Enjoy this enormous $900 PDF from the Delaware Court of Chancery

These days Elon Musk is always on trial in the court of public opinion, but occasionally he’s also on trial in actual court. On Wednesday, November 16th, Musk testified in the Delaware Court of Chancery in the legal trial over his $56 billion pay package from Tesla. You might recall that this is the same court (and judge) Musk would have appeared before if he had not completed his takeover of Twitter, so it was kind of like a peek into an alternate simulation. Even Musk seemed to think so:

“Are we in the Tesla trial or the Twitter trial?,” Elon Musk asked in cross-examination. “I’m slightly confused.”

Court is always interesting when Elon Musk is involved — even when the subject matter is relatively boring stuff like executive compensation packages. As CEO of so many different organizations and as a man with lots of hobbies, Musk has created a ton of surface area to scrutinize. That’s one of the reasons attorneys were able to wander the wild wilderness of his behavior at Tesla, Twitter, and elsewhere during examination. And Musk’s Tesla compensation has only gotten more relevant since his testimony, as Tesla shareholders and lawmakers are asking whether the big boss has left the building to meddle full-time in Twitter’s business.

The big headline from his court appearance? Musk revealed that he doesn’t want to be the CEO of Twitter or any other company. (It only took about a month for millions of voters on Twitter to agree that he should step down.) But if you want to dig in and see all of the spicy exchanges from the trial, keep reading. What follows is the full transcript of Musk’s testimony, plus a few of our own annotations and embeds.

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Direct examination

Musk Defense Attorney Evan Chesler: Good morning, Mr. Musk.

Elon Musk: Good morning.

Q. There is a binder in front of you with some documents that I may ask you some — I will ask you some questions about. Would you turn to the document labeled JX 48, please.

A. Yes.

Q. You see this is entitled “The Secret Tesla Motors Master Plan (just between you and me).” It is dated August 2, 2006. Have you seen this document before, sir?

A. Yes.

Q. Who created this document?

A. I wrote it.

Q. I’d like you to look at the second paragraph on the first page, please. It begins “As you know, the initial product….” Do you have that paragraph?

A. Yes.

Q. Toward the end of that paragraph, it says, “This is because the overarching purpose of Tesla Motors (and the reason I am funding the company) is to help expedite the move from a mine-and-burn hydrocarbon economy towards a solar electric economy, which I believe to be the primary, but not exclusive, sustainable solution.”

A. Yes.

Q. Was that your vision for the Tesla Corporation at or about the time you created this document?

A. Yes, it was actually something that I had planned to do for a long time, as we articulated in this document.

Q. Has it remained your vision for the company in the years since this document?

A. Yes. We have executed the elements of this master plan, and then I wrote a part two, which we’ve also done, and I will soon be publishing part three.

Q. Looking back to the period 2006, did you have a sense then or a view of the likelihood that you would succeed in accomplishing that vision?

A. I thought it was extremely unlikely.

Q. Why is that?

A. There had been no successful car company since Chrysler in the ‘20s, domestically.

Q. Would you look at the document that is marked JX 408, please. You see that this appears to be a transcript of a shareholder/analyst call from June 6, 2017?

A. Yes.

Q. Do you have that, sir?

A. I do.

Q. I’d like you to turn to page 0013. Those are the pages that are stamped at the bottom of the page, dark numbers. So it should say “JX 0408.0013.”

A. Yes. Sorry.

Q. You see that there is — towards the middle of the page, there’s a pretty long answer that you are giving that runs on for several pages, but if you look toward the middle of the page, about five or six paragraphs down, there’s a little paragraph that says, “So — but The Boring Company is maybe 2% of my time. Neuralink is 3% to 5% of my time. OpenAI is going to a couple of percent. And then 90% plus is divided between SpaceX and Tesla.”

And a paragraph or two below that, last sentence, the last sentence is, you say, “But I just want to emphasize very clearly, 90% plus of my time is divided between SpaceX and Tesla, and the remaining less than 10% is everything else.” Was that an accurate description of how you were allocating your time back at the time of this earnings call in June of 2017?

A. Yes.

Q. How, if at all, has that allocation of your time changed in the period, say, between the time of this call and 2021?

A. Well, later in 2017, when things got very difficult for Tesla, my time was almost 100 percent Tesla. So at times of crisis, the time allocation will change to where the crisis is. And Tesla was overwhelmingly the crisis for the years from late 2017 to at least 2020. Yeah.

Q. Thank you. You’ve been the CEO of Tesla for how long, sir?

A. Well, officially, I suppose, since mid-2008. Effectively, I’ve been in charge of the company from the Series A round of April 2004.

Q. Prior to 2009, were you compensated for being the CEO of the company?

A. No. I don’t think so, no.

Q. Okay. Do you recall that in 2009, an option plan was put in place for your compensation?

A. Yes.

Q. And just in general terms, do you recall on what basis you would be awarded options under the 2009 plan?

A. That was, I think, half time-based vesting and half of milestone-based vesting, contingent on the Model S success.

Q. So half of the options under that plan you got for remaining at the company for some period of time?

A. Yes.

Q. And the other half for achieving some volume of production for, what did you say, the Model S?

A. Yes.

Q. What was the Model S?

A. The Model S was a four-door sedan, still pretty expensive, but much more functional and a lower cost than the Roadster sports car.

Q. Do you recall that the total amount of that grant in terms of equity in the company was about 8 percent?

A. Yes.

Q. So if you stayed in the company for several years and achieved a particular level of production for one of the car models, you’d be granted options to purchase 8 percent of the company?

A. Yes.

Q. Was there any litigation over that plan, do you recall? Were you or the board sued over granting you that option plan?

A. No.

Q. After the 2009 plan, do you recall that another plan of option grants went into effect for your compensation?

A. Yes.

Q. Was that in 2012?

A. Yes.

Q. Just in general terms, on what basis were you to be compensated with options under the 2012 plan?

A. The 2012 plan was a series of milestones that were market capitalization and production-based. So that required simultaneously achieving multiples of the market cap and high volume of production, primarily, except for one of the milestones, which was based on achieving a 30 percent gross margin. All of the milestones were achieved except for the 30 percent gross margin. We, I think, got to 28 percent.

Q. Do you recall what the market cap increments were under the 2012 plan for each of the tranches?

A. They were $4 billion market — I believe $4 billion increments.

Q. And there were ten of those; is that correct?

A. Yes.

Q. And do you recall what percentage of the equity of the company you would be granted options to acquire for each of the tranches?

A. I believe it was about 10 percent.

Q. 10 percent in total, if you achieved them all?

A. I believe so.

Q. So would that have been a half a point, half a percent, for each of the ten?

A. Yes.

Q. Okay. So then if you achieved all the tranches, that would result in, what, a $40 billion increase in market cap for the entire plan?

A. That’s correct. I think we were around $3 billion in market cap, so it would have required — I think the first milestone was I think around 8 billion. So it would have required more than a doubling of the company’s value to achieve the first milestone.

