By on May 29, 2010

Actually, he’s been broke for since last October.

“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 Venturebeat are 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.

You don’t want to be Musk’s friend. According to court papers, he’s currently scraping by on “emergency loans from personal friends.” To make a long story short: Musk is in deep doo-doo.

If Tesla’s IPO is successful, his finances would look brighter. But there are two problems. The court has slapped a protective order on Musk’s holdings, says Venturebeat. He won’t be able to liquidate significant holdings without first getting permission from his ex-wife. That’ll cost him. Then, there is the matter of how Musk’s precarious finances will affect the IPO.

The filings with the SEC cite the usual laundry list of risk factors, but no word of Musk’s own tight finances. Tesla is “highly dependent on the services of Elon Musk,” says the filing, but in no word does it say that an estranged wife has him by the balls – financially. Venturebeat says that some in the venture capital community think that Musk’s situation should have been disclosed in the filing. Venturebeat asked the SEC, they had no comment.

Should the IPO fail, then no money from Toyota – it’s contingent on the successful IPO. We, the U.S. taxpayer likely won’t see any of the money the Department of Energy loaned Tesla. Should the IPO succeed and the Tesla stock sink afterwards, then you won’t have to wait long for an onslaught of lawyers. The dirty laundry most likely will feature prominently.

If everything goes hunky dory, then Justine Musk possibly gets half of the proceeds. There is a postnuptial agreement, but Justine is contesting it. She lost the first round, but the case goes to appeal. It’s all pretty well explained in her blog. If you are a glutton for divorce drama, then there is a great article in Divorce Saloon. Read it and you’ll never marry.

P.S.: According  to her blog, Justine wants:

- The house (not the rental, she did the usual thing and made him move out)
- alimony and child support (with 5 children, pretty much a given)
- 6 million cash (lump sum often negates alimony for the wife, but that can be bunched into child support..)
- 10 percent of his stock in Tesla
- 5 percent of his stock in SpaceX
- and a Tesla Roadster (she says “I really, really want one…”)

Advice to Musk: Settle for a little less. That protective order can get quite nasty over the long time an appeal takes. You pay her lawyers, and they’ll string it out as long as possible . I bet, $10m lump sum, child support, and the roadster would do it.

Oh, and I’d amend the S-1. The story is out anyway.

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41 Comments on “Tesla’s Musk Is Broke...”


  • avatar
    dwford

    Hard to feel sorry for someone living so far beyond their means.

  • avatar

    He’s broke alright… in the head.

  • avatar
    Robbie

    In this modern world of multiple divorces and women who can hold jobs there is only one conclusion – divorce laws needs urgent updating. Assuming there is little science fiction in car making, the car business should be Musk’s.

    • 0 avatar
      educatordan

      “In this modern world of multiple divorces and women who can hold jobs there is only one conclusion – divorce laws needs urgent updating.”

      Depending on the state and the circumstances, Amen. Each state is different and it’s hard to judge sweepingly. My favorite is when employed women get alimony and there aren’t even any children involved that she might be putting that money toward.

      I hope Tesla succeeds or fails based on it’s product, not the soap opera of it’s executives.

  • avatar
    Ingvar

    This doesn’t make sense. You simply cannot maintain expenses like that without a steady flow of serious income. If he really was broke, he would sublet the house, have his mother watch the children, and do his own dirty laundry. Two grand a month on laundry? for real? Did he substitute the starch for coke?

    No, this smells fishy. Either he’s skimming on top of the Tarp loans, Tesla or Toyota. Or there’s an off-shore account somehwere with Teslas war chest hidden away, with Tesla going bust within the month. Or he’s simply disclosing his real financial situation so his ex wife won’t ger her hands on the coffers…

    • 0 avatar
      cugrad

      Musk made a boatload of money from Paypal. Sounds like it just now is running out and his family’s lifestyle has not adjusted to compensate.

    • 0 avatar
      Acc azda atch

      Alright…
      I see ‘ol Mr Professional Trillion / mega hundred millionaire/ could do no wrong (as the article in CAR points out..)

      Nice to know he’s not pittering away his money at the local Starbucks.

      But help me out here.. FIVE KIDS! Ya couldn’t stop bumpin uglies at 2 with THAT ugly BIOTCH!!

      SO much here that is his own fault.. and things I disagree with her.
      Ya toss me out on my ass..
      Ya want a lump sum for the kids / you for 6mil, ya get 10% of Tesla, 5% in SpaceX.. AND ya want a Roadster..

