Musk Settles SEC Case, to Give Up Chairmanship of Tesla for 3 Years
Elon Musk (Credit: SpaceX)
Tesla CEO Elon Musk and the Securities and Exchange Commission have reached a settlement in a case in which the billionaire SpaceX founder was charged with fraud, the Los Angeles Times reports.
Musk and Palo Alto-based Tesla agreed to pay a total of $40 million to settle the case, and he will give up his chairmanship for at least three years. The electric-car maker also is required to install an independent chairman and two new board members, though Musk will remain on the board, according to terms of the settlement.
Musk and Tesla will each pay $20 million to settle the case; both reached the deal without admitting wrongdoing. The company declined to comment.
The SEC charged Musk with fraud Thursday, alleging that his tweets about taking Tesla private — at $420 a share — were “false and misleading.” As part of the lawsuit, the agency asked a federal court to remove him from the company’s leadership and ban him from running a public company.
115 responses to “Musk Settles SEC Case, to Give Up Chairmanship of Tesla for 3 Years”
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And the regulators get to mount a plaque on their wall and take a bow for protecting stock owners from another “evil” entrepreneur with dreams of building a better future. And you wonder who helped killed Tomorrowland?
BTW part of the settlement basically implied that Twitter is not considered an appropriate way to communicate with stockholders. Need to stick to old reliable established media…
Entrepreneurs go bad. The Wright Brothers opened the gates for the aviation industry world wide, but crippled it here in the US. Ford opened the doors with the Model T, and at the same stagnated on it long beyond it’s useful life. Everybody needs governance. Yes, even regulators. Musk has some serious flaws where, if he’s successful, will do a lot of harm to America’s already deeply wounded industrial base. Namely in Tesla’s desire to monopolize Tesla maintenance and the fact that owners can’t do maintenance on their own vehicles or choose a maintenance shop of their own choosing. Not that I want to come to the defence of the American car dealer, but they do constitute a functioning industry. If Tesla has their way those would go away as well. Electric cars, solar and wind power are a potent combination. Musk is really onto something there. I wish him success. Just not too much success.
That is the wonderful thing about a free market, those features leave openings for other firms. Ford fixation on the Model T allowed GM to replace Ford in dominating the market for automobiles.
And the Wright Brothers led to the NACA which became the foundation for NASA.
Wow…just really wow
So you don’t believe in free markets?
there is no totally free market, and a totally free market would not work
Why?
Regarding maintenance: I has been said that everything Musk does is Mars prep, so could it be that he is trying to tool a car that needs minimal or no maintenance at all, however possible that may be? this as opposed to building vehicles that are reliant on a whole other industry for their endurance. I can understand a person focused on worlds having no patience with state symbiotes and other legal versions of the mob.
That’s an imaginative thought. I’ll keep it in mind, but I tend to think he want’s to maintain control of as much of the e-car market as he can. In the normal automotive market the real profit point is in spare parts.
As for your assertion that governments are mobs. Of course. Anyone steeped in the subject knows that the state descends from and evolved from rape and raid organizations and those roots show. However the nature of how the protection racket is run matters. Any concentration of power and authority that runs unchecked will turn into a rape and raid operation. Look at what Enron did to California when the energy sector was de-regulated. You need evolved mafia to keep the new startups in check. Choosing who the don is and how the capos operate go a long way toward moderating the nature of the protection racket and how the rape and raiding is done. As humans we have no other institution for organized leadership to base our governing bodies off of. We’re stuck.
Lol! Touché .
The California power market was never “deregulated” in any rational sense of that term. It was simply a move from one form of centralization, formerly dominated by big utilities, to a different form of centralization that could be gamed by fraudsters like Enron.
… And did you defend them during the initial period during and after the market arbitrage that led to the artificial blackouts? Enron and the like defended themselves with vigorous PR leading the discussion far afield from what was really causing the blackouts. It was only years later that the discovery process of several lawsuits painted the full picture in Enron’s own internal documents that showed what they did. I’d wager lunch you bought their line about what was going on.
Enron built its expansion on merger and acquisition, whereas Elon Musk, like Henry Ford is focusing on an organic growth model, which is a big difference.
Merger and acquisition would have been a huge improvement. What Enron actually did was sell the idea of magic beans. Power would magically appear out of Enron’s mysterious trading backroom without benefit of anything so gauche as, you know, generating stations and wires and all that tiresome crap.
Well, you’d be wrong. It was obvious that the whole “free market” in electricity in CA was a top-down fraud perpetrated by outfits like Enron who were able to convince greenie Democrats in Sacramento that they could get all the power they needed without allowing any new capacity or distribution infrastructure to be built in the state. It was all pretty much a ploy by a small cartel to grab CA by the short hairs and squeeze with the help of credulous idiots in office. Offer a Democrat a supposedly free lunch and he’ll follow you pretty much anywhere.
That’s standard policy for Apple products, so nothing new here. The difference is Tesla is building their stuff in the US, thus strengthening the US industrial base, which is why the SEC action is so stupid, they’re not only harming the shareholders and investors, they’re also harming the American industry.
With an interest set as complex as the United States has it’s impossible to address an issue in one field and not do harm to another field of interest. Don’t get me wrong, I love Musk too. But he needs governing like anyone else. When he talked publicly about taking Tesla private apparently without really having the money to do it, he caused people with a lot of money, lawyers and a hot line to the SEC a lot of money. Musk tried to rig the market in his favor by starting that rumor against people who are used to rigging the market in their own favor. Then the SEC stepped in to re-rig the market as they saw fit. The only people who want free markets are people who have no hope of controlling it. Once you are big enough to effect market outcome you form a cartel or capture a regulatory entity as a means of rigging the market to serve your interest. It’s how you grow big. I’m sure you have heard the saying that “Markets don’t like uncertainty.”? How do you think they’re made certain? You rig them.