Q. And then for each — 4 billion each for all the milestones to get to about 40; correct?

A. That is correct.

Q. So you’d get about 5 percent of the equity of the company for $40 billion of market cap appreciation under that plan; is that the way it worked?

A. I think it might have been more than that, but yeah.

Q. “More than that” meaning?

A. A higher percentage.

Q. Higher percentage. Do you recall if there was any —

A. Sorry. Go ahead.

Q. Do you recall if there was any litigation, anybody sue you or the board, over granting you those ten increments of a half point each for $40 billion in market appreciation?

A. No.

Q. Now, by the time we get to 2017, do you recall approximately what the market cap of Tesla was?

A. I believe it was around 40 — just over $40 billion.

Q. What was the situation at the company? What was going on at Tesla in 2017?

A. 2017, we were preparing to start production of the Model 3, which would be our first high-volume, affordable car, essentially step three in the initial master plan. And it was a very — we were in a very tough situation, I’d say. So in order to fulfill the goal of making sustainable transport, electric vehicles, affordable, we had to achieve high-volume production. But this is an extraordinarily difficult thing. So we were in quite a tough position. We were losing a lot of money, I believe.

Q. Did you say you were losing a lot of money at that point?

A. Yes.

Q. Had any company ever achieved volume production at that scale of an electric vehicle?

A. Well, no. No company had ever achieved volume production of an electric vehicle at any meaningful scale. Yeah.

Q. What was the view of the marketplace, the public markets, about your chances of pulling that off as of 2017?

A. Well, I think if you were to read the press or to look at the statements of Wall Street hedge funds, they universally thought it was impossible and that we would fail. We were the most shorted stock on the entire stock market. I think we were the most shorted stock in the history of the American stock market, ever, meaning they hoped we would fail and go bankrupt.

Q. Let me ask you to turn in your document book to JX 185, please. Just let me know when you’re there.

A. Yep.

Q. Do you see that 185 appears to be the transcript of a shareholder/analyst call from June 3rd, 2014, sir?

A. Yes.

Q. Okay. Let me ask you to turn to page .0011.

A. I’m there.

Q. You see in the middle of the page, toward the middle of the page, you’re asked a question by what’s described as an unknown shareholder. Your answer begins in about the middle of the page. And you say, “Well, nobody is CEO of a company forever. I mean, eventually, they carry you out. So in my case, I mean, it’s quite difficult, I’d say, being the CEO of 2 companies, it was never my intention to be CEO,” and you go on from there.

Then there’s a subsequent answer just down below that, after an intervening question by the unknown shareholder, and it says — your answer says, “I think I was — yes, certainly be CEO for like, say, 4 or 5 years and then it’s sort of TBD after that. Yes, but that’s the commitment I made to people at Tesla and also to investors is that I’m going to make sure that we execute through the high-volume, affordable car at a minimum and then we’ll evaluate it at that point.” What was the high-volume, affordable car you were referring to in that answer, sir?

A. That was the Model 3.

Q. And was it, in fact, your view at the time you participated in this call in June of 2014 that whether you would remain as CEO of the company was to be determined once you were able to get the Model 3 into volume production?

A. Yes.

Q. Were the problems that you described with respect to the Model 3 solved during the course of 2017?

A. No. There — it took many years to solve the problems. I should perhaps elaborate that the — the Wall Street hedge funds were not — their estimates of Tesla’s bankruptcy probability were not far wrong. The probability of survival was extremely low. So I didn’t necessarily fault them for their assessment. They had good reason to think that we would not survive.

Q. So at that point — I want you to focus on the spring of 2017 — did you have a conversation at some point in that time frame with

Mr. Ehrenpreis?

A. Yes.

Q. And what was Mr. Ehrenpreis’s role at the company in the spring of 2017?

A. Well, I should say Mr. Ehrenpreis’s role through — at Tesla from the beginning has been one of great support and unflinching support for the company. We’ve had so many calls at midnight and 1:00 in the morning. So he’s been a great supporter of Tesla in so many ways. But I suspect what you’re referring to is his role as head of the compensation committee. But I would say that is simply a small part of his contribution to the company.

Q. In his capacity as a member of the compensation committee — actually, chair of the committee — do you recall, at least generally, your conversation with him sometime in the spring of 2017?

A. Yeah. So there — we were at somewhat of an inflection point here where a decision needed to be made as to whether I would continue to run the company or perhaps somebody else should run the company. Yeah. So I did not want to be CEO. I, frankly, don’t want to be CEO of any company. So Ira asked if it would be — if I would be amenable to considering a plan similar to the prior plan that would be very high risk but a high return. I said I would consider such a thing.

Q. Did you work out the details of the plan at that point when you were first speaking to him about it in the spring of 2017?

A. No.

Q. Did you dictate to him what the terms had to be at that point?

A. No.

Q. Did you attend any of the board meetings at which the possibility of the terms of a new compensation plan for you were considered or discussed?

A. No.

Q. Did you attend any of the meetings of the compensation committee at which that subject was being considered?

A. No.

Q. Did you attend any meetings of the working group of internal people and external advisors that worked on the plan?

A. No. I was entirely focused on the execution of the company.

Q. Did you have any role in recommending or selecting any advisors that the board or the comp committee selected to assist them in this connection?

A. No.

Q. Did you have any communications with the board’s advisors, with the comp consultants, the lawyers, did you talk to any of them about this?

A. I did not.

Q. Did you have any control over the work that the internal folks were doing to assist the board in trying to come up with a plan?

A. No. I did not have any understanding of the internal processes by which this compensation structure was obtained.

Q. Did you have any conversations with Todd Maron during the course of 2017 about whether the plan — the work on the plan should be temporarily halted from time to time?

A. I think I said to Mr. Maron that, you know, there — it’s not — it’s not the top priority because of emergencies at Tesla, of which there were many.

Q. Do you know if the shares you held in the company were counted toward the vote that the shareholders ultimately made on whether or not to approve the plan?

A. Sorry. Can you say that again.

Q. Yes. Were your shares in Tesla counted in voting in favor or against the plan?

A. Oh, no. My shares did not count in voting for the plan, nor were the shares of any affiliated party counted in the voting — in the shareholder vote.

Q. Now, just in terms — the terms of the plan are in the record here, so we don’t need to walk through each of the terms, but I just want to ask you about a couple of points about it. Do you recall — whereas in the 2012 plan, I think we’ve established, you would get options to purchase a half a percent of the company’s stock for each tranche, do you recall what percentage of the company’s stock you would receive options to purchase for each of the tranches in the 2018 plan?

A. I think it was roughly half a percent or something like that.

Q. You think it was half a percent for the 2018 plan as opposed to the 2012 plan?

A. Sorry. 2012 — I think — I think it was 12 tranches for normally 10 percent-ish, approximately.

Q. Do you recall what the market capitalization increment was that you’d have to achieve for each of the tranches of the 2018 plan?

A. The market cap increment was $50 billion.

Q. And how did that compare to what the market cap was, approximately, when you were talking to Mr. Ehrenpreis about the possibility of a new plan? What was the market cap of Tesla, approximately, then?