      Hell no = Go pound sand.

      For one..
      The new girl ya “dating” is one ugly woman. Don’t you have some decent taste?! (Then again, your car IS SILVER, and that’s JUST a BIT overplayed.)

      I also agree with you=INGVAR completely..2g a mo for LAUNDRY!?!
      This is a guy who likes his shirts EXTRA COKED!

      As for personal transport..
      Go out and find a S2000 or a nice NSX. It should have MORE longterm effects on how you are.. than driving around a Silver Electric car.

      Christ.. this dude is 10kinds of effed up .. in a 1/2lb bag:

      He’s got 5 kids!?!
      2 Companies not making a whole lot of dough. — He still got a 15fig sum from the DOE.. which I dont get.. where that went.
      The nannies must love your crazy ass.. 5kids. 2.5 EACH HAHA.
      The Shirt laundering business must be CRAZY good down / over / under at Santa Monica.. cause they are getting mad rich offa your stupid broke ass.
      Ya got ANOTHER WOMAN pulling on your COKED coat tails..
      Ya got two LEACHES (lawyers) yankin’ at you..

      And YOU consider YOURSELF broke?!

      I bet you’d love to know.. WHAT BROKE feels like, how bout ya stop pissing MY goddamn money away on your bumpin’ ugly problems… n start saving SOMETHING!

      P.S
      Did this story run before the Tesla and Toyota kiss-fest, cause it makes A LOT more SENSE now..?!

      He’s so broke..

      (How broke)

      Cant even make chance for a thousand dollar bill..

      (Ain’t that a mo-fo?)

    • 0 avatar
      George B

      “For one..
      The new girl ya “dating” is one ugly woman. Don’t you have some decent taste?! (Then again, your car IS SILVER, and that’s JUST a BIT overplayed.)”

      Acc azda atch, I thought that Talulah Riley was really hot in Pirate Radio. Not worth 98k/month if that’s what it costs to keep her around, but not ugly.

  • avatar
    twotone

    “Tough when you make only 8 grand a month and have two high maintenance women.”

    $8k/month does not even pay for one low-maintenance woman.

    Twotone

    PS: Never trust a guy who can not properly tie a bow tie.

  • avatar
    Zarba

    twotone:

    Amen, brother. If you think wives are expensive, just wait til you have an ex-wife. Or two.

  • avatar
    Lorenzo

    You got that right, Zarba. It’s best explained in computerese:

    If you install wife 2.0, be advised that wife 1.0 can never be deleted or overwritten, and in fact never fully uninstalls.

  • avatar
    healthy skeptic

    I thought Musk was a billionaire, too. Wasn’t he, at one point? Damn. Goes to show that the fortune has yet to be made that can’t be squandered.

  • avatar
    Telegraph Road

    …”so he rents. For $50,000 a month.”

    Clearly he needs to move to Detroit. $500 a month will get him into Grosse Pointe.

  • avatar
    Robert Schwartz

    If Elon is really out of scratch, Tallulah will be a cool breeze before long. BTW. Click the link, it is worthwhile.

  • avatar
    IGB

    Aren’t you supposed to look penniless walking into divorce court? That holds true for either party.

    I think Elon has a low risk of starving, or being kicked out of his rental for that matter.

  • avatar
    savuporo

    Great story TTAC. You are now on par with the National Enquirer and The Globe.

    • 0 avatar
      gslippy

      The National Enquirer was recently nominated for a Pulitzer Prize for its reporting on Sen. John Edwards’ shenanigans, when nobody else would bother discussing it. And they were right, telling The Truth About Candidates.

      As for Elon Musk, his continuity with Tesla will determine its fate, and possibly the future of electric cars. If that continuity is disrupted by an ugly divorce settlement that leaves him broke and unable to continue with Tesla, that’s a story relevant to the readers of TTAC, and certainly to the employees of Tesla.

    • 0 avatar

      Finally, someone who’s acknowledging where we belong on the scale of journalistic greatness. May we quote you when we place TTAC at supermarket checkouts?

    • 0 avatar
      gslippy

      Bertel, I’d be honored. :)

  • avatar
    tauronmaikar

    This news has made my day. I am now going to sleep with a grin in my face.

