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Only somebody like Elon Musk could have built Tesla. Now he could destroy it.
Tesla suffered yet another media black eye this week, when Reuters reported that the automaker had built deliberately false range estimates into its electric vehicles. According to the article, under the personal direction of CEO Elon Musk, the range estimation was rigged to exaggerate how far it could go, only triggering more realistic numbers when it got below 50 percent so the car could make it to a charging station. Then when that triggered mass repair requests from customers who thought their cars were broken, the company allegedly set up a “Diversion Team” to automatically close them out as quickly as possible.
This kind of thing is just par for the course for Tesla. Hyperbole, exaggeration, spin, and occasional outright dishonesty were how Musk built the company into a major force in the auto industry. But now his brand of careening irresponsibility is a threat to the company’s future.
Some good background on Tesla’s condition can be found in Ludicrous, an excellent book by automotive journalist Edward Neidermeyer, published back in 2019. He argues convincingly that Tesla’s initial success was precisely because Elon Musk is hilariously unsuited to the auto manufacturing industry. Building cars is an exceptionally challenging business, because of the huge capital requirements, strict safety regulations, and resulting low unit margins.
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Automakers also have to predict both what customers might like to buy several years in advance and predict how many sales they might make of each model, meaning heavy capital risk. And as the industry has evolved — particularly under competition from Japanese manufacturers — customers have come to expect extremely high quality and reliability even from cheaper mass-market vehicles, making success even more difficult.
In short, efficiency, standardization, and consistency are the name of the auto game. As Neidermeyer writes: “Successful automakers are giant, process-driven bureaucracies that rely on rigidly systematized cultures to manage a continent-spanning ballet of manufacturing operations, supply chains, service infrastructure, and regulatory compliance.”
Needless to say, Tesla was not anything like this. It came out of the freewheeling culture of Silicon Valley, with its motto of “move fast and break things,” its dogmatic ideology that every other institution in society but the tech industry is riddled with inefficiency and incompetence, and its belief that any problem can be solved by genius innovators hacking together solutions on the fly.
Musk viewed the stodgy, hyper-bureaucratic auto industry procedures with contempt, and assumed he could do better and cheaper with some good old Silicon Valley magic. He made wild-eyed promises, instructed his team to build factories that would move far faster than the deliberate pace at a traditional factory, and set impossible targets. As a result, Tesla consistently failed to meet its production goals, consistently struggled with factory operations, and suffered consistent quality problems. While Teslas are sleek and fancy-looking, customers have regularly complained of poor body panel alignment, leaks, rattles or other noises, bad service experiences, poor reliability, and other problems.
But Musk is — or was, at least — an hype man. He made grandiose promises about upcoming products and features — often shading into flagrant dishonesty, as shown in the range story above or the time when he oversaw a staged video of Tesla’s Autopilot feature. At the same time, he viciously attacked critics, often singling out journalists by name or even threatening to sue them, stifling much criticism. All this inspired a fervent cult of personality, heroic effort from key workers (though also high employee turnover), and a large cult-like community of investors who boost Tesla’s stock.
Musk also got lucky. He had the advantage that electric drive trains are dramatically simpler than internal-combustion ones, with far fewer parts and far less maintenance required, and also produce maximum torque at idle for breathtaking acceleration. He also got a large, low-interest loan from the federal government under the Obama administration, plus numerous other state and federal subsidies for producing zero-emission cars.
All this allowed Musk to keep raising money and selling stock to fund a consistently unprofitable business for years. His Silicon Valley-brained approach was terrible for actual factory production, but it helped him create a legend. And this really does seem to be the only way you could have built a mass market electric car startup. Realistic promises, careful engineering, and truthful marketing would have run headlong into the nearly impossible economics of the business. Nissan found this out when its Leaf project, in which it invested heavily, failed to live up to expectations, because it was a boringly useful appliance without any utopian dreams attached.
The problem for Tesla was that propaganda is not a sustainable business model. To keep the hype train going, Musk had to keep making more and more fantastical promises, and eventually his credibility started to erode. Meanwhile, the rest of the auto industry got into the EV game, including established fancy brands who took direct aim at Tesla’s aging luxury sedan and SUV models.
Neidermeyer thus predicted that Tesla would eventually stumble into bankruptcy, like every other major car startup since the 1920s. And this wasn’t an implausible idea at the time. Up through mid-2019, the company had posted a quarterly profit on just three occasions in its entire existence.
But a funny thing has happened since then. Starting in 2020, and accelerating through 2022, Tesla has posted consistent large profits, reaching a peak of $3.7 billion in the last quarter of 2022. There are two obvious explanations. The first is the subsidies in the Inflation Reduction Act. Tesla had previously run through its allotment of federal tax credits for its cars, but the law restored them for many of its models, boosting demand. The IRA also has a large subsidy for battery production, which granted the company between $150-250 million in the second quarter of this year.