A. It was approximately $40 billion. It varied during 2017, but approximately $40 billion. And — sorry. Yeah, sorry. I think — I think $50 billion increments. And the first — the vesting of the first point would be — require, I think, a $100 billion market cap, so more than double the current market cap of the company.

Q. Okay. And so you said you thought there might have been ten. Does it refresh your recollection if I suggest to you there were 12 tranches in the 2018 plan?

A. There were 12.

Q. Okay. So 12 tranches at $50 billion of market cap appreciation for each tranche would require an increase of how much market capitalization for you to achieve all of the goals in the plan?

A. I believe it would require a $600 billion market cap.

Q. Over and above whatever the company was worth at the time?

A. Correct.

Q. Now, do you recall that at some point, there was a discussion between you and one or more members of the board about whether your options would be granted on a total outstanding shares or fully diluted basis?

A. Yes.

Q. Do you recall what your preference was at the time?

A. My preference was that it be on a fully diluted basis.

Q. Why is that?

A. Well, over time, there would be incremental dilution of the company, and so a given percent would be diluted according to incremental shares that would vest on — essentially, on a fully diluted basis of all the shares vested and that there would be a large number of outstanding shares. So what would be normally perhaps on the order of 10 percent would be much less if on a fully diluted basis.

Q. What was the position of the board with respect to this issue in response to your position that you wanted fully diluted shares?

A. The board declined and said it should not be fully diluted. The — I mean, the two areas where the board — where there was significant — the board pushed significantly, which I conceded, were that I had asked for fully diluted; the board declined to do fully diluted; and the board also said that — that I think the shares could not be sold for a period of five years after the exercise of the options. I should say that the five-year holding period is perhaps the — that was my biggest concern, because it would mean that either I would need to run the company for another five years after the stock vested or I would need to find someone who would run the company well enough to not cause the valuation to subsequently decline significantly.

Q. And you agreed to both of those terms?

A. Yes. A lot can happen in five years.

Q. Indeed. Now, there’s been some testimony, some evidence here about the fact that there was a discussion back and forth in the latter part of 2017 about how many shares you would end up getting options for, how many millions of shares you’d get options to purchase. Do you recall any discussion on that subject as opposed to the total outstanding versus fully diluted question?

A. Yes. I believe in rough numbers, I was sort of aspiring to, I think, roughly 28 million shares; and the board proposed — or it ended up being 20 million, I think.

Q. And you accepted the 20 million as the number of shares?

A. Yes.

Q. Now, if it turns out that whether you got the shares initially, whether you got the options — excuse me — initially, on a fully diluted or a total outstanding share basis, it would still be about 20 million shares, was there any difference, from your perspective, going forward, that they be granted on a total outstanding basis rather than on a fully diluted basis?

A. Well, if the share — if the option count was adjusted according to dilution, it would have been a much bigger number over time due to subsequent dilution of — you know, basically issuance of additional shares, since the model of Tesla which I put in place was that all employees are granted stock in the company, no matter how junior they may be. So as the company grew, then we would necessarily dilute the company in order to ensure that everyone, even the most junior worker, would have stock in the company.

Q. What was your view back in 2018 when this plan was approved of the attainability or achievability of the milestones that were built into the plan?

A. I thought it was extremely unlikely that this would happen but not — not impossible, but unlikely. And there’s no question that the stock market agreed that it was unlikely because when this plan was announced, it’s not as though our stock suddenly jumped. In fact, there was sort of a belief that it was actually some diabolical plot to try to get the stock price to increase, that this was some sort of Jedi mind trick or something to get the — because of the absurdity with which they viewed such market cap aspirations. So they literally thought it was just — it was just a trick.

Q. I want to ask you, nevertheless, about one statement, at least, that you had made publicly several years before the plan went into effect. Would you look at JX 202 in your book, please.

A. Yes.

Q. Now, you see that this is a transcript of another earnings call. This one is February 12th, 2015. Do you have that one, sir?

A. Yes.

Q. Okay. I’d like you to turn to page .0006, please. And do you see toward the bottom of .0006, there’s a question from Brian Johnson, who’s identified as being an analyst from Barclays Capital? Do you see that?

A. Yes.

Q. And your answer begins at the bottom of 6 and goes over to the top of page 7. Do you see that, sir?

A. Yes.

Q. Okay. You say at the bottom of 6, “[I’m] just saying the back-of-the-envelope — if you make certain assumptions, and I emphasize these are just certain assumptions, I am not saying that they are true or that they will occur, but I’d bet that they do occur, personally, but just my personal opinion.” Then you go on and you say, “If you take this year’s revenue, around 6 billion or thereabouts, and if we are able to maintain a 30% growth rate for 10 years, add to your 10% profitability number, and have a 20 PE, our market cap would basically be the same as Apple’s is today. That’s going to require a bit of — on the order of $700 billion — obviously, getting that rolling requires some significant CapEx. But I am hopeful that we can do this without any significant dilution to the Company, maybe minor dilution but nothing serious.”

Did you say those words or in substance those words back at this transcript of the call in February of 2015?

A. Yes.

Q. Was that your personal opinion at the time, if you could accomplish this kind of a growth rate and that kind of a profitability rate and that kind of a price-to-earnings ratio, that you could get to the size that Apple was at the time?

A. Yes. I mean, these are, obviously, assumptions that are incredibly difficult to achieve. I was really just stating this is how companies are valued in the stock market; that there’s a price earnings multiple. And, you know, so if — and I think it might have been Einstein who said this, but compound interest is the most powerful force in the universe. It could be one of those misattributions, but it kind of is. Compound interest is the most powerful force in the universe.

Q. Mr. Musk, back in 2018, would you have accepted a compensation plan that prevented you from being the CEO, running other companies?

A. No.

Q. In fact, when you became the CEO of Tesla many years before, were you already the CEO of any other companies?

A. Yes. I was running SpaceX. I should say the CEO role at SpaceX and also at Tesla, it’s less about the CEO but, rather, that I am the one driving the technology. So at SpaceX, it’s really that I am responsible for the engineering of the rockets; and at Tesla, for the technology, you know, in the car that makes it successful. So CEO is often viewed as somewhat of a business-focused role, but in reality, my role is much more that of an engineer developing technology and just making sure that we develop breakthrough technologies and that we have a team of incredible engineers who can achieve those goals. And it is my experience that great engineers will only work for a great engineer, and so I — that is what I — that is my first duty, not that of CEO.

Q. Would you have accepted a plan that effectively had a punch clock, where you had to punch in certain times and punch out certain times at Tesla in order to get the compensation?

A. No. I mean, I just pretty much work all the time, so — with rare exceptions. So I don’t know what a punch clock would achieve.

Q. What was your relationship like with the board at Tesla back in this 2017 to ‘18 time period we’ve been talking about?

A. My relationship with the board?

Q. With the board, yes.

A. I think it was good.

Q. Did you control the activities of the board on a day-to-day basis?

A. No.

Q. Did you control their compensation as directors?

A. No.

Q. Did you have the power to control their election to or removal from the board of directors?

A. No.

Q. Did you suggest to any of them at any point in this process that if they didn’t support this compensation plan, that you’d do anything, any repercussions, any response, any intimidation of any kind?