    • 0 avatar
      gslippy

      What’s Elon Musk done to you? Maybe you’d like to tell Tesla’s or SpaceX’s employees how happy you are that their future is in peril.

      One of America’s greatest modern entrepreneurs is broke, and you’re happy?!

      Sorry, the class envy card doesn’t play well with me. If you’re working, it’s probably for a guy who has a dollar more than you.

    • 0 avatar
      ivyinvestor

      gslippy: you’re spot on.

      It’s one thing to challenge folks to uphold principle and rule of law when they might have done wrong and were punished for it (Trump and Stewart come to mind).

      But to revel in their misfortune and failure? Atrocious, and stunningly sad. Few of the “icons” in American history led clean lives: and few of its “average” citizens have, either.

      Why don’t you root for our future, rather than for a return to the pettiness, jealousy, and middle-school antics of old?

    • 0 avatar
      carve

      gslippy: right on.

      OP: WTH is wrong with you?

      gslippy>tauronmaikar

  • avatar
    gslippy

    He had better taste in women the first time around, IMO. Justine’s blog and bio is worth a quick read. I did not realize that the first of their 6 children died of SIDS at the age of 10 weeks. They’ve both been through a lot.

    Interestingly, Justine doesn’t really want the money, but it’s possible the court could award it anyway.

    Mr. Musk’s mercurial personality and finances will play a big role in the success of his ventures Tesla and SpaceX. I applaud him for taking on these challenges.

  • avatar
    blue adidas

    Good god, women are a pain in the ass!

  • avatar
    L'avventura

    I’m constantly at awe at how much brand-recognition Tesla has managed to achieve in such a short period of time.

    There are quite a few small car makers that make $100k+ sports cars; (Noble, Zonda, Comparo, Marcos, Farbio, etc) and none of them have nearly the recognition as Tesla. Especially for a company with a single product and such a precarious financial background.

    More surprising is that they were able to get $465M from the DOE. Certainly there is the case that it is a an EV, and certainly there is the case due to the current political climate, but as it stands there is value to the “Tesla” brand.

    While I remain a strong sceptic of EVs, there is a logic in making EVs as a premium vehicle rather then immediately pursuing low-margin high-volume vehicles. I’m not sure if Daimler, or Toyota, could capitalize on the Tesla, but only under a larger volume manufacturer is there even the most remote chance of a viable business model.

    • 0 avatar
      gslippy

      You’ve heard of the Nissan Leaf EV, arriving soon?

      And you’re right; I’ve never heard of those other carmakers. Have they sold 1000 cars as has Tesla? Yes, Tesla’s EV product makes it a PC darling, but at least it’s not a toy or vaporware like so many others.

    • 0 avatar
      L'avventura

      @gslippy

      If you’re saying that the Nissan Leaf is a good example of a low-cost high-volume EV then it’ll respond by saying it still needs a 1.6B DOE investment and a massive $7,500 rebate.

      The fact is, for ~$30k or so, you are getting an EV Versa, or an PHEV Cruze in the case of the Volt. You are inescapably paying a large premium to a comparable gasoline version of the car.

      Most Leaf or Volt buyers aren’t buying those vehicles because they make economic sense, rather its a luxury, a statement, and they are willing to pay a premium.

      Which leads me back to Tesla, while EV costs are still high, these vehicles would make better sense in the premium category. Tesla has managed to build a brand. A Toyota Tesla, or Mercedes Tesla may make good economic sense.

      Also, for large automotive companies, these EVs are also PR machine in the light of aggressive ecological reforms by many governments. The reason why the Volt is a Chevy rather then a Cadillac and the Leaf is a Nissan rather then an Infiniti, even with its price-tag, is because those companies want that green-credentials to rub off on their primary brand.

    • 0 avatar
      gslippy

      I don’t disagree with you on any point. Your original question regarding a large volume manufacturer make the Leaf come to mind.

      While the Leaf is priced as a mainstream car (unlike the Tesla Roadster), it certainly doesn’t make economic sense compared to buying a Versa.

      And any car receiving a subsidy obviously has some underlying cost problems.

  • avatar
    ihatetrees

    I was skeptical of any sort of profitable electric car firm making it. There are reasons sound financial firms like Toyota or BMW have steered away from all electric vehicles – they make no economic sense.

    The internal combustion engine, with it’s myriad improvements over the years, is very tough to beat with battery packs.

