Vanity Fair outlined in a recent article how Tesla CEO Elon Musk employed a number of questionable tactics in order to purchase the floundering solar power company he was both the largest shareholder of, SolarCity. In the opinion of former Tesla employee Dennis Scott, who worked at the company’s beleaguered “Gigafactory 2” in Buffalo, New York, Musk is “full of shit.”
In an article titled “He’s Full of Shit”: How Elon Musk Fooled Investors, Bilked Taxpayers, And Gambled Tesla To Save SolarCity” Vanity Fair examines the sequence of events that resulted in Tesla’s ownership of the solar power firm SolarCity. Vanity Fair notes that SolarCity was purchased by Tesla for $2 billion in 2016 and that Tesla CEO Elon Musk promised that the new SolarCity factory in Buffalo, New York, would be producing 10,000 solar panels a day. Before the acquisition, Musk was the chairman of the board for SolarCity, as well as its biggest shareholder.
Unsurprisingly, the plant is producing nowhere near that many and the promised 5,000 jobs created in Buffalo have not materialized. Investors may also have reason to worry about the plant according to Vanity Fair:
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.”
Now, Tesla is facing questions after Walmart sued the firm claiming that a number of solar panels installed by SolarCity were faulty and caused fires at Walmart locations across the United States. Vanity Fair notes that SolarCity was founded by two of Musk’s cousins, Lyndon and Peter Rive, who grew up with Musk in South Africa. But now, it seems as if Tesla’s solar business model may not be sustainable in the long term.
New York City’s $750 million investment in SolarCity also appears to not be paying off very well as the expected growth and job creation in the area caused by the Buffalo plant failed to take place.
In a statement to Vanity Fair, Tesla argues that its jobs in Buffalo are competitive, especially when benefits and equity are factored in. It says it has expanded its operations at the factory to include “some of our most innovative and pioneering products.” And it accuses the magazine of presenting a “one-sided view with cherry-picked sourcing aimed at feeding into the fear, uncertainty, and doubt being circulated about Tesla every day by those looking to gain from Tesla’s losses.”
But the level of secrecy surrounding the SolarCity plant may offer an additional indication of how bad things are. Tesla refused to allow me to take a tour, and former employees say a rare media event at the factory last fall was highly scripted. “They spent more time and resources trying to fabricate what people saw than they do making anything,” says Witherell, who worked there at the time. “They told employees to pretend we were busy.” A story aired last February by News 4 Buffalo described the shop floor as “torpid,” with idle employees milling about. “They say they are in ‘ramp up’ mode,” says Scott, the former employee. “But this isn’t even start-up mode. What company spends two and a half years starting up something they were already supposed to be the best at?”
Last April, not long after he placed his late-night call to Scott, Elon Musk finally paid his first-ever visit to Buffalo. There was no press release, no triumphant post on social media, no meeting with reporters. Local authorities were in the midst of performing the genuine engineering feat of dismantling what’s known as the “ice boom”—hundreds of steel pontoons, spanning over a mile and a half, that keep the massive amounts of ice on Lake Erie from floating down the Niagara River and jamming up hydropower turbines. After the visit, Musk continued his upbeat assessment of production. “We are looking forward to scaling up significantly through the balance of this year and into next,” he said.
Read the full report in Vanity Fair here.