A. No, not at all.

Q. Did you believe at the time that you controlled the shareholders of Tesla?

A. Absolutely not. The shareholders were sophisticated investors. They have made decisions according to what they believed would result in the best outcome for them as shareholders. We did have — we still do and did have then some of the most sophisticated investors in the world.

Q. There’s been some testimony here about Capital Group. Do you recall that they were a shareholder of Tesla at the time?

A. Yes.

Q. Did you ever call anybody at Capital Group before the vote on this plan was done to express any views about whether or not they’d vote in favor of the plan?

A. No.

Q. Do you know whether — what happened to Capital Group’s stake in the company after your compensation plan was approved?

A. I believe they increased their stake in the company.

Q. Back in the 2017-2018 time period, did the finance organization — withdrawn. Who was the CFO of the company at the time?

A. Sorry. When?

Q. Who was the chief financial officer back at the time this plan was being formulated, 2017-2018?

A. Deepak Ahuja.

Q. Did Mr. Ahuja and his organization prepare projections in that time period for future — looking forward to the future?

A. Yes.

Q. What was your view about the philosophy of — the nature of the projections that Mr. Ahuja and his group were preparing at that point and you were reviewing to go to the board?

A. Well, I think there were some optimistic projections, but I do think that one should generally have optimistic projections because it is rare that you exceed those projections, so — because, you know, there’s usually going to be — it’s rarely green lights to Malibu. So it’s like whatever your projections are, you will typically achieve some percentage of those projections because of unforeseen circumstances that — unforeseen negative circumstances.

So I would generally say that those projections would be success-oriented, meaning that a lot of things would have to go right, but in reality, not everything will go right and some things will go wrong. So it is good to have high aspirations for the projections because that’s the sort of, like, pretty much everything-goes-right projections. If you lower the projections, then you will still achieve some percentage of the lower projections. So it’s always a challenge to say, what is the right level of optimism to have in projections. I tend to bias towards the optimistic side.

Q. What is the impact, from your perspective, that Tesla has had up to this point on the goal that you articulated back in 2006 of moving from a carbon-based economy to a solar-based economy?

A. Or just a sustainable —

Q. A sustainable economy.

A. Well, I think Tesla’s had an immense effect on the world in not just that Tesla is making electric vehicles, but we have been really the main reason that the rest of the car industry has moved towards sustainable energy, towards electric vehicles. When we were doing electric vehicles, even as recently as maybe even three or four years ago, certainly five years ago, we were laughed at by the rest of the industry, and they had no plans to do electric vehicles.

So — but when the Model 3 was successful and really started taking a market share away from them, then they changed their plans to make electric vehicles. But one can simply read the press and see what their public statements were about electric vehicles. And they — they thought — they had no plans to do electric vehicles. They thought electric vehicles were a joke.

But then when the Model 3 started taking market share away from them, they really had no choice but to begin electric vehicle programs. So — and to their credit, they credit Tesla with the reason for that.

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Cross examination

Plaintiffs’ lawyer, Attorney Greg Varallo: Mr. Musk, welcome back to Delaware. Nice to see you again. I hope your travels weren’t too difficult, and I appreciate your giving us this time today. I know you’re occupied in many different directions.

Elon Musk: Yes, I might be a little slower than otherwise since I flew in overnight on a red-eye, so…

Q. I appreciate it. You are the Technoking of Tesla; is that right, sir?

A. Among other things.

Q. And you came up with that title yourself; correct?

A. Yes.

Q. And, for the record, you were stone-cold sober when you came up with the record — with the title; right?

A. Yes.

Q. And Tesla filed an 8-K announcing that appointment because you wanted to follow the process required for a title change. Is that also true, sir?

A. Well, it was more of a title increment, but yes.

Q. And you didn’t consult with the board before giving yourself the new title; right?

A. No, I believe we did consult with the board.

Q. Well, you recall giving your deposition in this case, don’t you, sir?

A. Yes.

Q. Down in Austin, we had a lovely day together, you watched a SpaceX launch, it was a great day. Remember that?

A. Yes.

Q. And you swore to tell the truth in that deposition; is that right?

A. Yes. That doesn’t mean my memory is perfect, but yes.

Q. You did your very best to tell the truth; correct?

A. Correct.

Q. Let’s watch a clip from that deposition, if we can. Counsel, page 25, lines 13 through 16.

(A video clip was played as follows:)

Question: Did you consult with the board about the new title before — before filing it on 8-K? Answer: No, but it was communicated to the board. I think with Zach and Bill Berry, and yeah.

Q. Did I ask that question, did you give that answer at your deposition, sir?

A. I think that the — the point is the board was talked to before it was filed.

Q. My question, sir, was did you consult with the board before giving yourself the title?

A. Before formally giving myself the title, yes, of course.

Q. Okay. So you were just wrong in your deposition?

A. Correct, I was wrong.

Q. Got it. And I take it you did not submit any errata sheet to your deposition correcting it; is that true?

A. Yes.

Q. You’ve described the role of Technoking as sort of like a monarch and similar to the role of CEO, but more technologically oriented with more panache than the CTO role and as something that comes with great dance moves and sick beats. Is that true?

A. I mean, I think comedy is legal.

Q. As Technoking of Tesla, you direct Tesla’s operational and strategic decisions; correct?

A. In consultation with others.

Q. Sorry?

A. You know, in consultation with others, yes.

Q. You recall, don’t you, being involved in litigation in this court relating to the Twitter matter?

A. Pardon?

Q. Do you recall being involved in litigation in this very court just recently pertaining to your takeover of Twitter, sir?

A. Yeah, I was not physically in the court.

Q. I understand you weren’t physically in the court, but you recall you were a party to a litigation involving your takeover of Twitter; correct?

A. It does ring a bell.

Q. And you’re aware, aren’t you, that this Court issued an opinion in which the Court expressed, “little doubt” that you have the power to direct operational decisions. You don’t contest that, do you, sir?

A. I mean, I aspire to be less foolish over time, so I, you know, would like to be corrected and not simply make decisions, because if I make decisions without consulting people, then the probability of that decision being wrong is higher and then the success of the company will be lower.

Q. You don’t contest, however, that you have the power to direct operational decisions at Tesla, do you?

A. That’s — that is the job of the CEO/Technoking.

Q. Indeed, in the Twitter litigation, your general counsel and others gave affidavits to the Court testifying that you occupy, and I’m quoting now, “a special position of trust,” and that no one on Tesla’s SI team can review emails in your Tesla email accounts without obtaining permission from you to do so unless that review is legally required. Is that a factually accurate statement, sir?

A. Yes, my email account is — and I think that of a few other senior executives — is in a higher security status because if that information in my email account was made public, it would be material information that could be used to manipulate the stock.

Q. And you also gave an affidavit about your email account where you swore under oath, “Due to my role at the companies, nobody associated with Tesla is authorized to access my Tesla email accounts without my consent, except to the extent legally required.” That was a truthful statement when you gave it, sir?