  • avatar

    Correct me if I’m wrong, but wasn’t Musk the one that said he was “Guaranteeing all deposits, production of paid for cars, etc…” with his ‘personal fortune?’

    Whoops!

    The DOE loans could possibly give the government first dibs on any desirable patents or trademarks, even the TeslaTM name… just a guess on my part, I don’t know if there are any bigger investors than the DOE yet.

    I’m probably the ideal candidate for an electric car, 2 mile commute to work, ‘normal’ payday errands 18 mi. round trip, but I will not pay for an electric car that costs more and has less utility than a compact ICE equipped vehicle.

    If I were to decide I ‘needed’ an electric car, I’d make my own. I’ve seen video of an electrified Rabbit, and the parts/system cost about $8,000 if I recall correctly.

    Tesla is not Google. There is a substantial product behind their smoke and financial machinations, but I believe we’ll look back on them as a cautionary tale.

  • avatar
    John Horner

    Just more evidence that Musk is your typical Silicon Valley flim-flam man.

  • avatar
    tedward

    Well, first of all the $50k a month in rent is an easy fix. I don’t car where you live and work, you can find entire houses with yards and garages within an hour of your job for regular money. It’s what adults do when they have kids and work near a city.

    • 0 avatar

      That doesn’t really work when your electric car’s stated driving range is 100 mi. max, and that is very questionable. You won’t get that on freeway driving. He’d be lucky to make it in to work, let alone be able to get back home.

      Better pay for unlimited AAA.

      I hope they have showers at work too, because you would never be able to run the A/C as it’s a major drain on the batteries in an electric car.

  • avatar
    carguy

    For much the same reason that rich politicians who fund their own campaign rarely get elected, entrepreneurs who can’t attract investors generally fail, because in both cases the only person they ever convinced of their undertaking’s success was themselves.

  • avatar
    Daanii2

    Don’t cry too hard for Elon Musk. He’s far from broke. He’s still a billionaire. But one with cash/liquidity issues. Similar to Michael Jackson before he died.

  • avatar

    Well, at least he got Telsa off his hands. It will soon disppear under Toyota.

  • avatar
    CarnotCycle

    I always wondered how long Musk could blow rockets up and build electric kit-cars on “just” a $300 million dollar fortune. I guess the number is about five years, give or take a government grant/loan/goodie or nine.

    I don’t see Musk going totally broke though. His two moneypits are alt-space and alt-greencars which are both at the center of ambiguous Obamanian plans. I could see SpaceX getting vacuumed up by one of the bigs in the soul-crushing Military Industrial Complex (like ULA) depending on their booked business (including gov-contracts). Tesla itself could be snatched up too, but by either GM (for political reasons) or Toyota (again, for political reasons).

    Either way, Musk and his money-burners are too politically connected and popular in the Establishment to truly go tits-up. Something/somebody will save him.

  • avatar
    cRacK hEaD aLLeY

    His ex-wife is way hotter then soon-to-be ex-girlfriend.

    • 0 avatar
      Daanii2

      “His ex-wife is way hotter then soon-to-be ex-girlfriend.”

      His ex-wife has her own lover. A boy toy she calls “Dude” that hails from Half Moon Bay and is (she says) so good-looking that she can’t believe it.

      Fine if these people want to live their lives this way. But we are financing this. Tesla Motors is getting $450 million of taxpayer money that will bail Musk out so he can sell his stock after an IPO. Yet another case where we lay the risk on the public and send the reward private.

      That’s what disgusts me. And what makes this sordid saga especially sordid.

  • avatar
    phantomwolf

    Being a mostly free market guy, with distributist tendencies, I have watched Tesla with great intrest, but under my own profoundly cynical vein. I am not surprised, I have meet a few silicon valley types in my lifetime and tried to emulate them when I was younger and dumber. Of course that is before ethics and wisdom began filtering into my mind. It seems that Mr. Musk spent all his money on his big risk, typical valley type mentality, narcissistically convinced in his ability to make this work based on his previous experience, and when all looks lost does the only rational thing a person in America’s crony capitalism would do, get a government handout. Of course having studied electrical engineering early this decade, I know the limitations imposed by the laws of physics and continue to laugh at the viability of electric cars. Sorry, small, controlled internal explosions still provide more “bang” that noiseless chemical reactions.
    As for Elon’s marital issues, helps if you can morally keep the stallion in the corral and remain responsible to the choices, “i.e. marriage,” you made.


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