The second explanation is that Musk is now spending most of his time running Twitter into the ground instead of fiddling with Tesla’s factories and models. As The Wall Street Journalreported back in May, Tesla’s Chief Financial Officer Zach Kirkhorn is now de facto running the company in Musk’s stead. By all accounts, Kirkhorn is exactly the kind of cool-headed, logical, spotlight-averse type of executive the company badly needs. Under his guidance over the last couple years Tesla seems to have focused on the boring nitty-gritty details of factory production, ironed out most of its production kinks, and is now delivering consistent numbers of vehicles. The company’s brand, meanwhile, remains strong enough that a critical mass of customers automatically turn to Tesla when considering an EV, despite it not releasing a new consumer model for the last three years.
Perhaps Musk’s Twitter purchase will be Tesla’s salvation. He’s already lost tens of billions of dollars on the deal, and his increasingly erratic antics on the platform have torched most of what remained of his reputation as a genius innovator. Most recently, he tweeted that he had reinstated the account of a QAnon conspiracy theorist who was banned for, in Musk’s words, “posting child exploitation pictures.” That’s an excuse for the Tesla board to give him the boot if ever there was one.
As a business, Tesla needed Musk’s megalomania and cult of personality to get off the ground. But now he is an existential threat. He remains CEO, and he’s gotten markedly more unhinged since spending hours and hours per day bantering online with antisemitic trolls. He could take back control at any time, demanding disruptive new changes to its factories or promising a new car that will, I dunno, fly into space. (The upcoming new Roadster — which Musk promised in 2017 to be delivered in 2020 and hasn’t been seen since — is supposed to have a package including “cold gas thrusters” from SpaceX.)
If Tesla wants to survive over the long term, it’s time for the adults to take charge.
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The Department of Energy has put together a list of sites and is requesting proposals from developers, Heatmap has learned.
The Department of Energy is moving ahead with plans to allow companies to build AI data centers and new power plants on federal land — and it has put together a list of more than a dozen sites nationwide that could receive the industrial-scale facilities, according to an internal memo obtained by Heatmap News.
The memo lists sites in Texas, Illinois, New Jersey, Colorado, and other locations. The government could even allow new power plants — including nuclear reactors and carbon-capture operations — to be built on the same sites to generate enough electricity to power the data centers, the memo says.
Trump officials hope to start construction on the new data centers by the end of this year and switch them on by the end of 2027, according to the memo.
The agency will request formal feedback from artificial intelligence companies and developers about how best to proceed with its proposal as soon as Thursday, according to an individual who wasn’t authorized to speak about the matter publicly.
The effort, aimed at maintaining America’s “global AI dominance,” represents one of the few points of agreement between the Trump and Biden administrations. In the final days of his term, President Biden ordered the government to identify federal properties where new data centers could be built.
Scarcely a week later, President Trump issued an executive order lifting all Biden-era limits on AI development — but keeping the mandate to move quickly to maintain America’s alleged edge in the new technology. “It is the policy of the United States to sustain and enhance America’s global AI dominance,” the Trump order said.
The new memo proposes a list of 16 federal sites that could host AI data centers, new power plants, and other “AI infrastructure.” They include several sites where nuclear weapon components are made, including the Pantex site near Amarillo, Texas, and the Kansas City National Security Campus, which is operated by Honeywell International. The other candidate sites are:
Other sites could still be considered, the memo says, and the current list has no particular ranking or order.
The offer may not be enough to convince developers to work with the federal government, one energy expert told me.
“I think it’s important that the government is thinking about how to help the industry, but you also have to think about it from the perspective of the industry a little bit. Why is doing this on a DOE site better than doing this as a project in Texas?” said Peter Freed, a founding partner at the Near Horizon Group and the former director of energy strategy at Meta.
“Historically, the perspective is that anything involving government land just adds complexity,” Freed told me. “I love Idaho National Lab. It’s a national treasure. But if you want a data center there by the end of 2027 — where is the power going to come from?”
Only if the government were able to guarantee fast-track access to certain kinds of equipment — such as transformers or circuit breakers, which are in a severe shortage — would it make sense for most developers to work with them, he said.
The new memo raises the idea that “innovative energy technologies” including “nuclear reactors, enhanced geothermal systems, fuel cells, carbon capture, energy storage systems, and portfolios of on-site technologies” could be considered to power the new data centers.
The memo asks potential developers, “What information would you need to determine the suitability of various energy storage systems (e.g., subsurface thermal energy storage, flow battery, metal anode battery) as a means for supporting data center cooling or other operations?” It also asks what companies would need to know about a site’s suitability for carbon capture and storage operations. It asks, too, what information might be needed about a site’s topography, physical security, and earthquake risk to build a new nuclear power plant.