People complain about Bill Gates as a monopolist, but he was a saint compared to Steve Jobs. If Apple had won the PC wars of the 80’s and 90’s our offerings would be like an Apple store. For those of us old enough to remember, an Apple store is really just a spit and polish version of a Soviet grocery store. I’ll take Fry’s any day. Steve Jobs was a nutcase, a real tyrant. He was also a mad genius when it came to developing new products. I count my blessings every time I sit at my general purpose computing platform(s) assembled from commodity parts running Linux.
I dont get the Musk love…period…it is a measure of how badly NASA has failed that almost any rhetoric about spaceflighttoday…we need to belief.
A lot of my friends/co-workers who I respect deeply agree with you. For me, it’s the Falcon 9. That system is very much the craftwork of Space X. In my accounting that reflects a lot of good.
See how it works out…so far..what he has done is built a reasonably economical kerosene burner…he has not proven reuse…he has so far got to refurbishment for two cycles…but the fiction of “gas and go” seems to be getting no closer…and the drop in price to launch the birds so far has yet to materialize. There is going to be no revolution in satellites or payload launch until and IF the cost of launch come down a chunk…and so far…w e are not there…there are some solid indications that the progress toward reusability and not refurbishment…is not that great…
All valid points. And I’ll add one more complication. Even when Falcon 9 lives up to its goals there are two major problems right in front of our faces when it comes to payloads. 60 years of established design culture predicated on making satellites expensive. And the slow evolution of our thinking up ‘killer apps’ for space travel that are worth investing money and time into. However that said, Falcon such as it is already cut launch costs by integer fractions, and captured the launch market to the maximum extent that foreign governments would allow. That in itself overturned 30 years of American loss of launch share in the global market such as it was. I’d call that revolutionary by itself.
Your counterpoints are irrefutable and SpaceX does seem to be keeping the Rev5 at two flights so far, it seems as if maybe there’s an issue still with going beyond two. Like you, I noticed that as well. The next 4 months are going to say a lot I think. If we just see a bunch of maiden flights, then second flights, with no third or more flights, then something is not quite working out. We’ll see.
Well put…I think that sat manufactors will change their method of operation (I think) IF they know that lower launch cost are there…but until they do its unclear to me that they will. The problem is that the knowledge base is there for the long lived expensive birds…and capital people are used to that.
I hope that they or Blue suceed…I am just guessing here but I would bet that the problem with reuse is not the engines…but has turned out to be the body of the rocket…
We will see..the “lift” to orbit has no real comparison in modern transportation systems…
Meanwhile Russia is screaming about unfair competition from Elon Musk.
http://tass.com/science/102…
Musk underprices space launches to squeeze Russia out of market, says Roscosmos CEO
You conveniently forget SpaceX has the largest operating launch vehicle in the world right now, a 50% Saturn V, designed and built using their own money.
You also forget SpaceX launched 18 times in 2017, on par with space powers like China and Russia, and Falcon 9 is a lot more powerful than many of the launch vehicles used by China and Russia.
SpaceX also has the world’s 2nd full flow staged combustion engine on the test stand, with the highest chamber pressure and T/W ratio.
If you don’t think these are special, you don’t understand space industry at all.
The “lot more powerful” statement is misguided. It’s more efficient to use a launch vehicle that is sized correctly for the payload. Large payload – large rocket. Small payload – small rocket. When you look at the Delta II and Atlas V, you see that they have a base model and can add solid boosters for heavier payloads. The idea is to use just enough rocket.
SpaceX could have developed a F4 and F6 along with the F9 all with a common core and simply used the number of engines required for the mission. Even the F9H could have been two F9 outer cores and a center core with an F4 arrangement for a longer burn. Instead, they are launching rockets that have 40-50% more capability than required so they can land the first stage again.
I dont completely disagree with your post…using your words I would say “its special” but not revolutionary.
SpaceX launcher achievement, a lot with federal dollars has put together something that challenges national space powers for national launches…Its unclear to me however that what they have done is “revolutionary” as is being claimed.
The rocket(s). Are large in part because they have first stage recovery capability which only is useful if the refurbishment moves to reuse…there are three or four indicators at least now…that this is not happening. It might be but so far its not clear it is.
The question is does refurbishment make economic sense.
That’s not what happened though. He got Goldman Sachs and Silver Lake to help and they put together a go private plan, so the money is there, just with strings attached. He didn’t like the strings and scraped the go private plan. The market is not rigged in anyway and the share price already stabilized after he abandoned the plan, then SEC stepped in which caused a 15% drop in stock price.
When you don’t have a signed contract, you don’t have the money.
I think you overstate the ill effects of the Wright Bros. patent trolling. The granting of overly broad patents, on the other hand, is definitely a problem and one that has gotten steadily worse over the past century. But it’s not a problem traceable to rogue entrepreneurs.
Any “governance” needed anent Henry Ford was amply supplied by his competitors and the general retail market for cars – not the government. Sticking with the Model T as long as he did was a strategic blunder from which Ford Motor Co. never really recovered.
Automobile dealers exist independent of automakers only because of government fiat. In many jurisdictions – notably Texas – automakers are forbidden, by law, from operating company-owned “stores.” I consider this an unjustifiable intrusion on the free market. But auto dealers have a lot of money to spread around to politicians who will do their bidding anent restraint of trade. The majority of regulatory agencies, especially at the state level, have long since been captured by those they ostensibly oversee.
Once one starts treating classes of businesses as protected entities with rights to perpetual existence despite changes in technology or business models, one insures economic inefficiency, stagnation and stasis.
As for a “right to repair” there is, and should be, no such right enshrined in law. As you note, Tesla’s desired maintenance model has much in common with that of Apple. Also note that, in a free market, a lot more people have eschewed the Apple maintenance model than have embraced it. The same may or may not prove true in the car market, but it’s not the job of the government to selectively privilege certain consumer preferences or business models over others.
Such a “right to repair” controversy is also now raging in the agricultural machinery markets. If there are enough farmers willing and able to maintain their own equipment, some manufacturer will respond to closed systems on the Apple or would-be Tesla model – notably that of John Deere – with lines of equipment that make it easy for owners to also be maintainers. Let the market decide.
