The Business Insider and The Truth About Cars.com both had interesting articles about electric car entrepreneur and Tesla CEO Elon Musk that got me to wondering whether the ostensible billionaire entrepreneur is really insolvent? We’ve been covering the story for months but we completely missed this important detail: That the supposed billionaire really doesn’t have any money. Here’s an excerpt from Bertel Schmitt’s article on The Truth About Cars:
“About four months ago, I ran out of cash,” Musk wrote in a court filing with the Superior Court of Los Angeles on Feb. 23. “I had to obtain emergency loans from personal friends. These loans are the exclusive source of cash I have. If I did not take these loans, I would have no liquid assets left.” Tough when you make only 8 grand a month and have two high maintenance women.
The documents, released by Venturebeatare part of Musk’s divorce trial. He’s in a messy divorce from budding sci-fi novelist Justine Musk. Justine is not very successful. In all of 2008, she received a total of $7,225 in royalties, and $24 in interest. Tough for Elon: He has to pick up the tab for her lawyer too.
Elon makes a little more. But not much. His monthly income is listed as $8,255. Tesla pays him a salary of $2,773, his SpaceX company remunerates him with $1,690 a month. There is a little income from investments. He definitely won’t be able to buy one of his roadsters with that kind of money.
For someone who makes that little, he lives high on the hog. No bank will give him a mortgage with that kind of income, so he rents. For $50,000 a month. That gets him a Santa Barbara beachside hacienda, barely big enough to house his five sons and a “friend” called Talulah. Talulah Riley is 24, Musk is 38. No complaints from me, my wife is 20 years younger than I.
Five kids and a 24 year old can be a bit of a drain on your finances. Two nannies, $10,000 a month. Monthly laundry bill $2000. Health care costs not paid by insurance: $11,000. It adds up quickly. To $98,023 a month.
Then there is Justine and the lawyers . Another $100,000 a month. With so little income, it has to come out of savings. On February 24, 2010, Musk wrote to the court: “I currently have liquid assets of just under $650,000. This money is needed to support Justine and the children and to pay my own living expenses, which, together, are in the range of $200,000 a month.” That was three months ago. At $200,000 a month, the $650,000 must be gone.
Hme. What’s wrong with this picture? This is not the picture that Justine painted on her blog. At all. Business Insider did a report a couple of days ago wherein it was revealed that Elon claims to have “run out of money” and lives on money he “borrows from friends” and also from the United States Government while he angles to save Toyota’s NUMMI plant in Tokyo. Business Insider writes:
“About four months ago, I ran out of cash,” he wrote in a court filing dated Feb. 23, reviewed by VentureBeat. That’s a problem not just for him but for Tesla, where he is the lead investor and chief product architect, as well as CEO. Musk’s willingness to funnel his own cash into Tesla has for years sustained the faith of fellow investors and reassured would-be car buyers in 2008 when the company’s finances were in perilous shape.
According to the filing — part of his pending divorce case from sci-fi novelist Justine Musk — Elon Musk has been living off personal loans from friends since October 2009 and spending $200,000 a month while making far less. Musk confirmed this in an interview with VentureBeat.
Tesla, likewise, is dealing with its cash flow problems by borrowing money from a friendly source — the United States government, which has eagerly backed cleantech startups through a Department of Energy loan program. Tesla burned through $37 million in cash in the last three months of 2009, according to amended S-1 documents, filed with the Securities & Exchange Commission in preparation for its IPO. Tesla slowed this burn rate in the first quarter of 2010 to $8.4 million, but only by drawing down part of a $465 million loan from the DOE, while reporting a net loss of $29.5 million. Tesla’s sales were flat year-over-year in the first quarter, but declined precipitously in the U.S
Hme….inneresting….I wonder what that means for his wife Justine? How are her lawyers handling this claim of Elon’s? I mean, she is asking for $6,000,000 in cash which we Jeannie Goldstein (one of the writers for Divorce Saloon) wrote was paltry and reduced Justine to “cheap date” status. But could we have been misinformed? Is Justine likewise misinformed as to the true net-worth of her husband? Or is Elon and his team pulling a fast one? It is entirely plausible that he is cash poor. But the pending IPO for Tesla could make him stock rich. Maybe Justine will have to re-consider her settlement offer, to accept more stock in lieu of cash. It’s one thing to ask for $6,000,000 from a billionaire and quite another to ask it from a guy who borrows money from friends and lives on government loans. In a weird way, this guy sounds a step away from needing public assistance! Justine may seriously need to reconsider her offer, and accept a settlement that looks a lot different from the one she currently has on the table.