A. Yes.

Q. And you’re aware, aren’t you, that your lawyers in this case, this very case, submitted a pretrial brief to the Court describing you as — and I’m quoting from page 4 of the brief, “intimately involved in all aspects of Tesla’s operations, from its strategic direction to its product design.” You don’t dispute that description of you, do you, sir?

A. I mean, I work a lot on Tesla. It’s not as though I aspire to be involved in every part of the company, but I must be involved in those parts of the company that are most crucial to its success.

Q. Is it fair to say that you’re intimately involved in all aspects of Tesla’s operations, from its strategic direction to its product design?

A. I’m not sure I’d use the word “intimately.” That wouldn’t be my first choice of words. But I allocate my time according to what I believe is most critical to the company’s success.

Q. I see. Did you read your brief before it was filed? Did you read the brief that was filed on your behalf in this court before it was filed?

A. I did.

Q. Tesla’s also disclosed publicly that it’s highly dependent on your services and that your departure would likely disrupt its operations, delay the development and introduction of vehicles and services and negatively impact its business, which could cause a stock price decline. Any reason to dispute those disclosures about you and your role, sir?

A. No.

Q. We heard about the master plan a few moments ago. You wrote that all by yourself; right?

A. Yes.

Q. And the master plan was designed to lay out a road map for at least a ten-year vision for the company.

Also true?

A. Approximately, yes.

Q. And a part of your reason for writing the master plan was because you wanted to make sure that people recognized you as the person behind and synonymous with Tesla; fair to say?

A. No, that is incorrect. The reason for the master plan was to articulate a long-term vision for the company. The — because people don’t know why the company is executing a particular correction, so the — I anticipated that there would be a significant criticism of the company because the first car was a sports car, and it was an expensive sports car. So the question is, why would you choose to do an expensive sports car? People would be like why — would I think that that is — it is not that we thought that there was a shortage of sports cars for rich people. That’s not the reason for making a sports car as the first car.

The reality is that any car that we made as our first car would be necessarily expensive because we — and this would be Version 1 of the technology, and it would be at low volume. So no matter what car was made, whether it was a compact sedan or a sports car, it would be very expensive. So the — so people are not prepared to pay a lot of money for a small, compact sedan, but they are prepared to pay a lot of money for a sports car.

So I needed to explain that we weren’t making a sports car or an expensive car for the sake of making a sports car or an expensive car, but that it was the only possible path to success and ultimately making a high-volume, low-cost car, meaning we could not get from nothing — from nothing to immediately a high-volume, low-cost car, even though that was actually our objective. And we did receive — despite me publishing this master plan, we still received a great deal of criticism for making an expensive sports car. I was hoping to deflect some of that criticism, which was partially successful, mostly not successful, by explaining that the only way to achieve an affordable electric car was first to make an expensive car and then secondly to make a less-expensive car of medium volume, which was the Model S, and then third to then make a high-volume, affordable car, which was the Model 3.

So I would say my primary goal in writing that plan was to address — to anticipate and at least partly address criticism that we — that we were making an expensive car as though that is what we wanted to do, but, in fact, we did not want to do that. We wanted to make an affordable car, but the only way to achieve that goal was first to make an expensive car, then a medium-priced car, and then a lower-cost car.

There are three — there are two things for any given technology, new technology arena, there are two very important things that are needed to achieve a mass-market product. You have to iterate the technology, I think at least for three major version — three major versions, if not more, but at least three major versions, and you need to achieve economies of scale. If you were to look at something like, say, cell phones, initial cell phones were extremely expensive and really not very good. But with the continued iteration of the technology and then economies of scale making them in volume, ultimately, cell phones became affordable to almost everyone.

And I was trying to illustrate that this is the path of all new technologies, and electric vehicles are a fundamentally new technology, or lithium ion electric vehicles are a fundamentally new technology. That was — I would say that was the primary goal of the master plan. Then the sort of — so the second major goal of the master plan was to emphasize that this was really not because we felt that there was a car company needed, but that there was an electric car company needed, because at that time, there were no electric car startups, and the major car companies had — the few electric car programs that they did have, they had canceled.

And, in fact, this is really tragic, but General Motors had the electric vehicle 1, the EV1 program, and they actually refused to sell people the car. They just gave it as a lease. And as soon as California let them off the hook, they recalled all the cars and crushed them in sort of a car graveyard so that no one could use them again. So that was pretty crazy.

Judge Kathaleen McCormick: I’m going to interrupt, Mr. Musk, only because we can all listen to this all day because it’s very interesting, but I don’t think it was responsive to the question, which I’ve now forgotten. So I’m going to help Mr. Varallo out here.

Attorney Varallo: Thank you, Your Honor. I was going to ask the witness whether he remembered the question. Maybe I can just follow up with this, Mr. Musk. Is it your testimony today that part of your reason for writing and posting the master plan was not because you wanted to make sure that people recognized you as the person behind and synonymous with Tesla; are you denying that that’s one of the reasons behind your writing the master plan?

A. That had nothing to do with the master plan.

Q. Sorry?

A. No, I am saying that had nothing to do with me writing the master plan.

Q. All right.

A. The plan was to —

Q. Let me interrupt you, if I can, because I — I’m on the clock, and as much as I enjoy chatting with you, I suspect your plane is going to leave without you if we have many answers like that. Sir, you recall coming to this court and testifying in the SolarCity trial under oath?

A. Yes.

Q. So I’ll ask my colleague, the technologist, to see if he can pull up the SolarCity trial transcript, page 79, and specifically lines 14 through 19. Counsel, we’re going to put it on the screen, but I have a full set of the transcripts if you need them.

Attorney Chesler: Thank you.

Attorney Varallo: So this is a question that was asked to you in SolarCity when you were on the stand, Mr. Musk, and the question is “And in it” — and this is talking about the master plan — “you wanted to make sure that people thought that this was the person who was behind Tesla, this person who is synonymous with Tesla, and in doing so you called yourself the co-founder. Correct?” And you answered “Yes.”

Were you asked that question and did you give that answer in the SolarCity trial under oath on the stand, sir?

A. I feel as though this context is not — this is taken out of context, and it’s misleading.

Q. I’m happy to allow your counsel to ask you about context when he does redirect. You see it on the screen. Any reason to doubt that you gave that answer to that question, sir?

A. I’m sure this is the transcript, but it is taken out of context and I think misleading to the Court.

Q. That’s all I need. Your counsel will be able to refresh the context, as appropriate. Now, you also wrote and published something called the master plan part deux; correct?

A. Yes.

Q. And that’s a very specific plan to produce specific kinds of technology improvements; true?

A. Yes.

Q. And you believe, don’t you, that the master plan is still guiding Tesla’s strategy; true?

A. Yes. We are —

Q. Thank you. That’s enough.

A. Okay.

Q. A lot of these are yes/no questions, and if you want to give further testimony, Mr. Chesler will be able to adduce it from you. You personally came up with the vision for Tesla; is that right, sir?