Please define “too much success.”
“I think you overstate the ill effects of the Wright Bros. patent trolling”. Needless to say I’ll disagree. Just have a look at what the US had in terms of military aviation when we entered WWI. Also take note of the heavy fraction of imported aircraft that were critical in making the air mail program work. I’d argue that the ill effects of Wright Brothers had full effect on American aviation right up until 1942.
As for Ford… I was not arguing for government intervention with Ford and the model T, only that pioneering entrepreneurs once successful can stagnate. And yes, the market addressed Ford’s stagnation. However that said, Ford would go on to become a pioneer in government intervention with private enterprise in the US with Ford’s enthusiasm to build B-24’s and his desire to protect his investments in Opel Motors. Not to mention he thought he was on the wrong side of WWII.
As for car dealers …. Yeah, they’re … well car dealers. But having government enforced local ownership and preventing corporatizing of car dealerships is just fine with me. What would the 70’s and 80’s California TV be without Cal Worthington’s ads?
As for John Deer … Yeah right they’ll get competitors. Maybe from China, I can believe that will happen. You’re not going to see a startup offering modern tractor technology that offers a open architecture. If you could have given IBM a crystal ball to look into the future, I’ll bet they’d never have offered an open architecture for the PC. They’d see they’d lose control of their own standard and would have never offered it. No American investor would invest in a business plan that is predicated on opening up the engineering to the greater market to adapt and extend with no direct payment to the founding enterprise. It’s not happening in tech anymore, and there’s no indication it will happen in farm equipment any time soon.
Military aviation’s slow development in the U.S., prior to WW1 had nothing to do with the Wright Bros. fairly inconsequential patent trolling. Airplanes simply weren’t very capable in their first couple decades especially anent range and carrying capacity. The U.S. was a continental nation with no hostile powers on either of its two borders. We last fought the Canucks in 1812-14 and the Mexicans in 1845. Europe had a lot more incentive to develop even primitive short-range military aviation because European countries are numerous, dinky in size compared to the U.S. and most nations there have a lot more than two borders with neighbors, many of said borders being loci of chronic hostilities, both ancient and recent. Development of large long-range aircraft advanced a lot faster in the U.S. than elsewhere, mainly for domestic civilian use before the late 1930’s.
You reinforce my point that Ford indulged his whims and prejudices at the long-term expense of his enterprise. The market, not the government, “controlled” him.
Leave it to a lefty to prefer folksy government-protected sleazeballs with numerous pet “dogs” named Spot to entrepreneurs who want to actually change the world in ways not salubrious for the left-statist agenda.
So commoditized hardware has vanished from the tech world? What color is the sky on your planet dude?
The right-to-repair controversy anent agricultural machinery is of fairly recent vintage. How it plays out is yet to be settled. But it seems to me that there is a considerable potential market for relatively open equipment architectures, particularly anent prime-movers like tractors. Time will tell.
+
“Military aviation’s slow development in the U.S., prior to WW1 had nothing to do with the Wright Bros.” — Really? ! The Billy Mitchell school of airpower at the time does not fit in with your take on history. People were trying to develop military air power, as well as the Kelly Airmail Act induced civil air sector. If it were not for the DC-2 and the B-17 we would have been in sorry shape.
—“You reinforce my point that Ford indulged his whims and prejudices at the long-term expense of his enterprise. The market, not the government, “controlled” him.”—
It sounds to me as if you only read my agreement on the Model T. Yes I do agree with you on that. However as I mentioned, you should look up Ford’s misadventures with Opel Motors and the B-24 Liberator and you’ll see the government very much took control of his enterprise and justifiably so.
—“So commoditized hardware has vanished from the tech world? What color is the sky on your planet dude?”—
When did I say that? You’re putting words in my writing I never said. So I’ll turn it on you. What planet are YOU living on? My argument was that I was thankful Apple lost the PC wars of the late 20th cen even though they made better product. And that while IBM made a decision to open up ISA architecture that was good for the market and the consumer, it was bad for them. And that open architecture is unlikely to be done on that scale for a long while.
The DC-1, 2 & 3 and the B-17 were what I meant by long-range aircraft. All were products of the 30’s when even the Struldbrugs in the U.S. Army and Navy were beginning to smell the coffee they should have whiffed in the rudderless 20’s.
The government took over, in non-trivial ways, virtually the entirety of the American industrial base during WW2. I don’t know the particulars of the Opel situation you’re referring to – and I lack time at present to do a lot of digging on it. Opel was a German company so I can certainly see where the U.S. government might have had quite a bit to say about Ford’s Opel situation. The government, at that time, was FDR’s New Deal and Ford was a Republican, an America-Firster, a bitter foe of trade unions and a flagrant anti-semite, all of which doubtless influenced governmental policy toward Ford – both the company and the man – during WW2.
What you said about commoditization was “It’s not happening in tech anymore.” I posed the colored sky question because your assertion is obvious bollocks.
PC’s, with the notable exception of Macs, are entirely commoditized. So is essentially all networking hardware. Except for the cultists who insist on overpaying for pretty, fragile baubles from Apple, pretty much the entire rest of the computer tech-consuming public buys nothing but commodity hardware. Video game players and DVR’s tend to be proprietary, but there are also a lot of makers of these items so no closed platform has anything remotely approaching a lock on either market.
I expect you are referring to Anthony Fokker. You do know that the Fokker airplanes built in the U.S. were different from the Fokker aircraft built in Europe? In 1926 he moved to the United States and founded a new firm, Atlantic Aircraft that eventually became North American. Other aircraft like the Ryan mail plane and B-9 were entirely American as well.
