Common Sense Skeptic: MUSK ON TRIAL - SolarCity Bailout Day1, Pt1
I finished. If we skip the 1/2 of the video that's about Tesla.
Disclaimer
I am not a laywer. This does not constitute legal advice. I am simply going to point out Common Sense Skeptic’s mistakes and deceptive practices.
Also, this video is so packed with misinformation and outright lies, it is taking me far longer than normal to get through everything and present the nuance CSS tends to leave out when needed. Check back for updates.
Introduction
On August 10, 2021, Common Sense Skeptic released this video going over the first quarter of the first day of transcripts for Elon Musk’s SolarCity trial. (Attachment 459). On August 14, 2021, CSS released this updated version.
Common Sense Skeptic is a YouTube group aiming to “provide viewers with the ability to break down outrageous claims using simple mathematics, examples, and logic.” The vast majority of their videos center around Elon Musk and his companies, with a heavy emphasis on SpaceX.
The Problems
1:24 - Falses In Uno, Falsus In Omnibus
As a small preamble here we're going to remind viewers of a very basic tenet of common law, and that is ‘Falses In Uno, Falsus In Omnibus’. It is a Latin phrase translated as ‘False in one thing, false in all things’. This tenet allows a court to completely disregard testimony of any witness if they are caught giving false testimony.
While saying this, CSS displays an image ripped from B&B Associates LLP with no credit given. Again, I am not a lawyer, instead I will simply present the Wikipedia article on the maxim, this comment thread on CSS’ video from a lawyer(CSS has a history of arguing with people who are experts in their fields, rather than learning from them), as well as a case law search, and leave it to the reader to draw their own conclusions.
5:08 - Background Fluff, Rough Childhood
On page seven the direct examination of Elon Musk begins, with Chessler asking him questions meant to introduce Musk to the court. These are mainly fluff questions such as ‘Where were you born?’, ‘What's your backstory?’, ‘Remind us what a rough childhood you had’.
I find it fascinating that Common Sense Skeptic pushes a narrative that everything about Elon Musk is simply horrible, yet still finds the need to embellish. The actual questions asked were:
Where were you born?
Did there come a time when you left South Africa?
And when you got to Canada, in the first months you were there, just in general terms, would you describe what you did?
The third question deals with Musk’s life starting at 17 years-old. I don’t see all the questions about “what a rough childhood [Musk] had”.
But wait, maybe those first two questions contained all the “rough childhood” bits? Let’s examine at the exchange.
Chessler: Where were you born, sir?
Musk: I was born in Pretoria, South Africa.
Chessler: Did there come a time when you left South Africa?
Musk: Yes. I left South Africa when I was 17, for Canada.
This non-lawyer rests his case.
5:21 - Scholarship
It's basically Musk reciting his autobiography, with many of the same errors, contradictions, and omissions of truth that we've seen him make before. For example, on page eight Musk tells the court he went to the University of Pennsylvania on what he called a ‘big scholarship’. Yet Musk also claims in news articles that he racked up six figures worth of student debt, so on one of those two points he appears to be confused.
Let’s examine the exchange.
Chessler: And at some point, did you transfer from Queen’s University to the United States to go to school?
Musk: Yes. This was quite difficult. So I was paying my own way through college, which is not that hard in Canada because the tuition is highly, highly subsidized. In order to go to the University of Pennsylvania, I needed a big scholarship, which they were going to give to me. So I got a scholarship to go down there and a combination of working during the semester and during the summer in order to go to the University of Pennsylvania.
Okay, so Musk says he got “a scholarship”, and that he was working as well. CSS seems to be referencing articles such as this one, which mention ~$100,000 worth of student loan debt by the time Musk was done with college.
According to his Wikipedia page, “In 1990, Musk entered Queen's University in Kingston, Ontario. Two years later, he transferred to the University of Pennsylvania; he graduated in 1997 with a Bachelor of Science degree in economics and a Bachelor of Arts degree in physics.”
So, five years at the University of Pennsylvania, an undisclosed scholarship amount, and a claim of $100,000 in student loan debt. The current page for the University of Pennsylvania tuition and expenses lists $80,000-$83,000 per year in today’s dollars. Is it possible Musk could have had a scholarship and still have gone into debt? CSS certainly hasn’t presented any damning evidence in this video.
