0:14:56.400 --> 0:15:00.400 and it has not been a good sign. Yeah, no, no, okay. 0:15:00.400 --> 0:15:02.360 I get that he had created the first new American 0:15:02.360 --> 0:15:05.120 car company and over a century. It is astounding. But 0:15:05.440 --> 0:15:07.920 why do you think he is such a cult figure. 0:15:07.920 --> 0:15:10.160 Why does he have his army of muscans? Is there 0:15:10.160 --> 0:15:12.400 more to it than that? I think he makes He 0:15:12.520 --> 0:15:16.960 makes a certain kind of person feel powerful. He makes 0:15:16.960 --> 0:15:22.120 a certain kind of man, especially, feel like they can innovate, 0:15:22.320 --> 0:15:24.680 they can have power over the world that they see 0:15:24.680 --> 0:15:30.480 around them, and they can use their minds to affect 0:15:30.520 --> 0:15:33.760 change because they're riding on his coattails. They're riding on 0:15:33.840 --> 0:15:38.520 his coattails and they can learn from him. So whenever 0:15:39.320 --> 0:15:45.160 somebody gets this like kind of hero complex, it's always 0:15:45.280 --> 0:15:48.040 useful to dig deeper. That's it's such a good point 0:15:48.040 --> 0:15:50.320 that you make. I remember I did a skeptical piece 0:15:50.320 --> 0:15:52.920 about Valiant. You remember, of course, Valiant, the high flying 0:15:53.000 --> 0:15:57.120 drug company, And I remember one skeptical investor saying to me, 0:15:57.480 --> 0:15:59.880 whenever people start to refer to the CEO by his 0:16:00.080 --> 0:16:03.440 first name, because everybody called him Mike, not Mike Pearson, 0:16:03.480 --> 0:16:05.680 but Mike. But when people start to refer to the 0:16:05.680 --> 0:16:08.480 CEO by his first name, watch out. That's not an investment, 0:16:08.480 --> 0:16:11.920 it's a cult. And so per your point, exactly right. 0:16:12.520 --> 0:16:15.240 Is there another layer to it too in this that 0:16:15.360 --> 0:16:18.560 makes the Muscians sort of more extreme, which is this 0:16:18.640 --> 0:16:21.320 layer of self righteousness surrounding it, that somehow if you're 0:16:21.360 --> 0:16:24.920 against him, you're you're a climate change denier. If you're 0:16:24.960 --> 0:16:26.840 against him, you want to see the Earth go down 0:16:26.880 --> 0:16:29.240 in flames. Does that add to it as well? Of 0:16:29.280 --> 0:16:32.160 course the self righteousness is a huge part of it. 0:16:32.200 --> 0:16:36.920 And somebody brought to my attention that inside of the 0:16:36.920 --> 0:16:40.360 Tesla Facebook group, but Tesla Owners Facebook group, they were speculating. 0:16:40.360 --> 0:16:43.600 They're like, well, isn't she a climate change denier? Why 0:16:43.640 --> 0:16:46.480 is she against Tesla? How is she for the climate 0:16:46.560 --> 0:16:50.440 and against Tesla? Can't be these two things? Cannot understand 0:16:50.680 --> 0:16:52.960 And I can explain it for you, but I can't 0:16:53.000 --> 0:16:55.880 understand it for you. Tesla Owners Club. Yeah, that's all 0:16:55.920 --> 0:16:58.000 I have to say about it. I thought this also. 0:16:58.080 --> 0:17:00.440 I don't think this was you. It was another female critic, 0:17:00.520 --> 0:17:02.920 One of the Muscians wrote, how about you shut the 0:17:02.960 --> 0:17:05.760 hell up and stop bothering Elon. Every minute that you 0:17:05.840 --> 0:17:09.360 cause trouble is a minute that fully autonomous vehicle sick 0:17:09.560 --> 0:17:12.520 is late to market. You're literally killing people as if 0:17:12.600 --> 0:17:17.240 somehow any criticism of Elon Musk is delaying the advent 0:17:17.320 --> 0:17:21.320 of autonomous vehicles. And I can't quite trace the logic 0:17:21.359 --> 0:17:24.800 of that, can you? No? I can't. And it's almost 0:17:24.840 --> 0:17:27.520 as if they think that Elon himself is in the 0:17:27.560 --> 0:17:31.320 trenches figuring out autonomous vehicles. No, he has a team 0:17:31.359 --> 0:17:34.199 that does that, a team that is breaking apart, and 0:17:34.480 --> 0:17:37.040 you know, probably has what I like to think of 0:17:37.080 --> 0:17:40.000 as the eye of Mordor, which is his full intention 0:17:40.560 --> 0:17:44.760 on them, and that why they're breaking apart. Whenever