Thomas, come on that’s a cheap rhetorical trick. So to answer your question, yes I’d consider him an import WRT the Wrights running roughshod over the American aviation industry. Note, he came in from Holland probably because he saw a vacuum he knew he could fill. What made that vacuum? But he’s not the only ‘import’ and you know that. You tried to make him a target for my point, knowing full well the argument you could turn. Cheap shot, you use that when you’re in politics and dealing with a ignorant mass who’s ignorance is engineered and steered. The point is simple, look at the majority of the aircraft used in the early pre DC-2 airmail years and you’ll see a majority of British and French aircraft.
The government mail service started out using surplus U.S. military aircraft from WWI. But after that most were American made. Actually even the ones the U.S. Post Office used were built in America under license.
https://postalmuseum.si.edu…
“From 1918-1926, the Post Office Department operated the nation’s first airmail service. For airplanes, postal officials turned to the military which turned over more than just aircraft. Army pilots flew the first airmail trips, including the inaugural routes between Washington, D.C. and New York City which began on May 18, 1918. For these first flights, pilots used Curtiss JH-4 (Jennies) aircraft. In June the Post Office Department, using its own pilots, took over the service. In 1918 the Post Office Department requested 100 deHavilland airplanes, model DH-4, from the army. Created by Geoffrey deHavilland, these planes had been built both in England and the United States during the last years of thewar. Like most of the 2,500 fighter planes built in the United States by 1918, few DH-4 aircraft even saw battle.”
So it was logical and inexpensive to use them and they served until the Airmail Act of 1925 turned the mail service over to private firms who used planes built by Boeing and Ryan air, as well as Anthony Fokker’s American firm.
BTW the reason Anthony Fokker came to the U.S. was, like many others from Europe in that era, to escape political unrest and the poor economic conditions following the First World War. Here is a link to a good book on the topic.
https://www.amazon.com/Anth…
In some ways that parallels the story of Elon Musk who left South Africa for the same reasons.
But that pretty much parallels what I said, but went into more depth. Sorry for lashing out at you like that. But you’re a professor, and the saga of Anthony Fokker did not set the path of events in the Air Mail era. Not only that, from above you can see just what I was saying. Before the DC-2 era of air mail they were using the European designs we had to buy into for the war because the US aviation industrial base was so underdeveloped. Why was it underdeveloped? A big reason was the Wright’s patent trolling.
Re: Anthony Fokker. Again why was there room for him in America? There was room for him because the American aviation industrial sector was underdeveloped. He was a big fish in a small sea with few functioning design houses vs the very functional industry of England, France, and even Italy. This AM as I was going thru my memory, I was trying to remember if one of the terms of the Treaty of Versailles was a limitation on Anthony Fokker? Technically he was citizen of The Netherlands and they were neutral, but I seem to remember he attracted some ire from the allies.
Yes the Air Mail era looks a LOT like our era. That prospect is exciting if we are indeed re-playing that saga.
Yes, but the problem was solved quickly after the patent settlement that created the NACA. The DH lasted as long as they did because there was no reason, nor money, for the USPO to replace them. Indeed, it was their staying with such outdated technology that was a motive for the Air Mail Act of 1925. So no, it did not continue into the 1930’s as you claim and what the government choose to use for its airmail service was not an indication of the state of American aviation technology, just what the U.S. Army wanted to get rid of.
Incidentally those foreign designed DH4’s used the American designed and built Liberty engine which dominated aviation in the 1920’s. It made them more reliable than the British built versions.
Recall historic aircraft like the NC-4, the Douglas World Cruiser, Commander Byrd’s polar aircraft? All built in the USA and all out performed the European designs in the 1920’s. So if anything it was the opposite, Europe’s lead during WWI resulted in them being awash in surplus aircraft which, combined with their economic issues, resulted in them falling behind until the competition started for WW II and forced them to invest in new military aircraft. In terms of commercial aircraft, Pan Am started Clipper service across the Pacific before the Atlantic because the British didn’t have the aircraft to compete with the Pan Am clippers and so refused them landing rights as a result.
In terms of Billy Mitchell, he used what he had available, namely some bombers from Europe that were used when the U.S. Air Corps went over there and the brand new Martin MB2’s which were the standard American bomber of the 1920’s. A very rugged and successful aircraft design and built in American around the Liberty engine. Just like the U.S recovered quickly after Sputnik, American aviation recovered quickly after WWI.
Musk’s refusal to allow a third party dealer network is hampering the growth of the company. It is exactly why there are serious issues with servicing these vehicles in a timely basis, and also why they are having problems delivering finished product.
Parts availability is a big issue too. Some states have “Right to Repair” laws which require manufacturers to sell parts to product owners and those owners have the right to make repairs without necessarily voiding their warranties. Replacing a faulty door handle on your own shouldn’t void the warranty on the electric motor, etc. If you screw up the door while trying to replace the handle, that’s a different scenario.
There is a pretty funny guy on YouTube, RichRebuilds, that works on Teslas and he points out lots of ways Tesla has made it very difficult to work on a Tesla with regards to being able to source parts used. Tesla also only provides some items such as a motor as a large sub-assembly that can be very expensive if you only need to replace something like bearings.
Thats really quite silly. I am one of those stock holders with a lot of my kids college fund in Tesla…and what he did was nothing more than “having fun” at stockholders around the world expense. The least thing musk did is show us what ajerk he is…40 million is not chump change plus he now has very close SEC scrutiny
No, it is how the real world works. The resources the SEC has is limited so they go after someone with a big name or is clearly in violation.
Elon Musk showed a willingness to fight back and not just roll over and play dead. They decided that rather then waste resources on a case they might lose to cut a face saving deal. Again, it’s how the world works.
And as a stock holder in Tesla for the long term you should be glad he stood up to them, as it’s his leadership and inspiration that is creating the value in the firm, which is why it’s stock dropped when the SEC attacked.
Yes. Buy and hold investors suffered no harm from Musk’s tweets, just the shorts, the day traders and other species of quick flippers.
