11 February 2021

Vanity Fair: “How Elon Musk Gambled Tesla to Save SolarCity”

Elon Musk SolarCity illustration
photo illustration by Justin Patrick Long

As is common with Musk’s ventures, SolarCity professed to be focused on changing the world. Everything was very motivational, says a former executive. Some workers, taking the ethos to heart, sported SolarCity tattoos.

But the initial success of the company’s stock masked some difficult realities. SolarCity’s business model was to front the costs of installing solar panels and allow homeowners to pay over time, which created a constant need for cash. That required raising money from outside investors, often big banks, who were then entitled to the first chunk of the payments homeowners made—leaving SolarCity in a never-ending scramble to raise more debt. The real engineering that took place at SolarCity, in short, was financial, not environmental.

By 2014, several insiders say, the board was also growing concerned. The company imported most of its solar panels from China, and it looked like demand would soon outpace supply. Because Musk had a reputation as a manufacturing genius, the board decided that SolarCity needed to start making its own panels—a huge shift in its business model. Installing and selling solar has almost nothing to do with manufacturing, says a former solar-industry executive. It’s like a car dealer saying it’s going to make cars.

In June 2014, SolarCity bought Silevo, a solar-panel manufacturer that had struck a deal with New York to build a factory in Buffalo. On a conference call, Musk boasted that the deal would enable SolarCity to install tens of gigawatts of panels every year—far beyond the company’s peak annual run rate of about one gigawatt. He spoke as if the technology were already proven. On its website, SolarCity predicted it would achieve a breakthrough in solar-power pricing thanks to massive economies of scale.

It was shoot first and aim later, says the former senior employee. There was a lot of machismo going on: bigger, better, badder, faster.

Richard Lawson

SolarCity is rarely mentioned in the news lately, possibly because it offers a counternarrative to Musk’s preferred public image of genius and successful entrepreneur.

Reading this article, the business reminds me of a miniature version of WeWork, raising money to finance solar panel installations to (hopefully) recoup the investment over longer time spans – a bad business to be in regardless. Coupled with Musk’s signature move of ‘overpromise and underdeliver’ and his supposed ‘manufacturing genius’ and the result was a company struggling with debt and lawsuits. Plans to revitalize the local economy by creating jobs at a factory in Buffalo, New York, have met the same fate as the more publicized failure of Foxconn in Wisconsin. And Musk’s grandiose, yet hollow, statements have been systematically dismantled by a group of outspoken Tesla critics on Twitter!

This is the downside of following a charismatic leader without challenging his vision: when the direction is sound, you can accomplish great things, but when he’s marching down the wrong path, you end up failing spectacularly. As things stand, Musk has apparently stabilized Tesla’s manufacturing process to some extent. Whether he manages the same with his Starship production line remains to be seen…

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