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Thursday, February 11, 2010

Tesla CEO Takes Private Jet as Company Takes Public Loan

By Chuck Squatriglia

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The CEO of Tesla Motors, which has received a fat federal loan, flew to Washington, D.C., aboard a private jet at least 12 times in the past 14 months. Although it isn’t unusual for CEOs to jet around on corporate planes, Elon Musk did so not long after lawmakers berated the heads of the Big Three automakers for doing the same thing while seeking a government bailout.

PeHub.com, citing FAA records, says Musk flew to Washington aboard his Dassault Falcon 900 on June 15, 2009 — one week before the Department of Energy agreed to lend the company $465 million to help build the Model S sedan, and two weeks after Tesla took over paying the plane’s operating costs. Those costs came to $175,000 in the second half of last year, according to the paperwork Tesla filed with the Securities and Exchange Commission ahead of an impending IPO.

The Silicon Valley automaker lost $31.5 million in the first nine months of 2009. Although the company has been steadily cutting its losses, it has lost $236.4 million since its founding in 2003. Tesla turned its first and only profit in July, 2009 but said in the Form S-1 filed with the SEC: “We expect the rate at which we will incur losses to increase significantly in future periods from current levels.” The same document notes Musk is taking $1 a year in salary.

Since Tesla started footing the bill, Musk’s plane has flown to Washington five other times, including one flight this year. Four of those flights were made after the feds approved the loan but before they finalized it. PeHub did not list the remaining six flights it claims Musk made since the beginning of 2009.

As PeHub notes, there’s nothing odd about the CEOs of tech firms billing their companies when flying in their jets. But PeHub quotes one venture capitalist who says it is highly unusual for the CEO of a startup to do so.

“It’s really not normal. and I don’t think it’s actually right,” said Ho Nam of Altos Ventures, which does not have a stake in Tesla. “It’s okay to expense what it would have cost to fly commercial, but the difference should be covered by the person using it. It’s really about the culture and the message it sends to the rest of the company.”

Tesla spokesman Ricardo Reyes said the company does not own a jet but pays for expenses incurred when Musk and other employees fly.

“Tesla has no corporate jet,” he said in an email. “When traveling on business, Elon and other Tesla employees have used his private airplane, especially for urgent or unscheduled travel, other times they fly coach. Tesla has paid for expenses such fuel charges and landing fees on some of the trips.”

Musk may have done nothing wrong. There’s nothing wrong with someone as busy as Musk — who runs three companies — flying around on a private jet. And some of those flights may have involved business related to Musk’s other ventures, Space-X and Solar City. But to have Tesla Motors foot the bill for any flights pertaining to its business while taxpayers underwrite the Model S is a colossal PR blunder.

Just ask Rick Wagoner, Alan Mulally and Robert Nardelli.

1 comment:

Private Jet said...

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