No the laws apply to everyone
As there has been, and will be, no trial – and thus no finding of actual lawbreaking, which both Elon and Tesla denied in the settlement reached – then the law is still unsettled until some equivalent case arises and is actually litigated. If the SEC was about actually enforcing law instead of responding to its Wall Street in-crowd puppeteers, it might have balked at reaching the settlement arrived at with Tesla and Musk. Or not. At this point, we’ll never know.
no we will some ofus have morals and know right from wrong
I doubt that your assertion will hold water and it makes no difference in the investor’s strategy when the CEO makes unfounded statements that will affect the stock price. A lie is a lie. You’re silly if you think that nothing matters if those with long term investment outlooks are the only ones that matter.
Do you have Evidence it was a lie? Or was it just the perceived state of things when he made the Tweet?
The shorts have been telling lies about Tesla pretty much non-stop for years without, for whatever reason, attracting any attention from the SEC. If Elon head-faked them and they went for it, good for him say I.
You have Musk syndrome pretty bad…and I would add for not a lot of reason…its not clear that SpaceX is going to do much of what they claim. They are doing
He acted like a jerk and how I would expect my children to act (this crap with the Thailand rescue thing is silly) except we try and fix that in the little ones…and the big one grew out of it.
The laws are the laws and if he wants to play CEO he either needs to know them or have lawyers.
You sound like Barney Fife 🙂 “The Law is the Law, Andy”
You have anti-Musk syndrome real bad and there is essentially no form of reason backing that. You have to keep inventing ever more recondite alleged secret failures to maintain your absurd belief that reusability can’t ever have any significant effect on launch costs.
The same seems largely true of the people – including the various oxes gored by Musk’s August tweet – who, at least for public consumption, pretend that Musk is an actual accomplishment-free fabulist, then chose to believe him when he communicated about money in a 140-character burst.
In 2013 Tesla filed a statement that Elon’s twitter account would be used for company announcements in an 8-K. I agree that for many statements, twitter is not appropriate. If he just wants to put out “3,500/week Model 3’s for the quarter”, that’s pretty straight forward but something more complex such as going from a public company to a private one takes a lot more supporting information.
And that was one of the SEC issues, namely that it didn’t consider it an appropriate media for company announcements, preferring more traditional outlets.
So the negotiated settlement amounts to a forced quasi-sabbatical and surrendering some couch cushion change. From a purely personal standpoint, I’m pleased that Elon can now turn nearly full-time attention to SpaceX for the next three years. These are likely to be three far more consequential years for SpaceX than for Tesla. Elon also needs to learn to pace himself a bit more. Perhaps when the “sabbatical” is up in three years he will find he no longer has much inclination to retake the reins at Tesla. One can hope at any rate.
My limited interest in Tesla was strictly based on its likelihood of being the first to offer an affordable self-driving car. I’ve gotten to an age where driving is a pleasureless chore I would happily cede to a suitable AI. But self-driving cars, even if fossil-fuel-powered, seem all but certain to be on the market in a few years. Tesla may or may not be leading said pack, but it is a pack and the presence or absence of any one market participant is no longer critical.
The save-the-world-from-Global-Warming aspect of Tesla’s mission has – it will come as no surprise to people familiar with my comment history here – never played any role in my limited interest in the company. Mr. Musk’s enthusiastic – and atypically credulous – embrace of patently fraudulent “climate science” has been a continuing source of disappointment to me anent Mr. Musk’s generally very superior insight and perspicacity as an out-of-the-box thinker and do-er.
They only forced him to resign as Chairman of the Board, but he is still on it and the largest shareholder. Also, and more important, he is still the CEO and so will continue be hip deep in Alligators running Tesla.
So this is actually a victory for Elon Musk, which shows how weak the SEC case was. Basically he gave them bragging rights so they would go away and not harm the shareholders more then they have by allowing him to continue building the firm.
This will be like when Putin quit being President for the PM slot, with Medvedev taking the top title. In the new administration there was no doubt as to who was actually in control.
A very optimistic assessment.
Most complaints are settled. If the SEC had really wanted to nail Musk to the wall, they could have. This was a pretty small potatoes complaint and Musk brought it all on himself. Like the rest of us, Musk brings the majority of his problems on himself.
I know but they had him…and he knew it
Maybe, maybe not. Twitter is a new communication media and no one knows how they court would have ruled on its use. In any case it would have been a messy case for the SEC, and one that would have consumed a lot of their limited resources. It could have well been a PR nightmare for them… for example
“Entrepreneur works to fight global warming with Electric Car, SEC seeks to block him from doing so on a technicality.
I could see him not only rallying the fans of Tesla, but also environmentalists to his cause, position the SEC as a tool of greedy Wall Street interests. There are a number of ways someone with his desire to fight and resources could have spun this.
Actually, this is just the start of the legal actions. Although he didn’t admit guilt, I’m sure the DOJ sees that as blood in the water. Tesla / Musk now also need to seriously think about settling all of those shareholder lawsuits that came about due to Musk’s fraudulent actions. There is probably another 500-600 million worth of settlements the company will need to pay out.
At least one thing is a victory for Tesla, no more tweeting from Musk without an adult in the room. And then, maybe no more bad decisions like merging Solar City into the company, and then letting it die.
Even if the shareholder class action suits are settled or won, it’s going to be a big distraction and cost a large amount of money in attorney fees. The SEC settlement doesn’t heal the investors that purchased Tesla stock at $380 after the “going private” tweet was made in hopes of being bought out within a year at $420 or so. Making those people/institutions whole won’t be cheap.
No one told them to take the gamble. They did it with their eyes wide open. As W.C. Fields once stated – “You can’t cheat an honest man”.
Also given how Tesla is ramping up the roll out their stock may well be worth more, not less. But then a startup like Tesla is not where you gamble your retirement savings anyway, at least if you are a rational investor.
https://www.teslarati.com/t…
Be careful using the term fraudulent as it implies intent. Also he willingness to fight has probably also sent a message to the DOJ, who like the SEC, prefers soft targets.
As for those lawsuits by the Short Sellers, it will be interesting to see if they move forward given the quick settlement, since it will now force the burden of proof on them since the SEC has bowed out.