5:43 - Stanford
On page nine, Musk tells the court he decided to do grad studies at Stanford in material science and physics but fails to disclose at this time that he never actually attended the school.
This is just wrong. Let’s examine the exchange. (emphasis mine)
Chessler: When you finished your education at Penn, where did you go?
Musk: So I did a dual degree in physics and economics at Penn and Wharton undergraduate school. Actually, before completing the degree, I worked for a
company in Silicon Valley called Pinnacle Research, doing research on advanced capacitors for use in -- potentially in electric vehicles. And then I decided to do grad studies in material science and physics at Stanford. And the basic idea there was to try to figure out energy source solutions for electric vehicles. So -- I was offered some very well-paying jobs on Wall Street, but I declined because technology is my primary interest.
Chessler: At some point, did you form a first company?
Musk: Yeah. So while waiting for the Stanford quarter to start in '95 -- a little
feedback -- I wrote software. So I've been writing software for a long time. I don't know if I'm talking too close or too far.
THE COURT: You are perfect.
Musk: There's a little feedback, but hopefully that's coming across okay.
Chessler: It is.
Musk: So I've been writing software since I was quite young. I started writing software when I was nine or ten, actually wrote my first video game when I was about 12. So software is -- I began to write software. Actually, one of the internships -- I actually had two jobs. One was during the day at Pinnacle Research working on ultracapacitors for electric vehicles, and the other one was working at a software -- at a game software company called Rocket Science, which is -- fate loves irony. So I actually worked for a company called Rocket Science before doing rocket science.
So that summer, of '95, I just started writing some internet software. This is when -- most people had not heard of the internet. And I wrote the first dynamically generated capacitor directions on the internet, to the best of my knowledge at least, and the first Yellow Pages and the first White Pages and tied them all together. And I wrote the entire code basically myself. So then the start of the quarter came around, and I called my professor in material science at Stanford and said I'd like to go on deferment. I said but please don't cancel me as a student because I'm sure this thing will fail and I will need to come back to school. And he said that's no problem, we'll put you on deferment. But he said, I think this is the last conversation we will have. And he was correct.
A series of questions detailing a single summer of Musk’s life, ending with Musk clearly stating “So then the start of the quarter came around, and I called my professor in material science at Stanford and said I'd like to go on deferment.”
5:52 - Dot-Com Job Offers
Also Musk graduated Penn with a Bachelor's of Science in economics and a Bachelor of Arts in physics. Musk does not even have a master's degree in either, just basic bachelor diplomas, and he does not have a PhD in any discipline. He claims he was offered some well-paying jobs on Wall Street that he refused, yet when Musk started up x.com with Harris Fricker and two other partners, it was Fricker and the partner he brought with him who knew the industry, and Musk had to resort to reading books to keep up with them, so it would be interesting to see who offered Musk what job and at what pay level, since he didn’t mention anybody.
Okay, I have to ask, what is even the point of this? CSS is talking about a potential 40-part series to cover this trial, yet they are padding their runtime with something that has nothing to do with the trial and is nothing but speculation.
It’s not that hard to imagine someone being offered jobs on Wall Street with a double Bachelor around 1995. This was the dot-com bubble, not a period in time where a PhD and four years of experience was required for entry-level positions.
6:27 - Is Musk a Coder?
On page 11 musk claimed to be a software writer, but we know from his coding at Zip2 that he was not a professional coder, and everything that he wrote had to be rewritten by actual professionals.
CSS is trying to paint Musk as a liar for claiming to be a software writer, allegedly without being all that good at it, which is more than a bit silly. Whether or not Musk’s code was good has no bearing on whether or not he wrote it. Being a self-taught coder is not a crime, so there is no “but” in this situation, other than the one CSS made up.
Musk mentions founding Zip2 without any acknowledgement of his brother Kimball or of Greg Kouri, claiming he wrote the entire website himself. Without Greg Kouri's involvement and connections Zip2 would never have launched. Musk does also not mention Rich Sorkin who was brought in by Kouri as CEO. Musk is pretending that the company was his but he was just the CTO and so poor at his job that other software engineers had to be brought aboard to rewrite his code from scratch.