The memo doesn’t mention wind turbines or new solar farms, although they could fall under some of the terms it sets out. It also asks companies what information they might need about nearby nuclear power plants or the local power grid — and it inquires whether some data center operations could be turned on and off depending on local power availability.
Although the government could allow new data centers to be built, it won’t accept all liability for them. The memo adds that companies might need to “agree to bear all responsibility for costs and liabilities related to construction and operation of the Al data centers as well as other infrastructure upgrades necessary to support those data centers.”
The Trump administration seems intent on moving quickly on the proposal. Once it publishes the request, companies will have 30 days to respond.
Current conditions: A rare wildfire alert has been issued for London this week due to strong winds and unseasonably high temperatures • Schools are closed on the Greek islands of Mykonos and Paros after a storm caused intense flooding • Nearly 50 million people in the central U.S. are at risk of tornadoes, hail, and historic levels of rain today as a severe weather system barrels across the country.
President Trump today will outline sweeping new tariffs on foreign imports during a “Liberation Day” speech in the White House Rose Garden scheduled for 4 p.m. EST. Details on the levies remain scarce. Trump has floated the idea that they will be “reciprocal” against countries that impose fees on U.S. goods, though the predominant rumor is that he could impose an across-the-board 20% tariff. The tariffs will be in addition to those already announced on Chinese goods, steel and aluminum, energy imports from Canada, and a 25% fee on imported vehicles, the latter of which comes into effect Thursday. “The tariffs are expected to disrupt the global trade in clean technologies, from electric cars to the materials used to build wind turbines,” explained Josh Gabbatiss at Carbon Brief. “And as clean technology becomes more expensive to manufacture in the U.S., other nations – particularly China – are likely to step up to fill in any gaps.” The trade turbulence will also disrupt the U.S. natural gas market, with domestic supply expected to tighten, and utility prices to rise. This could “accelerate the uptake of coal instead of gas, and result in a swell in U.S. power emissions that could accelerate climate change,” Reutersreported.
Republican candidates won in two House races in Florida on Tuesday, one of which was looking surprisingly tight going into the special elections. The victories by Jimmy Patronis in Florida’s First District and Randy Fine in the Sixth District bolster the party’s slim House majority and could spell trouble for the Inflation Reduction Act as the House Ways and Means Committee mulls which programs to cut to pay for tax cuts. But the result in Wisconsin’s Supreme Court election was less rosy for Republicans. Liberal Judge Susan Crawford defeated conservative Brad Schimel despite Schimel’s huge financial backing from Tesla CEO and Trump adviser Elon Musk, who poured some $15 million into the competition. The outcome “could tarnish the billionaire’s political clout and trigger worry for some Republicans about how voters are processing the opening months of Trump’s new administration,” as The Wall Street Journalexplained.
The Trump administration announced mass layoffs across the Department of Health and Human Services on Wednesday, part of a larger effort to reduce the agency’s workforce by 25%. The cuts included key staffers with the Low Income Home Energy Assistance Program, which has existed since 1981 and helps some 6.7 million low-income households pay their energy bills. A 2022 white paper calls LIHEAP “one of the most critical components of the social safety net.” The move comes at a time when many U.S. utilities are preparing to raise their energy prices to account for higher costs for materials, labor, and grid upgrades. In a scathing letter to HHS Secretary Robert F. Kennedy. Jr., Senate Energy and Commerce Democrats call the workforce cuts “reckless” and demand detailed explanations for why roles have been eliminated.
Energy storage startup Energy Vault on Wednesday announced it had closed $28 million in project financing for a hybrid green hydrogen microgrid energy storage facility in California. The firm says its Calistoga Resiliency Center, deployed in partnership with utility company Pacific Gas & Electric, is “specifically designed to address power resiliency given the growing challenges of wildfire risk in California.” The zero-emission system will feature advanced hydrogen fuel cells that are integrated with lithium-ion batteries, which can provide about 48 hours of back-up power via a microgrid to the city of Calistoga during wildfire-related power shutoffs. The site is expected to be commercially operational in the second quarter of 2025.
“The CRC serves as a model for Energy Vault’s future utility-scale hybrid microgrid storage system deployments as the only existing zero-emission solution to address [power shutoff] events that is scalable and ready to be deployed across California and other regions prone to wildfires,” the company said in a press release. As Heatmap’s Katie Brigham wrote last fall, PG&E has become an important partner for climate and energy tech companies with the potential to reduce risk and improve service on the grid.