Elon’s take on climate is pretty nuanced if you listen carefully, he basically said nobody knows for sure how much CO2 will cause disaster, and he thinks the current level is still fine. His point is, why risk it when renewables are already here and in a lot of cases superior.
And I don’t understand why everybody thinks SpaceX needs more Elon Musk, they’re doing fine with his current level of involvement, it’s not like they needed Elon to literally design BFR. what they do need is to get more investment, and a successful Tesla would be very helpful in that regard.
There wasn’t much nuance in Elon’s departure from a couple manufacturing and tech advisory boards Trump asked him to sit on early in his administration as a protest of Trump’s spurning the Paris Accords. The Paris Accords will have no effect on global CO2 levels. Ironically, despite Trump’s downcheck of the Paris Accords, the U.S. is the only nation that will actually meet or exceed its CO2 reduction targets under that agreement.
I would like to see Musk spend more time on SpaceX because, given what the company has managed to do with 1/2 a Musk, the mind fairly boggles at what it might do with 3/4 or 9/10 of a Musk. Sadly, as Mr. Matula points out, Musk only surrendered his board chairmanship, not his CEO role – a matter that escaped my attention upon first reading about the settlement. So Elon’s SpaceX vs. Tesla time allocation may not change much if at all.
Yes, pulling out of the Paris Accords was a smart move as it saved American taxpayers billions of dollars in payments the United States was required to pay to help nations like China and India develop renewable energy technology. China has already devasted the American solar power industrty by undercutting them and giving them billions of dollars so they could undercut American firms and destroy American jobs even more was just plain stupid.
Both China and India have have access to the technology to reduce CO2, but instead, as allowed under the Paris Accords, they choose to keep increasing their output. If environmentalists really want to do something productive on global warming they should encourage consumers to just boycott Chinese goods and services.
Little of that is accurate
Evidence? As for the billions the U.S. pledged, here is the information.
https://fas.org/sgp/crs/row…
“Article 9 of the PA reiterates the obligation in the Convention for developed country Parties, including the United States, to seek to
mobilize financial support to assist developing country Parties with climate change mitigation and adaptation efforts (Article 9.1).”
“The GCF became operational in the summer of 2014. Parties have pledged approximately $10.3 billion for the initial capitalization of the fund. The Barack Obama Administration pledged $3 billion over four years in
November 2014. The U.S. Department of State made two contributions
of $500 million to the GCF on March 8, 2016, and on January 17, 2017. The funds were obligated with FY2016 budget authority from the agency’s Economic Support Fund — an account under the function 150 and Other International Programs budget.”
Yep. just before he left office President Obama gave away $500 million of taxpayer money to the GCF…
The ranks of environmentalists consist almost entirely of power-seeking leftists. They don’t really care about the environment except insofar as it provides another cudgel with which to belabor the U.S. What China and India do, therefore, is of no real interest to them and, other than a bit of pro forma “viewing with alarm” when called out on it, the environmentalist left will say little and do even less about any other nation’s environmental sins no matter how egregious.
Given that actual hard evidence that rising CO2 levels have had any significant pernicious effects on the environment is marginal at best – while the positive effects, mainly increased plant growth, are significant – I’m not personally much concerned about how much carbon India and China put into the air. The fact that the environmental movement seems only barely more concerned is simply one more index of is fundamental mendacity.
SpaceX will get investment regardless. But they do own a bunch of Tesla debt that they probably want repaid.
I have no interest in self-driving cars. When I spend my hard-earned money on an automobile, I want to drive. What fun is owning a car if you aren’t going to drive ? And I wouldn’t count on Tesla offering an “affordable” automobile any time soon. I’m not really sure they get that concept.
PC’s were not very affordable when they first came out. As with all new technology it needs to mature for the costs to go down. But I agree, I enjoy the freedom of driving and oppose robotic automobiles.
I’m 67 and have some physical deficits. How old are you? What sort of shape are you in?
As for your preferences, if all the drivers who thought they were the second coming of Mario Andretti were laid end to end – you’d be in Forest Lawn. Driving cars is not a core competency of the average schmuck on the street.
I’m 60, and overweight. I don’t think I’m the second coming of Mario Andretti. In fact, I’m a fairly conservative driver who doesn’t need a ludicrous mode or a Mad Max mode. And I don’t need a video game console in the front seat either. I drive a fairly average sedan (Altima) that gets about 30 mpg in my normal driving. I’ve driven the Autobahn, which requires much more attention, but I prefer US Interstates where I can use my cruise control. As I said, I like to drive. If I wanted to be a passive passenger, I’d ride the bus or the train.
I don’t know where you live, but Drivers Education is a HS graduation requirement here in Illinois. Get the basic facts in school, and then at least 100 hours BTW before you can go get your license. Driving should be a learned skill for each and every adult.
There are plenty of a-holes on the road who aren’t considerate of their fellow drivers, but I ignore those Tesla and Lexus drivers. No need for the road rage.
Illinois, huh. Chi-town or somewhere downstate? Me, I’m an Angeleno. Trust me, Dude, driving is rarely anything approaching a pleasure on the clogged and ragged roads we’re forced to make do with in urban centers here. CA road surfaces average being in dreadful shape and we don’t even have frost heaves and salt to blame except in a tiny few mountain areas.
Settled because he couldn’t afford discovery and gets off easy
More like SEC’s case was ill conceived, which is what a former SEC senior counsel said yesterday.
https://www.businessinsider…
This lets Musk keep the important job, take a needed leave from the board, and he gets a puny (for him) fine. Meanwhile, SEC and the drones get a wall trophy & CV enhancement.
Musk isn’t really an Industrialist. My initial thought was that he would discover the synergy between zero emission extraction/power generation (see Texas) and a GiGa factory with advanced printing. This supplies the parts to his imaginations. This is the power of production and quickly making everything needed to build powerful ideas is the key.