In the actual transcript, his lawyer is walking through Musk’s background, which makes sense. Elon Musk is on trial, not Zip2. Furthermore, Musk doesn’t try to claim sole ownership, and uses ‘we’ rather than ‘I’ throughout this portion of testimony(emphasis mine).
Chessler: Zip2 was then in the business, as you described, the Yellow Pages, the White Pages, the dynamic mapping?
Musk: Yes. And we did a bunch of things. We did one of the most sophisticated Java programs on the internet. To a degree Eric Schmidt, who was chief technology officer at Sun Microsystems at the time, came by to see it. We also -- as the company evolved, we wrote a publishing software that enabled hundreds of newspapers and other publications to get onto the internet. And we also wrote a significant portion of the New York Times website and many other media companies. And, in fact, we were -- we had the New York Times and Knight Ridder and Hearst as -- both as investors and customers. Knight Ridder and New York Times Company were on the board of the two.
It is ironic that CSS complained about how long-winded Musk was in his testimony, and now is critical of him for not delving into more detail about the company during his testimony on his background, what CSS earlier called “fluff”.
7:03 - X.com / Confinity Merger
On page 15 Musk claims to have personally started x.com again without mentioning that there were three other co-founders. They were Harris Fricker, Edward Ho, and Christopher Payne who apparently still has no pictures online.
All of this information seems to come from Ashlee Vance’s biography on Musk. The issue of who founded x.com is a bit more nuanced than CSS would have you believe.
He actually plowed the majority of the money he made from Zip2 into X.com. There were practical reasons for this decision. Investors catch a break under the tax law if they roll a windfall into a new venture within a couple of months. But even by Silicon Valley’s high-risk standards, it was shocking to put so much of one’s newfound wealth into something as iffy as an online bank. All told, Musk invested about $12 million into X.com, leaving him, after taxes, with $4 million or so for personal use. “That’s part of what separates Elon from mere mortals,” said Ed Ho, the former Zip2 executive, who went on to cofound X.com. “He’s willing to take an insane amount of personal risk. When you do a deal like that, it either pays off or you end up in a bus shelter somewhere.”
…
Musk assembled what looked like an all-star crew to start X.com. Ho had worked at SGI and Zip2 as an engineer, and his peers marveled at his coding and team- management skills. They were joined by a pair of Canadians with finance experience—Harris Fricker and Christopher Payne. Musk had met Fricker during his time as an intern at the Bank of Nova Scotia, and the two really hit it off. A Rhodes scholar, Fricker brought the knowledge of the banking world’s mechanics that X.com would need. Payne was Fricker’s friend from the Canadian finance community. All four men were considered cofounders of the company, while Musk emerged as the largest shareholder thanks to his hefty up-front investment.
So the question is, is the statement “I started a company called X Corporation” an egregious lie, conjuring Falses In Uno, Falsus In Omnibus? I am not a lawyer, so that is not my determination. It doesn’t come across to me as false, especially in a brief overview setting like this. X Corporation was Musk’s idea, he put forward the initial funding, and he gathered the other co-founders. In layman’s terms, it sounds like Musk started the ball rolling.
Then Musk's version of the Confinity - X.com merger is relayed with all the same inaccuracies that we've heard before. X.com and Confinity were not equals in this space despite Musk's claim to the contrary. X.com was, as one software engineer that worked there put it, “A Hollywood set of a website that barely fooled oblivious investors like Mike Moritz of Sequoia Capital.
Okay, a few problems here. CSS ‘quotes’ Scott Anderson, but doesn’t say what Anderson said. Anderson said:
You look back, and it was total insanity. We had what amounted to a Hollywood movie set of a website. It barely got past the VCs.
Nothing about “fooling” VCs, and nothing specifically about Mike Moritz.
Another problem with this quote is that CSS is presenting this statement as the state of X.com at the time of the merger with Confinity, but that isn’t even close to the case. That quote refers to the time after Fricker left the company and took the other co-founders with him as part of a failed ultimatum that Musk give Fricker the position of CEO, specifically the time around “August 1, 1999, just a few days after the exodus.” The merger didn’t happen until March, 2000. Between those two dates, X.com went from a “Hollywood movie set of a website” to one of the world’s first online banks, complete with FDIC insurance and partnerships with three mutual funds.
