Elon Musk is in the news. (Again.) The latest announcement came last Thursday when Musk’s Boring Company signed a contract with the city of Chicago to build an “express loop” from O’Hare Airport to the city’s downtown. In one important way, the deal is wholly unlike most of Musk’s other projects—it won’t be taxpayer subsidized.
In other ways it’s exactly like his other schemes: Musk claims that his engineers can create an 18-mile underground passage for $1 billion—one-twelfth of the typical costs for such a project. Musk insists that he’ll employ a revolutionary technology to achieve the savings. And the approach he’s proposing has never been tested:
This habit of making extraordinary claims has characterized nearly all of Musk’s many businesses. SpaceX, his private rocket company, was founded on the proposition that its proposed Falcon Heavy reusable rocket could be cheaply used to haul huge payloads into space. The Falcon Heavy rockets were even supposed to assist with manned missions to Mars. Musk said this often, even adding that he himself planned eventually to retire to the Red Planet. After five years of delays and cost overruns, SpaceX belatedly revealed that the Falcon Heavy was not actually going to be used to go to Mars. Instead another company rocket, called the BFR, will be for interplanetary ventures. When might the BFR appear? No one seems to know. Meanwhile, the commercial market for the large space payloads that the Falcon Heavy is designed to handle is rapidly diminishing as companies and governments increasingly focus on smaller satellites.
Moreover, a closer look at SpaceX’s Falcon Heavy launch raises questions. During this “successful” test, the rocket’s central engine boosters broke down twice. This caused them to fail to dock and to crash into the ocean. And its payload—a Tesla Roadster—was set on the wrong trajectory in space. The mission was dubbed a huge “success” simply because the rocket’s engines didn’t explode on the launch pad as they had in each of the three previous years.
Musk says that the engineering behind the Falcon Heavy will somehow assist one of his other ventures, Tesla, since the two ventures are headquartered in the same city. But the technical challenges these two companies face are have almost no similarities. SpaceX designs and builds hand-assembled rockets. These take years to construct, and they’re fixed and re-fixed many times before a launch.
Tesla is trying to manufacture a mass-market electric automobile, which means uniform production of millions of units of a product with thousands of complex parts. Tesla has not yet mastered this process—the company has manufactured 300,000 cars in 15 years. (For perspective, Ford has manufactured more than 300,000 F-series pickup trucks in 2018 and the year is only half over.) Not only has Tesla failed to conquer the technical challenges of mass production—they company has failed at the economic challenges, too: So far, Tesla hasn’t even managed to make money on the pricey, heavily taxpayer subsidized luxury cars it sells.
What Tesla has done is swallow up taxpayer money. As the Los Angeles Times pointed out, Musk’s companies have taken more than $4.9 billion in taxpayer subsidies.
Meantime, Musk has busied himself with other heavily-promoted ventures. Take Musk’s solar panel company: Earlier in the week it said that it was walking away from its plan to sell Tesla-branded solar panels at kiosks in 600 Home Depots. Those kiosks were announced in February and speedily set up. But, by June, the company was saying they would be shuttered. In the same week, Musk’s car company announced layoffs for 9 percent of its workers—close to 4,000 employees. Tesla is now the most shorted stock in the country as stock analysts and reporters increasingly question Musk’s often dubious claims.
Credit agencies are downgrading Tesla’s debt, which had already been rated “junk.” If only the government would be as skeptical.