I understand the Tesla diversion for industry credibility of delivering the fastest things on wheels. But Space X and its rolling forward to the BFR is a big task. There must be an expansion as Stratolaunch, Virgin, Boeing, Lockheed are moving forward. So is Russia. The high ground is quickly becoming the battlefield. http://www.thedrive.com/the…
Musk is a big idea guy and proving the prototype. I wish he would make the Hyperloop happen here and return to the fundamentals of advanced manufacturing and the need to zero emission some of the 40 trillion in US reserves to power a US reindustrialization. Cheap energy, advanced manufacturing, new jobs, robotics building out hyperloops would be far more revolutionary than Tesla. He could buy up 747s and ready them for space planes or even military missions. The future is coming.
One guy can do so so much. Tesla’s just an electric car. Hyperloops will increase real estate value wherever they go. A zero emission industrial zone with recycled by-products and below 2 cents per kw energy re-frames the American economy. Tesla will advance incrementally, slowed by the very means of production I’m talking about. Aerodyne is pushing the limits of 3-D manufacturing. Space X is a relatively simple technology innovative yet conventional. The engine Lockheed is building for the SR-72 couldn’t have been made a few years ago.
Musk seems to falling through the cracks. I wish he would work with zero emission energy producers to power a giga factory where he can organize the 3-D and 4-D printing that can build space parts, hyperloop parts and car parts. Then drone parts and what ever else he imagines. Its that modern day assembly line making its own supply chain that the 21 century economy needs. Its where the MIC is going as well.
Then his BFR can lift factories into space where air frames and other things can be forged in microgravity using unlimited power and grahene. For someone who was dedicated to making this all happen, I am confused by his apparently disordered strategy. The Master Industrialist brings many thing together to create large scale projects. Musk has to up his effort and focus on what is important in the time he has to do it.
Musk isn’t really an Industrialist.
And I am Marie of Romania.
Laugh all you want but we don’t have Industrialists with the vision of Musk, do we Marie? And the old school ones would be put in jail were they to do what they did now.
I would respond further, but, aside from a few short sentences like the idiocy I quoted, your writing is so word-salad-y as to defy deciphering. That includes your above response, by the way, the first sentence of which seems to simply double down on your previous risible “point.”
Well, let’s agree he isn’t the average businessman. The average suit would not have invested in rocket or car companies, with huge up front costs.
They run for President and act like fools
Even you understood what an industrial enterprise is you can only come to the single conclusion musk is an industrialist.
“Noun. 1. industrial enterprise – the development of industry on an extensive scale. industrialisation, industrialization. manufacture, industry – the organized action of making of goods and services for sale; “
Musk is also a futurist, at his time (the first) Henry Ford (for all his faults) was considered both an industrialist and a futurist as well
Elon could have bought quite a bit of discovery for that $20 million fine. I almost wish he had decided to do so as looking into the origins of this case would no doubt have proven fascinating. As things stand, he’s still the largest Tesla shareholder, still on the board, not precluded from roles in other public companies and gets to dial back his Tesla involvement in favor of more hours per week spent on SpaceX. Compared to the SEC’s opening gambit, this is a wrist-slap.
Elon could have settled cheaper initially, but he turned down the first offer from the SEC. The settlement came pretty quickly after Musk hired a new high-powered lawyer. It appears that someone told him to settle before things got even more expensive.
We don’t know if it was cheaper. If you have a reference with information, please link to it. Also I could see him not settling if the SEC was also demanding him to quit as CEO.
the first offer would have probably ended up killing the company, and putting SpaceX at risk, as it was a fault settlement which would have left him open to more litigation, this is a no fault, which may have a higher fine but doesn’t leave him or Tesla open to further litigation.
I love how settlement implies one side is in a weak position…although the SEC must have *offered* the settlement deal. Stick with pancakes and not hot takes.
Settled because it was in Elon’s best interest to settle. If they would have gone to court, the stakes would have been much higher with the possibility that Elon would be banned from heading up any publicly traded company and the fines sought would have been much larger. The biggest issue would have been having to fight a case in public view for a much longer period of time. Regardless of which side prevailed, Tesla would have lost. They are still not out of the woods and have many other lawsuits to fend off along with the likely need to raise money to cover debts in the near term.
Elon needs to keep from putting his feet in his mouth going forward. If he drags Tesla down, the loans Tesla has from SpaceX won’t get repaid and that could put SpaceX in a bind.
I’m starting to get a bad feeling in my guts over this business, like it’s a diversion from the real issue, namely, the economy of true re-usability. Blind Freddy could have foreseen the SEC reaction to this Tesla Musk Twitter business. Let’s get back on point. What’s happening with the re-gas’n’go for Block Five and how’s the cleaner burning Methane engine development coming along? Not happy, Jan.
A guy/gal I know who is a rocket scientist for a major US gov agency has done an analysis of SpaceX and he is asking the same questions
1. The hot fire test at McGregor and the Cape have never been “cancelled” (at least one of them) which says something after all this time
2. They have not gotten over 2 launches…and that is not reusability but refurbish
3. They have not shortened the cycle all that much for the refurb
You wonder if they are having fatigue problems on the body…
Wrong. Look at the stages coming back now from GTO mission on block 5. They are pristine. They basically can turn them in a few weeks even very early into block 5 program. They haven’t gone beyond two launches because that was specked out for block 5 and we are very early into block 5 flying.
LOL. How they look to the eye from pictues is absurd and says nothing about their fatigue life or systems life…and they are not pristine either, there has been next to little negation of the smoke
And none of them have been turned around in two weeks….dont go fan boyish on us.
Ha! The loads involved in recovery are well known, the flipping thing is covered in accelerometers. Building aluminum structures that will take these loads ~10x times is well known, just ask any Navy pilot who files an F-18 on the 10,000th carrier landing. Turning the stage around in 2-4 weeks doesn’t mean it is flown again right away, very light labour to turn them around these days and currently being optimized. 2016 called and wants its FUD back.
