12. A Wrench in Tesla – Business Insider – Business Insider

This year, Tesla's image took a hit. The company fell behind on production targets, reports came out that it may be skipping safety tests and making mistakes on the production line, creating more waste. It didn't help that Elon Musk smoked weed on a podcast, attacked a diver rescuing the Thai soccer team, and got sued by the SEC. At the same time, a guy near Boston taught himself how to bring damaged Teslas back to life, and in doing so, he revealed a lot of the cars' flaws. Now the question is: will Tesla support him or stop him?

Produced by Dan Bobkoff and Amy Pedulla, with Anna Mazarakis and Sarah Wyman.

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Note: This transcript may contain errors.

DAN BOBKOFF: Linette Lopez is a senior correspondent at Business Insider and she started hearing rumblings about Tesla years ago, but at first she kind of dismissed them.

LINETTE LOPEZ: A lot of my Wall Street sources started getting involved in Tesla around 2014 and that is when they started talking about how the stock was overvalued. That story was never particularly interesting to me, because it seemed clear that the stock was overvalued and that the company never made money. But it didn't seem that any of the shareholders actually cared about that and so that to me was not a particularly interesting story until I was contacted by somebody within the company.

DB: It was spring. Linette was at home when she saw an email.

LL: I was contacted by a guy who worked on the manufacturing line at the gigafactory, which is Tesla's Nevada plant. It makes all the drive units and batteries. His name is Martin Tripp.

DB: He sounded credible, so she called him up.

LL: He basically told me that Tesla wasn't exactly living up to its brand. It was not making sexy cars that saved the world because its manufacturing process was so flawed.

DB: Martin tells Linette that Tesla's factories may not be as good at making things as many thought.

Then, Linette publishes her findings from internal documents showing the factories are generating huge amounts of waste because of flaws in the manufacturing process.

LL: For every car that it made, it would throw away about a third of a car.

DB: Her source alleges that a misprogrammed robot once punctured holes in hundreds of battery packs and then the company repaired them and put them back into cars. Tesla denies this.

Sources said the company kept shutting down the production line to fix problems. That all that scrap from mistakes was costing the company $150 million and hadn't been recycled. Tesla said that cost was an exaggeration. Looking at all this, it started to make sense to Linette why Tesla might be spending so much cash.

LL: Martin Trip's claims made sense to me, and of course they were backed up by internal documents, but they made sense because Tesla's balance sheet had always been out of control. It had always been spending too much money. In fact, the company had only turned a profit in two quarters over the course of its history. So this was kind of the missing piece of the puzzle of why Tesla was just burning so much cash.

DB: Linette continued writing stories about Tesla's manufacturing process. On July 2nd, Business Insider published one, again citing internal documents.

She reported that Elon had ordered Tesla to stop doing a critical brake test on Model 3s as they left the factory. The stock fell.

Two days later, she got a response, but not the kind you'd expect.

LL: I had like six missed calls and my Twitter was going insane and it was because Elon Musk was addressing my reporting, rather aggressively, on Twitter.

DB: Elon Musk Tesla's CEO called her reporting false. He accused her of paying her sources, and being paid by people who wanted to profit from a falling share price.

Then it got nastier and some might say childish.

LL: The weird part was when Musk started tweeting out screenshots from my Facebook page and he was totally trolling.

DB: Elon put up some of her posts from years ago attempting to show she had a close relationship to big investors betting against Tesla's stock. Elon called them "love letters" to sources.

It's a weird time to be Linette. The Elon tweet-storm led to TV interviews like this one on CNBC:

CNBC: I would prefer to talk about the reporting, and it's up to shareholders to decide whether or not the CEO of a $50 million company should spend his time yelling at reporters on Twitter.

DB: It's also a really a weird time to be Elon Musk. It's a weird time to be Tesla. For years, Tesla was held up as the future of transportation: sleek, curvy, efficient electric cars that would leave old car companies like GM and Ford in the dust.

NEWS: Tesla. [applause] The name alone triggers devout worship among some.

DB: And at the same time, Elon Musk was built up as this genius inventor kind of like Alexander Graham Bell, Howard Hughes, and Steve Jobs rolled into one.