A. I mean, there’s — I mean, there was more than just me, but the — if you say like what — for the vision that Tesla has become or the vision articulated in the master plan, then I would be the principal person responsible for that vision, yes.

Q. So you were the person who came up with the vision; is that the answer?

A. I have long wanted to do electric vehicles from when I was in college. At Stanford, my graduate studies at Stanford would have been focused on energy storage technologies for electric vehicles. So my interest in electric vehicles goes back to when I was practically in high school.

Q. Maybe I could get you — you understand the words “yes” and “no” or “I don’t know,” right, you understand those three alternatives? Were you the person who came up with the vision for Tesla, yes or no?

A. I believe you are asking complex questions that are not — where “yes” or “no” is not possible, but “yes” is more accurate than “no.” But your question is a complex question that is commonly used to mislead people.

Q. Well, let’s just dispel any complexity from it. We’ll take a look at your deposition in this case. Page 34, lines 14 through 16, counsel. Let me try that again.

(A video clip was played as follows:)

Q: Who generated or who came up with the mission or vision of the company?

A: I did.

Q. You were asked that question, gave that answer at your deposition; is that right, sir?

A. Yes.

Q. True, isn’t it, that you typically make a recommendation for senior executive compensation to the compensation committee in the first instance, so you come up with the recommendation for the committee; is that true?

A. For senior executive compensation?

Q. Yes, sir.

A. Yes.

Q. And also true that last year, you proposed to the board that Tesla agree to take bitcoin as payment for cars and the board agreed to that proposal?

A. Yes.

Q. And the board action authorizing Tesla to accept bitcoin, the board took action authorizing Tesla to accept bitcoin for cars; right?

A. Yes.

Q. And that decision was publicly announced; true?

A. Yes.

Q. And then Tesla paused accepting bitcoin until gaining clarification about the use of renewable power for bitcoin mining; correct?

A. Yes.

Q. And you personally made the decision to pause bitcoin acceptance unilaterally, exercising your authority as Technoking; true?

A. I became concerned about the use of —

Q. Sir, I don’t care why. Did you make the decision unilaterally?

A. In that case, yes.

Q. Thank you. And you had no discussion with the board about your unilateral decision to pause accepting bitcoin thereafter; true?

A. Correct.

Q. I want to switch topics for just a few moments and talk about tweeting. First, it’s true, isn’t it, that as of October 27 or so of this year, you became the chief twit of Twitter?

A. I mean, that is a humorous title, but yes.

Q. It’s a title you gave yourself; right?

A. As I said, I believe humor is legal.

Q. And for those of us more versed in more traditional business titles, “chief twit” encompasses the role of CEO or interim CEO; true?

A. Arguably so.

Q. Indeed, within hours of closing, you fired Twitter’s then-CEO, CFO, and general counsel; correct?

A. Yes.

Q. You also fired the board?

A. Well, the board was no longer necessary since it was a new company.

Q. Shifting gears just a moment. It’s true, isn’t it, that in connection with a settlement with the SEC, Tesla agreed to form a permanent board committee charged with overseeing implementation of the SEC settlement and controls governing Tesla’s management and public statements regarding Tesla; is that right?

A. Yes.

Q. And your understanding is that the board committee was formed to review the disclosure process, not your individual tweets; right?

A. Yes.

Q. And the committee doesn’t review tweets before you make them; true?

A. Correct.

Q. Ms. Denholm, who chairs the committee, at least at the time of your deposition, had never asked you to allow her to review a tweet that you were making before you made it; correct?

A. Correct.

Q. And the process you follow to comply with this SEC consent settlement is that if you decide a tweet might be one that is required to be reviewed under the settlement, you submit it to an in-house lawyer in advance of making it, wait for some period of time that you decide upon, and then tweet if the lawyer hasn’t given comments; right?

A. Yes. Are we in the Tesla trial or the Twitter trial? I’m slightly confused.

Q. We’re on cross-examination in an interesting case, Mr. Musk.

A. Okay.

Q. So when your lawyer wants to make an objection, he has the right to do it. Sadly, you don’t. But I suspect he will if he doesn’t like the question. At least at the time of your deposition in this case, you couldn’t recall Mr. Berry, who was the — or is the in-house lawyer reviewing your tweets, making any comment to any tweet that you submitted to him; right?

A. I don’t recall.

Q. I’m happy to refresh your recollection. Counsel, page 15, lines 23 through 25.

(A video clip was played as follows:)

Q: Has Mr. Berry made comments to you on those tweets as a result of his review of them?

A: Not that I can recall.

Q. Again, you were asked that question and gave that answer at your deposition; is that right, sir?

A. Yes.

Q. And you believe it’s probably correct that Tesla received letters from the SEC about two of your tweets after the consent decree was amended to make it more clear; correct?

A. Yes.

Q. At least, though, at the time of your deposition, you weren’t aware of any changes to the process that were made after Tesla received these letters; true?

A. Yes.

Q. Now, the settlement with the SEC that gave rise to this permanent committee also charged that committee with review — oversight of review and resolution of HR issues and conflict-of-interest issues; right?

A. Yes, I think so.

Q. You think so?

A. Yeah.

Q. At least at the time of your deposition, you weren’t aware the committee had that charge; right?

A. I don’t recall.

Q. I’m happy to show you the testimony. Counsel, this is page 17, lines 15 through 24.

(A video clip was played as follows:)

Q: Now, it’s also true, isn’t it, that the committee that was established, in your words, to review the process also was to review human resources issues and conflicts of interest regarding management?

A: Human resources issues?

Q: Yes.

A: As it pertains to me or to the rest of the company?

Q: I don’t know. Answer: I — unfortunately, I don’t — I am not aware of those.

Q. Again, you were asked those questions, you gave those answers at your deposition?

A. Yes.

Q. Changing topics. During the most recent Tesla earnings call, did you say that the board was considering a $5 to $10 billion buy-back of Tesla stock?

A. Yes.

Q. Did —

A. I’m not sure if that’s the exact number, but it was — the board is considering a buy-back.

Q. Did the board or anyone else authorize your saying so before you gave that statement?

A. No; but it was on an earnings call, and I believe I — you know, I should describe accurately what is going on to investors.

Q. Well, sir, you’re aware of something called nonpublic material information; right? You’ve heard that term?

A. Yes.

Q. And you addressed the earnings call and said the board was considering a $5 to $10 billion buy-back, hadn’t made a decision yet; true?

A. Yes, we had received —

Q. Thank you. And so let me just ask the follow-up question. You’re also testifying that no one cleared you to give that statement; correct?

A. I don’t believe it needed to be cleared.

Q. Thank you. Is it also true that during this October Q3 earnings call just recently, you said that you saw a path to Tesla becoming worth more than Apple and Saudi Aramco combined?

A. Yes.

Q. Did you clear that statement with anyone before making it?

A. No.

Q. Earlier in — a couple of years ago, actually, in May of 2020, you tweeted that in your opinion, Tesla’s stock price was too high. Do you recall that?