I doubt G forces are the issue, I would suspect heat from reentry is the cause of fatigue… nice try
They’ve modeled the re-entry heating for years, they know what the temperature is on the hot spots, even implemented a water cooling system to handle these hot spots on block 5. The primary structure is not exposed to this heating. We have detailed information on the composition of the heat shield wrapping octaweb. Get a grip, you’re pushing on a string.
they are currently spending 4 weeks at McGregor that is with the first few Block 5s
that is an interesting number, and tells me that they will never get to “gas and go”
I’ll be curious where they go with this…BUT
they have not gotten past two reflights and what I find interesting is on the block IV at two flights…there was apparantly NOTHING Of the booster worth saving that cost less than the recovery…now some of them they expended in well performance issues.
BUT you would think that for the cost of the barge etc…there would have been “something” on the rocket worth more than the cost of the recovery…
clearly NOT so that means that the engines alone were not worth the cost of recovery, the avionics along were not worth the cost of recovery and neither was the “body”…nor any of it together.
Block V does not seem to be faring all that much better…in terms of reuse cycle. and their time for “reuse” refurb whatever seems to be in months not in weeks.
No it is just a careful start they want to characterize how it fatigues better before they gas and go
one has to hope…but it makes no sense to me that after recovering and flying earlier version boosters and saying ‘this was the last iteration” or something like that…it is now taking months to get one ready for flight…and people are hoping to get thisone to gas and go
there is no history in technology of this happening
why in your view did he just dump Block IV boosters…do you agree that there was nothing of value there above recovery cost?
They dumped the block 4s because they cost more to reuse then block 5s do, as I understand it, with block 5s even now its mostly just inspection, with block 4 there was minor rebuild involved
yeah that is what they say…but it is what got me thinking
the “marginal cost” to recover the boosters had to be “small”
so what that means is that 9 falcon engines were not worth that. really? thats 9 million or so…ok say half of that 4 million
the avionics have to be 1 million, more like 2 million…so those were useless?
the avionics come off the vehicle…so do the engines
something isnot adding up here.
more likely the entire package was toast…ie at the end of life…and if that is the case…there are big issues here
It isn’t so much that, it costs more in work and storage to keep those outdated block 4s around, than it does to replace them with block 5s which require less work to turn around and can do it much faster. Fastest block 4 turn around was 5 or 6 weeks, and that was the last block 4, the starting turnaround (after the first one which they did a tear down for extra inspection) is 4 weeks, it isn’t so much that they couldn’t fly the block 4s, 3 or possibly 4 times, it just didn’t make sense to. Lets say refurb a late block 4 is 10% a new booster, inspection on an early block 5 could be 1% a new booster.
Edit and remember, any booster laying around for a long time is just costing money, also this way they could test more efficient landings
you are missing my point. its clear the block IV’s cannot be economically processed beyond two. the point is the PARTS on the vehicle. the avionics package for instance…if the cost of recovery is in the margin…than why not recover the booster for the parts?
Answer is either the parts are not worth it or that process is to expensive…all bad answers.
none of this is making any sense right now…unless one concedes the vehicle is not reusable, in say my triple seven but it is merely refurbishable…and now we have an entire new kettle of worms.
if all the Block IV took to refurbish was 10 percent they would have had parts worth saving.
something is not adding up
Simple those parts while valuable, aren’t as valuable as perfecting a more aggressive landing profile and other than the grid fins it might have costed more to recover them from a booster than it would be to replace them
if it takes weeks and disassembly to get to the avionics then its a bad design
how about the engines
something is wrong with their numbers…we will see but Ed Boland comes to mind about this block getting to “gas and go”
Not a bad design just wasn’t designed to be taken appart and again they aren’t valuable enough.
As for the engines, they are a different version than what is used on the Block 5, as a result they would just be collecting dust as SpaceX has no intention on selling engines.
Disassembling a rocket just to reuse the avionics doesn’t make sense, you are spending weeks and lots of labor getting something that you can get in a few days new, as a result the only thing that would have been worth salvaging are the titanium grid fins, however valued against the possibility of being able to push the envelope for reuse with Block 5, by experimenting with block 4s that aren’t going to be reflown anyways, which they did, even the grid fins weren’t THAT valuable. It adds up fine as the extra preformance afforded by perfecting the 1:3:1 landing profile, allows them to put even heavier payloads on F9 and allows more missions to be RTLS that would be ASDS which is more advantageous to them.
Edit in addition Block 3 &4 were really intended to inform what has become block 5, they were more reusable than Shuttle, but they were missing a few features that would have made them perfectly reusable, tps upgrades and an actively cooled titanium octoweb for instance.
The avionics stack changed between 4 and 5. There was a major upgrade. You aren’t up to date so make crazy claims.
when we get to the third reuse then we can talk…otherwise I feel pretty comfortable in what I am told by people who well “now” are on the SpaceX floor at least for a bit 🙂
Block 5 has only flown a few times, and while functionally finalized, there are minor adjustments happening. Only one self retracting landing leg has flown as an experiment, and they may need to modify their ground tranporters for it to be really useful, and while NASA approves the current turbopump for the interim, durability improvements there are expected.
Remember Block 5 is based on lessons learned from Block 3&4 but they still have to test and polish it up
BTW in terms of regulation being a barrier to innovation, here is a problem that Elon Musk has in launching from VAFB.
https://www.teslarati.com/s…
“Harkening back to a truly hilarious moment in SpaceX history, where the company was forced to hire someone to kidnap a seal and make it listen to sonic booms before being allowed to launch from Vandenberg Air Force Base, SpaceX has been slowly preparing the pad’s companion landing zone for several years. With construction effectively completed in early 2018, it may well have been able to catch its first Falcon 9 booster this summer were it not for a somewhat humorous environmental regulation preventing return-to-launch-site (RTLS) recoveries between March and June, pupping season for native harbor seals.”
Yep, for a four month period each year SpaceX it is not allowed to return boosters to the launch site because the sonic boom may scare the poor seals…