At the time the merger happened, Vance has this to say:
In March 2000, X.com and Confinity finally decided to stop trying to spend each other into oblivion and to join forces. Confinity had what looked like the hottest product in PayPal but was paying out $100,000 a day in awards to new customers and didn’t have the cash reserves to keep going. X.com, by contrast, still had plenty of cash reserves and the more sophisticated banking products. It took the lead in setting the merger terms, leaving Musk as the largest shareholder of the combined company, which would be called X.com.
So, according to CSS’ own source, X.com took the lead in the merger. Is it time yet for ‘Falses In Uno, Falsus In Omnibus’ to apply to Common Sense Skeptic?
7:33 - Going Public/Sale
Note: I’m getting really annoyed with so many problems that actually don’t have anything to do with the case, so I’m going to skip ahead for now.
8:20 - Tesla Saga
23:05 - Cross Examination Begins
And this guy has been waiting for years to get this guy in that chair. Baron warns Musk straight off the bat that there is a lot of material to cover, three notebooks worth, so being able to move through the questions quickly will be to everyone's benefit. The first question from Baron clarifies that Musk was indeed chairman of the board of both companies at the time of the bailout and that kind of sets the tone. It's pretty obvious that baron has been looking forward to having Musk answer his questions on the stand. But he starts by showing three video clips of Musk’s deposition from two years ago labeled JX 2789. We don't have those clips but we can read off the audio verbatim. It's Musk on tape being rude and adversarial towards Mr Barron.
This… isn’t scepticism. Aside from the clarification on Musk’s status as chairman, it’s not even relevant. This is purely CSS projecting their excitement for this trial because of their bias against Musk. Anyway, we finally now get into the start of the heart of the trial. The three audio clips’ transcripts are:
But we'll get back to it and that's why I suggest you just stop wasting everyone's time and see how the next few quarters go, at least the balance of the year. And then if that still doesn't work out, then I suggest you come back and start wasting everyone's time again.
So what you will see as we solve these things as -- because resources have now been reapplied to solar is a dramatic increase in the deployment of megawatts in the years to come. At least -- one cannot predict these things precisely, but in the years to come, this case will look silly and you will have wasted your time and ours.
It was like, remind me there was some filed suit against us for this 5,000 a week Model 3 thing, and then we got to 5,000 a week. And this is obviously a waste of time. It's the same thing. We will fix the solar situation. And you'll see it's just a big waste of time.
One final note before moving on, these audio clips are later said to be from June 1st, 2019. Back to CSS
24:43 - Fixing the Situation
Baron then starts questioning Musk about these false predictions he made in 2019 during his deposition by asking yes/no questions that musk responds to with vague references to promises versus aspirations. For example, Baron reminds Musk that his sworn deposition claimed that Tesla would have fixed the solar issues by the end of the year, and Musk answers that was my aspiration
Ironically, CSS highlight’s Baron’s questions during this segment. Not all of them are yes/no, and not all of them can be fully answered with a simple yes/no. For example:
Baron: You said you will [fix the solar situation] in a quarter or two. Didn’t you say that?
Musk: I said we’ll see how the next few quarters go.
Baron: In the second part of your deposition, you specifically said you'll have it fixed by the end of the year. Do you recall that?
Musk: That was my aspiration.
Again, I am not a lawyer, but Baron appears to be twisting Musk’s statements. Baron claims Musk specifically said it would be fixed by the end of the year. CSS claims Musk made hard predictions. What did Musk actually say?
At least -- one cannot predict these things precisely, but in the years to come, this case will look silly and you will have wasted your time and ours.
25:05 - What Difference Does A Year Make Anyway?
Musk tries to tell the court that the solar business has been fixed but Barron pulls up exhibit PDX 1 on the screen which would have been a graph similar to this one published on Seeking Alpha. The graph shows the decline of SolarCity's installation numbers, and we have marked posts on this graph when the bailout occurred and when Musk was deposed wherein he made these statements. And straight away the plaintiff's lawyers proved to the court this is not a waste of anybody's time despite Musk’s claim to the contrary, because none of these problems have been solved.
