Elon Musk is now the richest man on the planet. As I write this, his net worth is estimated to be around $280 billion. Time magazine made him the person of the year 2021. He has a huge fan base worldwide with 68 million followers on Twitter. Many praise him as the greatest genius of our time. He is the man that makes a lot of things happen where others have failed.
I have watched Elon Musk for many years now. He is undoubtedly very smart. Unfortunately, he does not use his talent to improve the world. Instead, I am convinced, far from being a genius, Musk really is the biggest con man of all time. I am not alone in that assessment of course. There is a whole community online that is dedicated to expose Musk’s frauds. But even though they are well documented, Musk is allowed to continue defrauding people out of their money. He is probably too big to fail at this point and therefore enjoys political protection.
Just before Christmas, Elon declared that he was done selling Tesla shares. Apparently he wanted to sell 10% of his holdings to pay some taxes. The stock price rallied several percent on the news. As a result, Musk sold more of his shares into the rally. That is blatant pump and dump stock manipulation. Every normal person would go to jail for this. Musk has done this several times in the past and never had to face any serious consequences.
Elon is selling himself as a guru who finds solutions for big problems. Unlike other gurus, instead of targeting people looking for spiritual experiences, he has discovered that tech enthusiasts can be just as dreamy and gullible.
The way the con works is like any other con. Con, of course, stands for confidence. Elon Musk is confidently selling people dreams, in a way that many really believe he can deliver them. He is taking old technology and make it look like it is something new coming out of his genius. Sometimes he even pretends to have technology that does not exists and cannot possibly exist. Rarely he adds anything really new.
Oh, you are worried about fossil fuels polluting the planet, don’t you worry, I will fix that for you. Not only will I fix that, but the new world will be more fun than the old one. Tired of driving on your own? No problem, I will have self driving cars in short order. You want to create your own cheap energy at home? No problem, I will sell you the best solar panels that are easy to install at a bargain price. You have always dreamed of going to outer space? No problem, I will colonise Mars, how cool is that. Oh, you want to have fast internet everywhere? No problem, my satellites will give you fast broadband everywhere at an affordable price. You want to travel comfortable between major cities at lightning speed? No problem, I have this cool new technology called Hyperloop.
The problem with all of these things is that Musk cannot realise any of them. Some are outright impossible. The hyperloop, for example, is simply a dumb idea. It is impossible to created a vacuum tube that is hundreds of kilometres long and big enough for a train to fit in. That would be super expensive and very unsafe. And I hope you are not expecting Mars to be colonised any time soon. You will end up very disappointed. Self driving is similar. Even though Musk has been charging his customers already for this technology, real self driving cars are most likely still decades away. And they won’t come from Elon. Other companies like google are far ahead of him.
Some technologies that he is marketing are at least partly possible but at a cost that makes them uneconomical. But that is why I call Musk a con man. He knows full well that these things cannot be run at a profit, but he does not care. He does not care, because his business model is not to make money from profitable businesses. No, Musk makes his money by convincing people that he is genius enough to eventually make these things possible and profitable. All investors have to do is give him money upfront. A lot of that money then ends up in his own pocket.
What is left he puts into his companies to produce at least some products that make it look like he has plans to really deliver. He has convinced investors so much of his genius that they don’t seem to realise that non of these businesses are currently profitable, or will be profitable in the foreseeable future.
Let’s take his most popular product – electric cars. Musk, of course, did not invent them. Electric cars are pretty much as old as cars. There have always been people experimenting with them. When cars first became available on a large scale at the beginning of the 20th century, there was a real race between the electric and the combustion engine. In addition, all major car manufactures have been experimenting with electric cars for decades.
But they never succeeded on the market. Electric cars simply have inherent disadvantages. While Tesla cars, with the help of companies like Panasonic, seem to have improved some of those disadvantages a little bit, they have not been able to overcome them. And there is really little hope that we will be able to fix these things in the future. The laws of thermodynamics, in other words hard physics, is in the way of that.
