Tesla’s Icarus Syndrome

Elon Musk
Photo by Joe Raedle/Getty Images
William D. Cohan
November 10, 2021

I first wrote about the Tesla enigma back in September 2018, during what we now know to be far more innocent times regarding speculation about the company and its valuation. This was shortly after Elon Musk tweeted that he wanted to take his company private for $420 a share and that he had “funding secured.” As it turned out, of course, Elon was just being Elon. He didn’t have the funding secured for the buyout, apparently had no intention of taking Tesla private, and may have violated securities laws in the process of suggesting to the market, as Tesla’s largest shareholder, that he was going to do something he had no intention of doing. 

What made it all more bizarre, back then, was that Tesla was still something of a vision: a large, well-capitalized bet on the direction of the auto industry, the green economy, and a singularly brilliant founder. Tesla, after all, had never made any money from selling its electric cars and had some $11 billion of existing debt. The idea that Musk could take Tesla private by borrowing even more money without having the profits to repay that debt was just another one of Elon’s fantasies. Wall Street would never have provided the capital for that bit of financial folly. So suggesting the buyout was a really dumb idea at the time and it would never have been completed, even if Musk had been serious, which of course he wasn’t. (In the end, Musk paid the S.E.C. a wrist-slapping $20 million fine, stepped down as board chairman, and conceded that his Twitter feed would be vetted.) In my New York Times piece that day, I wondered at the outset: “Is it too late for Tesla?” 

Well, while I may have been right about the possibility of Tesla going private in the summer of 2018, I was very wrong about the lengths investors would be willing to go to support the bildungsroman that is Tesla and Elon Musk. Don’t get me wrong. Tesla is now very real. It makes electric cars that people buy, and in droves, especially in Los Angeles, where every other car on the road seems to be a Tesla. And Elon Musk is real and it’s real that he is the world’s richest man with a net worth, depending on the nanosecond, of around $290 billion. (That is not a typo).