A. Yes.

Q. Did you submit that and get comments on it before you put it out?

A. No. I said it was too high in my opinion.

Q. Yeah. And in November of ‘21, you issued a tweet taking a poll on whether your followers supported your proposal to sell 10 percent of your Tesla stock; right?

A. Yes.

Q. And did you submit that tweet to anyone before making it?

A. I discussed that with Tesla counsel before making that — putting that poll into place.

Q. Got it. July of this year, you issued a tweet disclosing that more Tesla commodity prices are trending down than up FWIW. Do you recall putting that out?

A. Yeah.

Q. Was that something you cleared in advance?

A. No. This is public knowledge.

Q. That’s fine. Thank you. It’s true, isn’t it, Mr. Musk, that, to put it politely, you hold a rather dim view of the Securities and Exchange Commission of the United States?

A. I have concern that they are not executing their duty in some cases.

Q. Indeed, you don’t respect the commission; is that right, sir?

A. That is not correct. I — I — there’s — I mean, some of these things do require, I think, a little bit of elaboration, rather than yes or no. In general, I think the mission of the SEC is good. The question is whether that mission is being executed well and whether — and in some cases I think it is not. The SEC fails to investigate things that they should and places far too much attentions on things that are not relevant. The recent FTX thing, I think, is an example of that. Why was there no attention given to FTX? Investors lost billions, and yet the SEC continues to haunt me despite shareholders being greatly rewarded. This makes no sense.

Q. We saw in this trial, I guess it was yesterday, a clip of you giving a TED talk back in April of this year in which you described this commission as, quote, bastards, close quote. Do you recall saying that?

A. I recall saying that with regard to the San Francisco office of the SEC.

Q. Oh, I see. So your disdain is only for the San Francisco office, not the entire commission?

A. And I would say for some particular individuals at the San Francisco office, who I believe are not doing their duty.

Q. In fact, earlier this year, you recall calling the San Francisco office, quote, shameless puppets of Wall Street short seller sharks who did nothing to protect actual shareholders?

A. I believe that is an accurate statement.

Q. Anyone review your tweet attacking the San Francisco office of the SEC before you made it, sir?

A. I — no, I don’t think so.

Q. And am I correct that the consent decree that you entered into with the SEC provided that you would not “take any action or permit to be made any public statement denying, directly or indirectly, any allegation in the complaint or creating the impression that the complaint is without factual basis.” Do you recall that as one of the obligations in the consent decree?

A. The consent decree was made under duress, so I believe that —

Q. I — we can get to that. I just want to know whether you recall that as an obligation.

A. An agreement made under duress is not valid as a foundation of law.

Q. Okay. Can you tell me whether you know — are you trained as a lawyer?

A. I have some familiarity with the legal system.

Q. I suspected that might be the answer. You know, once upon a time, you could read the law and become a lawyer. Even in Delaware, it was not so long ago that you didn’t actually need a law degree. So maybe you’re on your way.

A. I mean, if you’re in enough lawsuits, you learn a — you pick up a few things along the way.

Q. There you go. Well, putting aside the lack of bar admission, anyway, perhaps legal training is there, but the bar admission isn’t, I just want to know whether you’re aware of this obligation. I don’t really want to hear about what you think about it. I just want to understand whether you’re aware of the obligation, yes or no.

A. Yes.

Q. But you have given interviews publicly in which you’ve contended the SEC was just plain wrong and that you actually did have funding secured, but you settled because the lenders put a gun to your head. Do you recall that?

A. That is correct. That’s the duress I was referring to.

Q. And it’s also true that you put out a tweet that SEC was an acronym, the middle word of which is “Elon’s.” Do you recall that?

A. I believe I said — I suggested having a naming contest for a three-letter acronym where the middle word was “Elon’s,” yes.

Q. Let’s take a look at that tweet. That’s 1555 in your book, and it’s a little bit of the way back. Oh, here it is, it’s also on the screen. Joe’s on the ball here. That’s your tweet, right?

A. It is.

Q. And when I asked you about that in your deposition, you described it as kind of a Rorschach test; right?

A. Yes, yes, you know, whereas I read that as “save Elon’s company,” others may interpret it differently.

Q. And “Elon’s company” is Tesla for this purpose?

A. Yes. Well, it could be another company, but yes.

Q. Mr. Musk, as the CEO of a public company and certainly a CEO of other companies as well, do you think it’s a good idea to actively be at war with the SEC?

A. I would prefer not to be.

Q. If they just did what you wanted to do?

A. If they did their duty.

Q. I want to talk for a few minutes about the findings that this Court made — not this judge, but this Court — about your role in the SolarCity acquisition. And if you would be so kind as to do so, you’ll find in your book something called JX 1554, which is the memorandum opinion that was issued resolving the SolarCity case that was brought against you and was resolved in your favor, so congratulations for that, sir.

A. Thank you.

Q. Let me know when you have the opinion in front of you.

A. I have it.

Q. So I’m going to ask you to turn with me to page .0092, and I want to talk about a number of the findings the Court made about your role in that acquisition. Before we turn to the Court’s findings, true, isn’t it, that that acquisition was very important for both SolarCity and Tesla?

A. Well, the acquisition was important to fulfill the master plan that I had articulated in 2006, which is to advance sustainable energy.

Q. And, indeed, the master plan part deux specifically talks about bringing that company into the fold; right?

A. It specifically talks about solar power as being crucial to sustainable energy.

Q. So let’s look at the Court’s findings beginning on — it’s page 91 of the opinion, but it’s .0092 in the stamping down at the bottom. The Court writes up top “Elon was permitted to participate in the deal process to a degree greater than he should have been:” And then the Court has a series of bullet points, and I want to ask you about just a few of these bullet points. First bullet point in part reads, “Elon declared to Lyndon that Tesla would acquire SolarCity, and later assured Lyndon that Tesla would extend a bridge loan to SolarCity.” Simple question: Do you dispute that finding of fact?

A. No.

Q. Let me draw your attention, if I can, to the next page of the opinion, top paragraph, which indicates that “Elon participated in the selection of Tesla’s outside deal counsel.” Same simple question: Do you dispute that finding of fact?

A. No.

Q. Two bullets down it begins, “Elon was involved in preliminary discussions regarding price during Evercore’s initial presentation….,” and it continues. Do you dispute that finding of fact, sir?

A. No.

Q. And then flip over, if you would, to the next page, second bullet point on the page, “Elon was present for a part of a Tesla Board meeting where the Tesla Board discussed the revised offer for SolarCity.” Again, a simple question: Do you dispute that finding of fact, sir?

A. No. I thought Vice Chancellor Slights’ analysis was extremely accurate.

Q. Wonderful. Thank you. I want to change gears and talk for a few minutes about the genesis of the 2018 plan and follow up on just a few points your counsel made as well. I heard you give some testimony this morning about a spring of 2017 call with Ira Ehrenpreis, the chairman of your compensation committee and a director. Do you recall that testimony, sir?

A. Yes.

Q. Sir, it’s correct, isn’t it, that in this case, you were given written questions, which lawyers call interrogatories, and that you gave answers to those interrogatories under oath?