NEWS: The South African-born businessman, engineer, inventor, real life Iron Man, and probably savior of the human race...

DB: Musk was introducing cheaper Teslas for the masses at the same time he was launching rockets into space.

SPACEX ARCHIVAL: SpaceX and Tesla. You would be hard pressed to find two companies that are more popular today. And yet, in the not too distant past, both companies were basically unknown, and were in fact simultaneously on the verge of bankruptcy.

DB: Touting new solar panels for roofs.

ARCHIVAL: The interesting thing is the houses you see around you are all solar houses.

DB: And dreaming of new forms of transportation like the Hyperloop, which would move people on pods through a tube that works kind of like an air hockey table. Tesla and Elon could do no wrong they embodied the future. Until this year.

NEWS: Tesla is defending its safety standards after one model felt short of the highest rating in a major crash test study.

DB: The Tesla narrative changed. And some of Elon's other projects stalled.

NEWS: Tesla's been accepting $1000 deposits for the roof tiles since May 2017, by at that point, the company wasn't even close to mass producing them...

LL: So from the beginning of Tesla's history, Elon has overpromised on production targets and timing and under-delivered. So the question has always been for how long can he do that and at this point it's still unclear on Wall Street.

DB: And after the dustup with Linette, Elon seemed to become more erratic.

He tweeted out that he planned to take Tesla private off the stock market. Then he smoked weed on a podcast.

PODCAST ARCHIVAL: "I mean it's legal, right?" "Totally legal."

DB: Then the Securities and Exchange Commission sued him over the tweet and charged him with fraud. He was forced to step down as chairman of the board though he's still CEO. The damage had been done.

LL: He has said in interviews in the past that he thinks that the internet is a video game where things don't matter and you can just say whatever you want to people and because he has an army he has a, it's ridiculous that he says things like that.

DB: So what happens when someone plays Elon at his own game?

From Business Insider and Stitcher, this is Household Name. The show about brands you know, and stories you don't. I'm Dan Bobkoff.

Today: Tesla.

In a sense, Elon Musk trolled Linette for reporting on the conditions of Tesla's factories and cars.

At the same time, there's a guy in Massachusetts who's trolling Tesla.

Rich Benoit knows the cars better than almost anyone. He taught himself how to take a wrecked Tesla and bring it back to pristine condition.

And along the way, he's discovered a lot of Tesla's issues.

Now the question is: will Elon do to him what he did to Linette?

Stay with us.

ACT I

DB: To help me tell these two stories we have with us Household Name producer Amy Pedulla.

AMY PEDULLA: Hey!

DB: OK, so, this has been quite a year for Elon Musk and Tesla.

AP: Yeah, what happened to Linette from her reporting is like this microcosm of what's going on more generally at the company. First of all, Tesla has a cult following that you know about, I know about, everyone knows about. Its drivers and fans are rabid, and part of that is the mystique of Elon Musk. Like, who knows the name of the CEO of Subaru? Do you?

DB: I do not.

AP: Exactly. Everyone knows Elon Musk. And people have very strong opinions. Here's Linette Lopez again:

LL: You know as a Tesla reporter, you're constantly being pulled in different directions. I think that a lot of people who are very supportive of the company think that I hate it or that I hate Elon Musk or that I want Tesla to fail and that's really not true.

AP: And Linette thinks Tesla has an amazing mission.

DB: What's the mission?

AP: So its goal is to "accelerate the world's transition to sustainable energy." Sounds like a good thing for all of us. It does that through its electric cars and solar panels for homes.

LL: What I am paid to do is try to figure out whether the company is living up to that mission of making these sexy cars that save the world, and the cult of Musk crowd is always very skeptical of anyone who actually applies skepticism to the company and thinks that they must have some hidden, anti-Tesla agenda. In fact, I followed this guy on Twitter the other day and he's like a big, you know Musk supporter, I guess.

AP: So the guy immediately sends Linette a message on Twitter.

LL: And this person was like, 'wow I can't believe you followed, me you're on the other side.' They act like this is some kind of war like we're playing online Cowboys and Indians or something and that's just simply not the case. They tend to think that journalists hold these petty grudges or have some kind of dog in this fight, I don't have a dog in this fight, I haven't driven a car since the Bush administration

DB: So other cars have fans, you know there are websites for fandom of various brands, but Tesla seems like something else.

