Elon Musk’s Defiance in the Time of Coronavirus

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Photo: Photo Illustration by Doug Chayka; Photos: Bloomberg (2); REUTERS

On Monday, as companies all over the Bay Area rushed to send their workers home, complying with an order to shelter in place, Tesla Chief Executive Elon Musk had a defiant message for his 56,000 workers.

“I will personally be at work, but that’s just me,” he said in an email. “Totally ok if you want to stay home for any reason.” Tesla’s Fremont, Calif., factory kept humming, even as the county sheriff’s office the next day said publicly that Tesla should stop production.

Thursday, under pressure from local authorities and some in the public, he finally relented, agreeing to temporarily suspend production in Fremont.

The decision followed weeks—and, arguably, a career—of defiance.



A malaria survivor who founded SpaceX, his rocket company, with the aim of colonizing Mars because he fears Earth could be doomed, Mr. Musk, 48, has consistently played down the reaction to the coronavirus outbreak as a panic. He has held forth on Twitter with his own sanguine takes on its epidemiology and likely impact.

“My guess is that the panic will cause more harm than the virus, if that hasn’t happened already,” Mr. Musk said Wednesday evening on Twitter, doubling down on skepticism he expressed earlier. He didn’t respond to a request for comment about his thinking; neither did Tesla.

Mr. Musk has for more than a decade cultivated a persona as a visionary truth-teller, constantly pushing back against doubters, critics, short-sighted nonbelievers and stodgy government agencies. His contrarian stance is core to his business model. His bravado and sense of certainty have created both ardent believers and plenty of skeptics on Wall Street and in the public eye. His legions of superfans are vocal on Twitter.

On Dec. 1, 2019, a patient in Wuhan, China, started showing symptoms of what doctors determined was a new coronavirus. Since then, the virus has spread to infect more than 100,000 people. Here’s how the virus grew to a global pandemic. Photo: Getty Images

The billionaire has attributed his business success to the scientific approach called First Principles, which is rooted in Aristotle’s writings and among other things rejects solving problems with copycat solutions and depends upon reducing problems to their essence even if the solutions might seem counterintuitive.

“When you want to do something new, you have to apply the physics approach,” he said during a 2013 TED Talks appearance.




The decision to keep his factory open flows from such a mindset, according to Gene Munster, who follows Tesla closely as managing partner at investment and research firm Loup Ventures.

“It’s a first principle for him, do everything in his power to move forward even when people say it’s not possible,” he said. “It’s not about producing cars to stay in business. Tesla has the money to weather this storm. Times like this that the first principles approach is tone deaf.”



In 1995, when he was 24, Mr. Musk took on the phone book industry with his first startup Zip2. The sale of that startup helped fund his next venture, an online company to compete with the banking industry that would eventually become known as PayPal. That bet gained him the fortune he used to fund the early days of SpaceX, formally known as Space Exploration Technologies Corp., and Tesla—passions he developed after nearly dying from malaria contracted in 2000. His family has said the prospect of dying led him to reconsider his life, concluding he should focus on ways to help humanity through colonizing Mars and creating sustainable transportation.

Mr. Musk isn’t shy about airing his opinions, having developed a reputation for battling any threat to him or his companies—in person, and usually on Twitter—with a vigor most other CEOs would never consider. He attacks Tesla’s shortsellers with a vengeance, calling them “value destroyers” and “jerks who want us to die.” He’s tangled with safety regulators who he thought were stifling innovation and fought with the Securities and Exchange Commission over tweets he made in 2018 that said he had lined up funding to take Tesla private. (The SEC considered it misleading shareholders when it became clear a deal wasn’t so certain; the two sides settled with a deal that’s supposed to curtail some of Mr. Musk’s Twitter use.)




In 2018, he gained attention on Twitter for trying to develop a mini-submarine to help rescue a boys soccer team stuck in flooded Thai caves—leading to a war of words with one cave expert that ended up in court.

Over the past month, as officials in the U.S. grew more concerned about the Covid-19 crisis, Mr. Musk sounded off. “The coronavirus panic is dumb,” he tweeted on March 6. The same day, Apple Inc. began encouraging its employees to work from home. Most Silicon Valley giants soon did the same.