Remember earlier when I said that the deposition was from June 1st, 2019? This is important because, just like Mr. Baron, Common Sense Skeptic gets the date wrong. CSS shows this image on the screen, with the deposition marked as Q2 2018, instead of Q2 2019:
So, what is going on here? The entire exchange is built around Musk’s deposition, where he stated they pulled solar staff to work on Model 3 production, and didn’t fully send them back until around Q2, 2019. Baron’s questioning is basically, why did deployment after Q2 2018 go down when the employees went back? But, the employees didn’t go back until Q2 2019. If you shift that line over by a year, the entire narrative falls apart.
Missing from this chart are the 2021 reports, with 92 MW deployed Q1, and 85 MW deployed Q2.
As a side note, I find this particular exchange particularly interesting. Remember, Musk didn’t claim solar personnel were fully redeployed to solar until Q2 2019:
Baron: Again, my problem is that, again, after you fully deployed and everybody was now fully at Model 3 between Q2 2018 and Q2 2019 -- I asked you specifically, since you had already taken all the staff and resources that you needed off of SolarCity, why did it continue to go down both to 73 and then 47, because you had no more changes at that point.
Musk: Are you referring to 2018?
Baron: Let's move on.
Musk: I believe you are getting confused about the dates here.
Baron: No, I'm not getting confused. The point is that even after you redeployed, the problems still kept getting worse at SolarCity; correct?
Musk: No. As I just explained to you, you got your dates wrong.
Baron: By the way, [change of subject]
25:32 - To Growth, Or Not To Growth?
All these numbers are taken directly from the Tesla quarterly reports, and since the acquisition they have tanked. Both men are looking at the same materials. Musk sees an amazing growth rate as he states on page 53. Baron sees a faltering company. You can make up your own mind who is correct.
Musk is answering Baron’s questions about Tesla’s solar performance since the deposition, since Model 3 production was ironed out and solar workers were able to focus on solar again. Musk talks about how deployments were trending up until the COVID-19 pandemic hit, and how they are trending up again as the economy opens back up. Let’s look at the exchange in-context(this is a long one):
Baron: So when we take it out, as we are here in 2021, we can see that at 92 megawatts per quarter, you are a long way from either the 710 megawatts per quarter or the 523 megawatts per quarter that was being told to shareholders that they should expect;
correct?Musk: Yes. I think, like, some elaboration here is needed, because as I mentioned earlier --
Baron: Mr. Musk, with all due respect, we're not getting out of this if every time I ask a question that is a yes or no, you want to do an alliteration. I'm not going to stop you, but I'm going to tell you that, you know, if I ask you yes or no -- we have a lot more questions, and if you want to alliterate every time, we're here for days.
Musk: I'm okay with that. I think it's important that the Court understands what's actually going on. And some of your questions, I think, are somewhat really tricky and deceptive. If I may continue. If I'm allowed to continue.
Baron: Go ahead. Is there something you want to say?
Musk: Yes. So as I mentioned earlier, from 2017 to 2019, those were the three hardest years of my entire career. The company was in dire straits. Many times, when I thought we were out of the woods, it turned out we were not. And so the entire company was dedicated to the success of the Model 3 program, and really just trying to figure out how we can bring in more money than we spend and not go bankrupt.
So that was 2017 through 2019. Then, as everyone is aware, there was a pandemic in 2020. The pandemic shut down all of the permit offices. So we weren't allowed to work. And even if we did work, we couldn't get anything permitted in 2020. So -- and that still has not -- we're only beginning to get out of that now. Still, some permit offices are not fully opened or are staffed at a very limited rate. So it's
simply impossible to have -- to sort of fix solar while still trying to fix the Model 3 program, and then run headlong into a pandemic.You see the low point, 27 megawatts, was Q2 2020. We were fortunate that there were any permit offices open. And since that point, we have increased dramatically the solar installed. And the trend is going to be, I think, very strong again in the future.
Baron: Well, so is it your testimony that the only thing that was broken from SolarCity, from the time you purchased it at least through our deposition where your megawatts was down to 29 megawatts per quarter, was your redeployment of SolarCity people to Model 3?
Everything else about the company was perfectly great; is that what you are saying?