AP: Yeah, it's totally totally different. So people don't like it when people point out the company's problems. I'm just gonna take a step back for a sec:

Here are some of the things that have happened to Tesla recently.

Tesla struggled to get its new Model 3 to its customers. The Model 3 is supposed to be this cheaper Tesla more of a car for the masses than a plaything for the rich. But for a lot of the year, it couldn't make enough of them.

And the ones it did make had some problems. So for instance, one customer who got an early model said his bumper fell off in the rain 30 minutes after bringing it home for the first time.

DB: So are they still having these problems?

AP: So they're making a lot more Model 3's lately, and the bumpers seem to be staying on these cars, but recently the issue hasn't been the cars, it's Elon.

I reached out to Tesla directly for this story, and while I requested an interview with Musk, it was declined. The company also did not follow up to multiple follow ups for questioning.

DB: So, here are some things I know about Elon Musk, just from the ether. I know Elon wants to build a giant tube that will apparently whisk people from Los Angeles to San Francisco really quickly.

AP: Mhm, exactly.

DB: He says he wants to colonize Mars.

AP: Somebody has to do it.

DB: And he thinks that in the meantime, artificial intelligence is going to destroy us. And somehow he's running this car company, and he also has time to run a rocket company, SpaceX and then there's also Tesla, which has all those production problems you talked about and Elon apparently is sleeping in the factory on this bad couch because they are so behind on production.

AP: Yeah, he's a pretty busy guy. But there's another side of Elon that we've been starting to see this year which is just very very different. Like the time Elon's then girlfriend, the Canadian singer Grimes, invited rapper Azealia Banks over to Musk's house to collaborate on a new album.

DB: Just like the Ford CEO! (laughs)

AP: Yeah, exactly. While there, Banks posted Instagram stories, claiming that she had been waiting alone for Grimes for days in the Musk's house, alleging he was making freaked out phone calls to financiers, and that his money came from colonialism.

DB: What a mess, do we even know if any of this is true?

AP: No, we can't confirm a lot of this but look: even before all that went down, a month before,he inserted himself into that rescue of the Thai soccer team in a cave.

NEWS: A British diver who played a key role in the rescue effort of that Thai soccer team trapped in a dark cave for weeks is back in the headlines. He's considering legal action against Elon Musk over comments the billionaire made on Twitter.

DB: Right didn't he say he could solve it with a robot or something?

AP: Yeah, a small submarine. But then a diver saved the kids, and criticized Elon and Elon called the guy a "pedo" on Twitter.

DB: It seems like Elon has a nasty side.

AP: And the diver even sued Elon... and is asking for damages.But Tesla is worried about the reports. It recently asked employees to "renew their vows" to the company, in an effort to plug the leaks.

DB: And what happened to that guy who tipped off Linette about all the problems in the factory?

AP: Oh yeah listen, it did not end well for that guy.

LL: Tesla figured out who Martin Tripp was, and that he was leaking, and then he was fired and now he is being sued by Tesla. And the company accused him of writing code and hacking his way into Tesla's back end and sabotaging the company's manufacturing process. Tripp on the other hand said that he can't even code and that he was making 28 bucks an hour in the middle of the desert, so.

AP: I can see why Elon feared Tripp and feared Linette too.

LL: Once you start breaking stories on a company other sources approach you, and I started using their resources as well and once Martin was fired I wrote another story and that's when things really started getting interesting.

I wrote a story based on more internal documents that appeared to show that Elon Musk himself had ordered that Tesla stop doing a test that checked the breaks and alignment on Model 3s as they were leaving the factory. The test is called the brake and roll test.

And this was the week that Tesla had something to prove because it had promised Wall Street that it would make 5,000 model 3s within a week.

So my story was essential said, 'ok, these guys are willing to cut this, what everyone seems to be telling me in autoland is a really crucial part of the process' and that was shocking to anyone that worked in automative. And the day my story went out, the stock fell 7%.

DB: And then Elon had his meltdown and started posting Linette's Facebook pictures?

AP: Look, I would not find that fun, but at the end of the day it was good publicity for her reporting.

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