Elon 0:17:44.960 --> 0:17:49.840 focuses on a specific part of the business, it does 0:17:50.080 --> 0:17:53.960 tend to fracture. It is. It's a lot of really, 0:17:54.560 --> 0:17:56.600 it really is. I know, my Lord of the rings, 0:17:56.600 --> 0:18:00.840 good good that prepared you for this job. And so 0:18:01.160 --> 0:18:04.240 I will admit I'm not well sourced in the autonomous 0:18:04.240 --> 0:18:07.119 on the autonomous team, but I do follow the reporting 0:18:07.280 --> 0:18:10.639 and the exits. Yep. I also thought it was fascinating 0:18:10.680 --> 0:18:15.320 the whole idea that criticism about this is even the 0:18:15.359 --> 0:18:18.560 notion that criticism about this is distracting Musk from his 0:18:18.720 --> 0:18:21.720 task means that Musk is paying attention to the criticism right, 0:18:22.080 --> 0:18:25.200 which is back to our point originally that not many 0:18:25.280 --> 0:18:28.720 CEOs invest this amount of their very limited time in 0:18:28.760 --> 0:18:30.880 attacking their critics for a reason. They've got a job 0:18:30.920 --> 0:18:33.000 to do. It's almost like he thinks he's the president 0:18:33.000 --> 0:18:38.800 of the United States or something. There's another piece he 0:18:38.840 --> 0:18:41.200 wrote in the sumber of twenty eighteen where you spoke 0:18:41.280 --> 0:18:44.359 with I think forty two Tesla employees and they talked 0:18:44.359 --> 0:18:47.320 actually explicitly about the cult of Elon Musk And what 0:18:47.359 --> 0:18:50.760 did you hear from them? Well, first of all, do 0:18:50.920 --> 0:18:54.920 not fire nine percent of your workforce while you're in 0:18:55.000 --> 0:18:58.879 the middle of a massive project, because they will talk 0:19:00.040 --> 0:19:02.480 so And was it because he'd hired the wrong people 0:19:02.520 --> 0:19:04.720 to begin with, or just because he has a temper 0:19:04.760 --> 0:19:07.280 and just fires people on a whim. Trim the fat 0:19:07.440 --> 0:19:10.600 running out of money. This was during the Model three ramp, 0:19:10.800 --> 0:19:13.560 so I imagine that they were burning through a lot 0:19:13.600 --> 0:19:15.479 of cash and they needed to trim the fat as 0:19:15.520 --> 0:19:18.760 an organization. Before we come back to that just pause 0:19:18.800 --> 0:19:21.119 and explain to listeners why the Model three and the 0:19:21.160 --> 0:19:23.840 Model three ramp were so important. What was this supposed 0:19:23.840 --> 0:19:26.800 to do? So? Elon Musk has said that Tesla has 0:19:26.840 --> 0:19:29.520 had a master plan for years now, and the plan 0:19:29.720 --> 0:19:33.200 was to start with luxury vehicles, the Roadster being first, 0:19:33.240 --> 0:19:35.520 then the S and the X, and then move on 0:19:35.560 --> 0:19:38.199 to a mass market vehicle that would become like the 0:19:38.280 --> 0:19:42.159 Toyota Camera of electric cars. Everyone could afford it, they 0:19:42.160 --> 0:19:45.240 would mass produce it, and it would completely change the 0:19:45.280 --> 0:19:48.960 game of automotive. Of course, the challenge there would be 0:19:49.359 --> 0:19:54.719 making margins thick enough to sustain the manufacturing of this 0:19:54.840 --> 0:19:58.080 car and mass and so in order to do that, 0:19:58.480 --> 0:20:02.480 Elon Musk had to keep the price down, can't keep 0:20:02.520 --> 0:20:04.919 the price of the car affordable, and try not to 0:20:04.920 --> 0:20:06.720 blow as much money as he had in the past 0:20:06.840 --> 0:20:10.680 on past models. He failed to do that, and last 0:20:10.720 --> 0:20:15.119 summer we watched that happen, and the margins on the 0:20:15.160 --> 0:20:17.560 Model three are not where they should be. I don't 0:20:17.680 --> 0:20:20.360 I don't think they're above twenty percent. Yet he has 0:20:20.400 --> 0:20:25.040 not sold as many cars as projected, and right now, 0:20:25.080 --> 0:20:29.800 you know, it looks like there's no real plan to 0:20:29.840 --> 0:20:32.159 get out of a financial the financial hole that the 0:20:32.200 --> 0:20:34.639 company is in now because the Model three was not 0:20:34.680 --> 0:20:37.920 a success. This goes back to the question of why 0:20:38.000 --> 0:20:40.399 Musk is such a cult, or at least it's linked 0:20:40.400 --> 0:20:44.200 to it. But why, at least to this point, arguably 0:20:44.200 --> 0:20:46.439 to this point, has this not mattered. Why have the 0:20:46.480 --> 0:20:49.399 capital markets still been willing to give Musk billions of 0:20:49.440 --> 0:20:53.080 dollars two point seven billion dollars only last spring, despite 0:20:53.080 --> 0:20:55.480 the fact that it was easy to see that promises 0:20:55.520 --> 0:20:58.680 like this weren't coming together. Girl, they were about to 0:20:58.680 --> 0:21:02.479 sell us we work at fifty billion. I guess that 0:21:02.520 --> 0:21:07.680 says it all right, said no, we work, We don't 0:21:07.720 --> 0:21:11.479 work billion. It don't work right. I think that as 0:21:11.520 --> 0:21:14.560 long as bankers recognize that there is an appetite for 0:21:14.600 --> 0:21:18.920 the story, they will sell you whatever. And Musk has 0:21:18.920 --> 0:21:21.600 had the story. He Musk is a great story. He's 0:21:21.640 --> 0:21:24.359 still a great story. I think people are starting to 0:21:24.440 --> 0:21:29.800 understand him better and that is hurting him. But He's 0:21:29.960 --> 0:21:31.800 been a story you could sell for years now, and 0:21:31.880 --> 0:21:35.560 Wall Street loves that. People don't understand that Wall Street 0:21:35.720 --> 0:21:39.920 is making its percent and it doesn't mean because they're 0:21:39.960 --> 0:21:42.439 selling stock and bonds for companies that they believe in 0:21:42.480 --> 0:21:45.000 those companies. Quite the contrary, right, it can be the 0:21:45.080 --> 0:21:48.320 ultimate exercise in cynicism. No, and the terms of Tesla's 0:21:48.359 --> 0:21:51.680 last capital raise weren't that. In fact, Wall Street made 0:21:51.680 --> 0:21:55.840 out like a bandit and congratulations, guys, you did it again. 0:21:56.240 --> 0:21:58.359 Back to the Model three. How big a deal is 0:21:58.440 --> 0:22:01.359 the failure of the Model three? I think it could 0:22:01.400 --> 0:22:05.000 sink the company if they don't figure out what story 0:22:05.040 --> 0:22:09.400 they're selling next. It is not hard for Elon Musk 0:22:09.400 --> 0:22:12.439 to blow through two billion dollars. He does that. He 0:22:12.520 --> 0:22:15.160 does that pretty routinely, right, like every year, every quarter, 0:22:15.920 --> 0:22:19.040 every year. It's two billion, two and a half billion, 0:22:19.080 --> 0:22:23.240 three billion dollars. So the last capital raise wild did 0:22:23.280 --> 0:22:26.200 provide some kind of cushion, is not enough to sustain 0:22:26.240 --> 0:22:30.720 the company for any significant amount of time if there 0:22:30.880 --> 0:22:34.320 is not some kind of profit made. And the losses 0:22:34.359 --> 0:22:38.800 that Tesla has generated throughout its existence have completely canceled 0:22:38.800 --> 0:22:41.440 out any profits that it has made over the three 0:22:41.560 --> 0:22:44.240 or four quarters that has actually been profitable. I mean, 0:22:44.240 --> 0:22:47.040 they basically might as well not have even happened. And 0:22:47.119 --> 0:22:49.800 Tesla's in a lot of debt, so it needs cash 0:22:49.840 --> 0:22:53.560 on hand. And this is a very very very expensive 0:22:53.560 --> 0:22:57.360 business that it's in. And that's another promise Musk has blown. Right, 0:22:57.560 --> 0:22:59.560 was the promise earlier this year, at the end of 0:22:59.640 --> 0:23:01.800 last ye that Tesla was now going to be profitable 0:23:01.920 --> 0:23:05.200 going forward. Right, Not so much. Yeah, he did, he 0:23:05.240 --> 0:23:07.720 did say that. But it doesn't actually matter. If you 0:23:07.800 --> 0:23:11.520 remind people what Elon Musk said wants is if perhaps 0:23:11.600 --> 0:23:15.160 part of the old version of tell a really big 0:23:15.240 --> 0:23:17.000 line and you can get away with it, it's small 0:23:17.040 --> 0:23:19.679 eyes that will kill you, and perhaps that this is 0:23:19.680 --> 0:23:22.480 a version of it, and that if you lie constantly 0:23:22.520 --> 0:23:25.879 all the time, always, then it no longer matters because 0:23:25.880 --> 0:23:28.479