China will finalize its first-ever sale of a green sovereign bond Wednesday. The country is expected to issue the bond on the London Stock Exchange and has reportedly received more than $5 billion in bids. “It’s no coincidence that China has chosen to list its debut green bond in London, given European investors’ continued strong demand for environmental products,” Bloombergnoted. Green bonds are investment vehicles that raise money exclusively for projects that benefit the climate or environment. China’s finance ministry wants the bond to “attract international funds to support domestic green and low-carbon development,” and specifically climate change mitigation and adaptation, nature conservation and biodiversity, and pollution prevention and control. Some of the money raised might also go toward China’s EV charging infrastructure, according toReuters.
GE Vernova has now produced more than half of the turbines needed for the SunZia Wind project in New Mexico. When completed in 2026, the 2.4 gigawatt project will be the largest onshore wind farm in the Western Hemisphere.
Rob and Jesse catch up on the Greenhouse Gas Reduction Fund with former White House official Kristina Costa.
The Inflation Reduction Act dedicated $27 billion to build a new kind of climate institution in America — a network of national green banks that could lend money to companies, states, schools, churches, and housing developers to build more clean energy and deploy more next-generation energy technology around the country.
It was an innovative and untested program. And the Trump administration is desperately trying to block it. Since February, Trump’s criminal justice appointees — led by Ed Martin, the interim U.S. attorney for the District of Columbia — have tried to use criminal law to undo the program. After failing to get the FBI and Justice Department to block the flow of funds, Trump officials have successfully gotten the program’s bank partner to freeze relevant money. The new green banks have sued to gain access to the money.
On this week’s episode of Shift Key, Rob and Jesse talk with Kristina Costa, who has been tracking the effort to bankrupt the green banks. Costa helped lead the Inflation Reduction Act’s implementation in the White House from 2022 to 2025 — and is a previous Shift Key guest. She joins us to discuss how Trump is weaponing criminal law to block a climate program, whether there’s any precedent for his actions, and what could come next in the legal battle. Shift Key is hosted by Robinson Meyer, the founding executive editor of Heatmap, and Jesse Jenkins, a professor of energy systems engineering at Princeton University.
Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, or wherever you get your podcasts.
You can also add the show’s RSS feed to your podcast app to follow us directly.
Here is an excerpt from our conversation:
Robinson Meyer: There's kind of two lines you hear from the Trump administration about this, two claims made by the Trump administration about the reason for these seizures, and I just wanna talk about them briefly because this is an unprecedented action. We should look at why the government has claimed that it needs to take this unprecedented action.
The first has to do with this video made by Project Veritas, a kind of conservative media organization …
Kristina Costa: A hit squad.
Meyer: A hit squad that recorded, unwittingly, an EPA official who described the EPA’s actions during December 2024, between the loss of the election and the inauguration, as “throwing gold bars off the Titanic.” That the agency was so eager and desperate to spend as much of the IRA down as it could before the Trump administration took office that it was like they were throwing gold bars off the Titanic — you know, a sinking ship.
The EPA administrator has fixated on this line and described it as waste and self-dealing, suggesting reckless financial mismanagement, blatant conflicts of interest, astonishing sums of tax dollars awarded to unqualified recipients and severe deficiencies of regulatory oversight.
You were involved in setting up the IRA. I wonder, first of all, just how do you reflect on this episode? And second of all, was the Biden administration doing the proverbial version of throwing gold bars off the Titanic during the post-election period?
Costa: Yeah, so I mean, it falls apart as any sort of quote-unquote evidence in what's happening with the Greenhouse Gas Reduction Fund if you just believe in the linear nature of time. So, as I said, we announced EPA made the selections in April of 2024. The funds were fully obligated in August of 2024. Grantees were starting to make announcements about investments in October of 2024 — all dates which precede election day by weeks to months. And so it is just a complete fabrication on the part of Lee Zeldin that there was any sort of inappropriate action on the part of the Biden EPA or any of the other agencies in doing what Congress directed us to do, which was to award and obligate funds to recipients consistent with the provisions of the Inflation Reduction Act that authorized and appropriated funds for the programs.
We had also — and I think I might have said this when I was with you guys in December — one of the first things that we did, from the White House implementation team, was to meet with all of our grant agencies and, in September and October of 2022, set targets for them for how much funding we wanted them to try to award and obligate by the end of the administration. And we set a goal, basically, that we would be aiming to have at least 80% of the available funds obligated by the end of 2024. And we hit that. And so the idea that there was some massive acceleration post-election — like, were there some contracts that the agencies obligated in December and January that, in the event of a Kamala Harris administration, they would've maybe obligated in February and March instead? Sure. I'm not going to say otherwise, but those grants had been made already. There wasn't this rush of actual decision-making.
Music for Shift Key is by Adam Kromelow.