Musk: No. That's obviously sort of a leading question. Things are never always great. They are never always great, and there are always many issues that we have to deal with. I'm just saying that, as I said earlier in my testimony, that the company had to make the Model 3 program work from 2017 to 2019, and there were many times when we thought we had the problem solved, and it turned out not to be the case. And, in fact, it's not merely that one has to get to 5,000 cars a week for Model 3 to be successful. We also had to figure out to reduce the cost of the car and how to solve the delivery logistics. So that really -- we are not able to get to positive cash flow until basically end of 2019.
And so -- the company's focus was on Model 3, had to be from 2017 to 2019, and then we ran headlong into a pandemic, which made it impossible to even get permits to install solar in most parts of the country. And now, as you can see from the graph, it clearly shows that as the pandemic lifted, we saw 300 percent growth from Q2 2020 to Q1 2021. The growth more than triples. If that's not a high-growth story, I don't know what is.
Now obviously that is a lot to read just to make a point about one thing CSS said, but as is often the case, context and nuance are far more complicated than just spewing whatever it is someone wants to spew. Musk said the last three quarters look promising. CSS paints that as Musk claiming the entire history of SolarCity/Tesla Solar looks good.
26:50 - More… Scepticism?
Common Sense Skeptic provides this appeal to ridicule logical fallacy. I don’t think any rational person actually needs to have it explained to them that not every question can be properly answered with merely a yes/no answer.
As is common with their videos, this is not the behavior of a rational skeptic. This is the behavior of an immature person with an agenda to push. CSS refers to Musk’s explanation as “droning on” and a “diatribe”. Again, clearly showing their bias.
27:31 - CSS’ Refusal To Accept Reality
There's some banter back and forth about the timing of redeployment of resources from SolarCity to Tesla and back, before Baron reminds Musk of his testimony at the time. Then in 2019 Musk claimed Tesla had redeployed former SolarCity resources and manpower back into Tesla energy, which should have meant installation numbers for SolarCity should have started climbing back to where they were, but that did not happen. The graph clearly indicates that SolarCity production is a fraction of what the company enjoyed at its peak prior to the bailout, and nowhere near what Musk promised it would deliver.
This is where the deposition date is corrected in the record, but CSS does not fix the information, and again shows their chart with the deposition date listed in 2018.
Common Sense Skeptic is right about solar deployment being a fraction of what it was at SolarCity’s peak, but this argument gets lost in all the crap they surround it with.
28:05 - Did You File The Thing?
At the top of page 60 Baron wonders why none of these redeployments were filed with Tesla's SEC paperwork. Musk claims they were but Baron informs him that no such paperwork exists where Musk reported in the company documents that SolarCity was declining because he had gutted the company, and Musk is unable to provide documents contradicting that fact.
I don’t even know where in what form information like this would be documented with the SEC, and apparently neither does Common Sense Skeptic, or Baron, as no specific form is mentioned. This is not my area of expertise, so I will simply show that CSS is misrepresenting this exchange. Musk said he is “certain of it” and “we can obviously do this later”. If Baron hadn’t requested Musk’s team provide that information, it would be no surprise that they wouldn’t have it on hand.
Baron: By the way, you never reported in any SEC filing that redeployment; correct? There's no SEC filing that says, hey, the reason we are doing bad in SolarCity is because I redeployed people from Model 3 -- or to Model 3 from SolarCity; correct?
Musk: Actually, I'm surprised if that would be correct, because I think I did explain in a number of earnings calls that we were all hands-on deck for Model 3. So I believe what you are saying is probably not correct.
Baron: There is no filing with the SEC that says what was happening to megawatts at SolarCity is associated with redeployment; correct?
Musk: I believe if you were to look at my transcripts -- and we can obviously do this later -- that I am pretty confident I said that I told investors that we had to deploy all resources to make Model 3 effective. I’m certain of it, in fact.
28:25 - The 2013-2019 COVID-19 Pandemic
Baron turns the line of questioning to the pandemic and the effect it would have had on the solar industry as a whole.
Just keep this in mind. Baron and CSS are both talking about COVID-19’s effect on the solar industry as a whole. At least, that’s what they say they are talking about, but what do they actually talk about?