It is not difficult to build an electric car. I can even remember us building a simple electric motor at school. Electric cars are far simpler than combustion engines. The problem is to take electric energy on the road. It cannot be stored easily. Batteries are expensive and they take time to charge. And these two things are still true in Tesla cars. But the real problem is that batteries will never be able to store anywhere near as much energy as carbon fuels.
By its very nature, a battery needs to have all the elements in it to discharge the energy stored. That makes it also possible to discharge the stored energy in an uncontrolled way if anything goes wrong. Therefore, the more energy is stored, the more dangerous batteries become. Already with the currently available energy density of batteries, these can be quite dangerous. That is why, for example, it is not allowed to have a lot of batteries on a plane. And we are already seeing that extra danger, compared to conventional cars, in current electric cars. If one of these cars starts burning, it is very difficult to put out the fire, as the fire does not need oxygen to maintain itself.
The more energy batteries store, the more dangerous they become. We, of course, already have batteries with far higher storing capacities. We just don’t call them batteries, we call them bombs. As far as battery technology is concerned, we can maybe hope for cheaper batteries or batteries that charge more quickly. But realistically, there is no hope that we will get higher capacity batteries for cars. We are probably already at an optimum for capacity vs safety with the current battery technology.
No matter what Elon Musk and a lot of politicians tell us, electric cars are not the future. That is impossible. If we are forced to use electric cars, then most of us will simply stay where we are most of the time. In other words we will loose a lot of our mobility. And Elon Musk has not, and will not change that. He is not going to beat the laws of thermodynamics.
But even though Tesla cars are popular as a status symbol, the company cannot produce them profitably at the moment. Despite the fact that the company is now priced to become the dominant car manufacturer in the world, the reality is that Tesla cars are still a niche product in the auto market and Tesla loses money on every sale. Most other car manufacturers btw. are mainly producing high end electric cars. Because that is where the profitable market is. Electric cars are fun toys for high net worth individuals, but not serious means of mass transportation.
Even people who acknowledge that Musk is probably not totally honest about some of his businesses, they still think that he is nevertheless a genius. Why? Because at least when it comes to rockets, Musk is a game changer. SpaceX can now bring back the same rocket, making it significantly cheaper to fly rockets into outer space. I, too, was willing to give Musk credit for this for a while.
But then I saw videos of NASA already doing just that back in the 1980th. The reason why we do not bring back rockets is not because no one has so far figured out how to do that. That technology is decades old. The reason is simply that it turns out that it is not more profitable to do that. It is actually cheaper to throw away the rocket.
What profitable business has Musk launched with his rocket technology? Currently there is his Starlink project, which is supposed to give everyone on the planet access to fast satellite internet at an affordable price. But then again, satellite internet is nothing new. It has been around for a while. The problem is, it is very expensive. Yachts for example could already sign up for high speed internet for a while. But the service will cost a few thousand a month.
Starlink does not change that. While people can currently sign up for $99 a month with Musk’s service, this is totally unprofitable. Even if Musk can get his desired 8 million subscribers for the service, which would be about 3 times oversubscribed, it would only be profitable if it was at least 3 to 4 times as expensive as it is currently. Can he really find 8 million people who will pay him $400 a month for 100Mbit/s broadband? Even at today’s prices, the service is currently massively under subscribed. And of course, Musk is already telling people that the service will be even faster soon, making it even less profitable.
But again, he clearly does not seem to care about profitability. He is not planning to run any of his companies at a profit. All he is trying to do is to give his followers just enough credibility that they can continue to dream. That then will enable him to con more investors out of their money. And he is doing that in an environment in which, thanks to central banks, there is a lot of free investment money available looking for dreams to invest in. Hey if money is free, who cares about profitability? Everything starts to look profitable. That is the problem with central banking.
In a free money environment, dreams are just good enough as an investment. And Musk is a master in marketing himself as the guy who will make these dreams possible. He has managed to con so many people out of their money that he is now the richest guy in the world. While all of his companies are fake or unprofitable, conning himself to be the richest man on the planet is undoubtedly an impressive achievement. It makes him the biggest con man of all time. Of course it will end badly eventually. Hopefully for himself, but definitely for his investors. So be careful with this man.