Mr. Musk continued to take a lighthearted tone about the virus. “Coachella should postpone itself until it stops sucking,” he wrote on Twitter on March 10, as the popular music festival decided to move from April to October over coronavirus fears.

Several times on Twitter, Mr. Musk has promoted the idea that chloroquine, which he took for malaria, might be a remedy. President Trump on Thursday said he has directed the Food and Drug Administration to look at the potential for such malaria-fighting drugs to be used for coronavirus, something some doctors around the world have already been experimenting with to treat patients suffering from disease.

Unlike other Silicon Valley companies that have built their businesses with coding and keyboards, Tesla depends on an army of workers to turn metal and parts into vehicles. Other U.S. auto companies started taking action this past week. General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV on Wednesday announced plans to suspend North American production amid pressure from the United Auto Workers union. That evening, Mr. Musk was still expressing skepticism about the virus’s severity on Twitter. The next day, around 2 p.m. in California, Tesla announced that the Fremont plant would suspend car production on March 23.

After Thursday’s announcement that the factory would stop production, Mr. Musk highlighted on Twitter a news report that no new coronavirus cases had been reported locally in China and said he expected an end of new diagnoses in the U.S. by the end of April.

Also on Thursday, California Governor Gavin Newsom warned that 56% people in the most populous state could get infected in eight weeks without aggressive preventative actions. California ordered its 40 million residents to stay at home except for essential activities beginning Thursday night in the largest such lockdown in the U.S.

The coronavirus outbreak threatens to mar what appeared to be a possible turning point for Mr. Musk and Tesla in which he seemed to have proved his doubters wrong, posting two consecutive quarters of profit in the second half of 2019 and opening a new factory in China in a time span that many thought improbable.

Wall Street had cheered, sending Tesla’s shares to record heights and ranking it as the world’s second most-valuable auto maker behind Toyota Motor Corp. Analysts believed 2020 might be the year that Tesla might post its first annual profit and help define a new era for automobiles as being electric.

This week Tesla celebrated the start of deliveries of the Model Y, a compact sport-utility vehicle. The Model Y is a key part of Mr. Musk’s plan to deliver more than 500,000 vehicles this year, a more than 36% increase from last year.

Now analysts increasingly doubt that’s possible as they look at the fall off in sales in markets already hit by coronavirus. China industry auto sales fell almost 80% in February from a year earlier.

Instead, Tesla is trying to reassure investors that it can weather the uncertainty ahead, noting on Thursday that it had $6.3 billion in cash on hand at the end of December before raising an additional $2.3 billion in new shares a few weeks ago. Tesla also has access to about $3 billion in working capital plus financing available for its Shanghai factory, the company said.

Morgan Stanley estimates Tesla has enough cash to weather revenue falling 90% for several months. In such a case, the bank estimates, Tesla would burn about $800 million in cash a month.

But the decision to suspend production could put Mr. Musk back in a familiar position: having to manage a period for the company with no certainty when production can resume. The mythology of Mr. Musk is rooted in his ability to stare into the abyss and carry on when others might fold. He faced down near bankruptcy in 2008 when financing dried up during the last recession. He found a way to keep Tesla alive and in turn leveraged himself to the hilt.

Recently, he weighed in to say he could make ventilators, a medical device seen as critical for combating lung failure found among some of the sick. “Which hospitals have these shortages you speak of right now?” he asked on Twitter. New York City Mayor Bill de Blasio piped up that he needed them.

Although Mr. Musk stands apart from many in Silicon Valley for his views on the reaction to the novel coronavirus, he’s not alone.

Investor Jason Calacanis, a long-time Musk friend, said a mentality of “corona derangement syndrome” was taking over.

“If you question the data, ponder why there are different outcomes or otherwise question CV as anything other than the end of days you’re slaughtered by the mob,” he wrote on Twitter. He later added that overreacting is wise.

In a memo to his Tesla employees on Monday, Mr. Musk downplayed the threat of the virus, pointing to Center for Disease Control data to say his “best guess” was that confirmed cases of Covid-19 won’t exceed 0.1% of the U.S. population. “I do not think, when we look back on 2020, that the causes of deaths or serious injury will have changed much from 2017.”

As one former senior Tesla executive mused about the former boss: “He is a climate believer and a corona denier.”




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