Musk says the entire industry got hit to different degrees, so Baron pulls up exhibit JX 3193 which contradicts Musk in a big way. It's an industry analysis from Wood Mackenzie, which is a global research and consultancy firm that covers the solar industry, who Musk claims not to recognize the name of, despite being the chairman of a solar installation company, and Wood Mac has covered that industry for the past five decades. Their report that we don't have contains a graph similar to this one, showing that before the company was sold SolarCity enjoyed holding 33 percent of the market share for solar installation, but in 2019 that share had dropped to just five percent and that is pre-COVID so that particular argument holds no water.
Right. So Musk says that the solar industry as a whole was hit by the pandemic, and both Baron and CSS point to SolarCity’s declining market share before COVID hit as proof that Musk is wrong?
29:18 - Quarterly Reports
[Musk] also states that right now Tesla Energy is doing quote unquote “reasonably well”. Exhibit JX 3192 is the Tesla report for the second quarter of 2021, where that particular department claims to have lost 101 million dollars in the previous three months. Baron identifies the growth margin during that time was negative 20 percent, meaning that not only was the company selling less, they were actually losing money on every sale. So Baron asked Musk for confirmation. “That had nothing to do with the pandemic, correct?” but the last words out of Musk's mouth before the court goes into recess were No it has everything to do with the pandemic, trying to blame all of Tesla Energy's current woes on the COVID pandemic that he didn't even believe in.
Okay, so here is Tesla’s Q2 2021 10-Q. Baron points to, apparently, page 46, but that page doesn’t have the information he is claiming. In fact, I can’t find the information anywhere. I believe he is referring to gross margin, rather than growth margin, because of this line:
Baron: If you turn to page 47 of that same document, it shows that the growth margin of energy-generation storage was negative 20 percent. So we're not just talking about a lack of sales with regard to Tesla; we are talking about the profitability of the sales that you had.
Profitability per sale is gross margin. Gross margin is shown on page 36 of the 10-Q, but it’s 2% for the last quarter, not negative 20%.
Edit: I’ve figured this out. Baron is using Tesla’s Q1 2021 10-Q, not Q2. Page 33 has all the figures Baron refers to.
Don’t go to a lawyer for economic advice. It is not at all surprising for gross margins to be down during a pandemic. When production and sales are down, fixed costs remain, driving down gross margin. This is an attack by a lawyer trying to prove a point, and CSS parrots it without actually understanding the situation. The SEC filings go into more detail about why revenues and costs change for each sector, each quarter. Of course, CSS doesn’t refer to the SEC filings themselves.
30:00 - Proving Yourself Wrong
So in light of that statement from Musk we're just going to leave this right here. It's a Wood Mackenzie report stating that 2020 was a record year for solar installations, the best year ever which kind of ends that line of excuses for Musk.
This is the report CSS is referring to. If you look at the graph, you will see that, from 2019 to 2020:
Commercial installation was down.
Community solar was roughly even.
Residential solar was roughly even, a slight increase.
Utility solar is what soared.
CSS has an unhealthy habit of not looking beyond the headline, this is just one more example of that.
Conclusion
So, in this video, and in the comments for this video, CSS has:
Argued with a lawyer
Grossly distorted the first few questions
Claimed Musk lied about his scholarship with no facts, no links, no numbers, no calculations.
Lied about Musk’s account of his applying to, and declining to attend Stanford
Made a fuss about someone with two degrees getting job offers during the dot-com boom
Said Musk isn’t a coder because he allegedly isn’t good enough of one for CSS
Lied about the X.com/Confinity merger, directly contradicting his own source
Repeatedly shown their bias and lack of professionalism
Misrepresented Musk’s deposition
Been off for most of the cross-examination’s timeline, so far, by a year
Misrepresented Musk’s claims about recent growth
Produced an absurd appeal to ridicule
Highlighted and summarily ignored the correction to their Q2 2018 number
Made a claim about an SEC filing not existing with no details
Used pre-pandemic information to dispute Musk’s claims about the effects of the pandemic
Used, along with Mr. Baron, Q1 gross margin numbers, claiming them to be Q2 gross margin numbers.
Pointed to an increase of utility solar installations to claim Musk is wrong about residential installations.
I think it is clear just how poor of a video this is.