A. Yes.

Q. Let me direct you, if I can, to Exhibit JX 1256 in the book. Let me know when you’re there.

A. There’s a lot of —

Q. I know, there are a lot of these. I apologize for that. They’re also on the screen, if that helps, sir.

A. Sure. The screen is fine.

Q. All right. So let’s ask our technologist, please, to bring us to page 9 of JX 1256, which is .0009. And I want to focus your attention, if I can, on the first interrogatory here, which asks for the date on which the compensation plan was first proposed, who proposed it, et cetera. And then if we take a look at the very next page where your response sits, I want to focus, if I can, on the very last paragraph. It indicates that you had “informal discussions regarding a new stock option award that may have occurred prior to June 23rd, 2017 that were not documented.” Those are the conversations you were talking about this morning; right?

A. I mean, I don’t recall those conversations.

Q. All right. Well, that’s the point. If you look at the very next sentence, it says “Mr. Musk does not specifically recall the dates or substance of any such discussions.” So that was your sworn, written testimony in this case earlier, correct, that you didn’t recall the substance of any discussions that may have taken place prior to June 23rd?

A. Yes. I mean, June 23rd, I mean — I mean, maybe there was something in like May or — I don’t know if — I don’t recall any such discussions.

Q. That’s fine.

A. Yeah.

Q. And we saw in this trial earlier that Mr. Ehrenpreis also doesn’t recall. He gave a similar answer that he didn’t recall the substance in his interrogatory. But, by the way, this was true and correct at the time you gave this testimony under oath; correct?

A. That is correct that I did not recall, yes.

Q. Nonetheless, you think in an early call with Ira that you proposed owning an additional 10 percent of Tesla, taking into account dilution of your own shares. You think that might have happened; right?

A. Yes. My recollection is that I had proposed a higher number of shares that would have taken into account dilution, and ultimately we settled on a smaller number of shares.

Q. So now I want to talk about — I understand that happened, and we’ll take you through the documents. I just want to talk about pre-June 23rd, which is the first comp committee meeting, the call that you don’t recall the substance of, you think you might have suggested 1 percent per tranche in that call, maybe?

A. I think so. But I don’t — I don’t recall.

Q. All right. So let’s see if we can help. Open, if you would, to JX 1597 in your book, and I want to go to the Bates stamp number at the bottom right-hand corner that is Bates stamp number 5008, and let’s see if we can’t take a look at this. It’s up on your screen, and I want to focus in on the paragraph beginning on April 9. Do you see that on the screen, sir?

A. I do.

Q. I’m going to read it, and I’ll tell you when I’m skipping, but I’ll read the substance of it for the record. It reads — and this is a proxy that was prepared internally and circulated outside the firm, not the final, by the way. And it says, “On April 9, 2017, Ira Ehrenpreis, the Chairman of the Compensation Committee of the Board” — and I’m skipping — “had a preliminary discussion with Mr. Musk about a new compensation program, in which they talked about the concept of using a similar structure to the 2012 Performance Award but with even more ambitious and challenging performance hurdles that would reflect Tesla’s ambition to become one of the most valuable companies in the world. Mr. Musk indicated an interest in such a structure, and mentioned the possibility of setting 15 milestones in which each would require a market capitalization increase of $50 billion” — then I’m going to skip again. “Mr. Musk proposed that given the difficulty of [those] milestones, an appropriate size of the award would be stock options totaling 15% of the Company’s current total outstanding shares, or 1% of the Company’s current total outstanding shares being attributed to each of the 15 milestones.”

Now, sir, given your sworn testimony that you don’t recall the specifics of the call with Ira Ehrenpreis, it’s true, isn’t it, that you would have no basis to dispute this recitation that was going around in early January summarizing the background of the transaction?

A. I — I don’t dispute this.

Q. Okay. Now, you gave some testimony in response to my friend Mr. Chesler’s questions, and I think you said that you were not in any meeting of the compensation committee or the board at which the substance or the substantive terms of your plan were discussed. Do you recall that testimony?

A. I — I don’t recall being in any such meeting, yes.

Q. Well, then let me ask you a simple question: Were you in any meeting of the compensation committee or the board at which the substantive terms of your plan were discussed while it was being created?

A. I don’t believe so.

Q. So let me ask my friend, Mr. Wills, to pull up, please, JX 407, which is not in your book, and this is the minutes of the June 6th, 2017, meeting, and this is a meeting of the board of directors. And it’s true, sir, that you’re present at this meeting; right?

A. Yes.

Q. So using logical deduction, would it be fair for me to infer that if you were present at this meeting, the board did not discuss the substance or the terms of your grant in your presence?

A. Well, I mean, there are discussions that the board has without me being present.

Q. I understand, sir. When you’re not present, the meeting — the minutes indicate you’re absent from the room; correct?

A. I don’t know if that’s the case.

Q. Do you recall — you don’t recall ever having a discussion about the substance of your plan, or if you do, tell me, because I’d like to explore that too.

A. I — I don’t recall having discussions about the substance of the plan.

Q. And do you —

A. I mean, I think we — when it was maybe proposed to me. But I — you know, certainly not in how it was come up with.

Q. So —

A. We have to propose — sorry. They have to propose it to me at some point.

Q. No, no, no. My question was shorthanded. I apologize.

A. Okay. Okay.

Q. You don’t recall having a board meeting which you sat through at which the substance of your plan was laid out and discussed in your presence; correct?

A. Well, there would have been at one point, once the board had decided what to propose, they would need to tell me what that was.

Q. I’m talking about the period during which the plan was being formulated and put together. I thought you testified eloquently and clearly, in response to one of your counsel’s outstanding questions, that you didn’t sit through any meeting while this plan was coming about in which the substance of your plan was discussed. I’m just asking if that’s true, did you —

A. I don’t recall being in such a meeting.

Q. I’ll take it. I’ll take it. Do you recall that while you were working on — while the work was being done to develop the 2018 plan, your former colleague & cofounder, JB Straubel, wrote to you to “humbly propose” that the company consider setting up an equity plan for him that had the same vesting milestones that your new plan would have, but smaller amounts of equity? Do you recall that?

A. Yes.

Q. So let’s take a look at that email, if we can. Joe, would you put up JX 399.

It’s in your book. But it’s short enough as well. Focusing on your response to Mr. Straubel’s email, you write — and this is about your plan, right, so he’s asking you, can you do a plan for me that mirrors your goals, and you respond, quote, “I’m planning on something really crazy, but also high risk.” That’s an email you sent to him on or about May 12th while this plan was under consideration; right?

A. Yes.

Q. Let me change gears again. I want to talk a bit about timing and your input into timing of the development of the plan. It’s correct, sir, isn’t it, that on July 30, 2017, you asked your general counsel, Mr. Maron, to put development of the plan on hold. Do you recall that?

A. Yes.

Q. And then on November 9, you requested that Tesla move forward with the plan and said you’d like to “take board action as soon as possible.” Do you recall that?

A. I don’t recall, but I’ll assume that it is true.

Q. I want to show it to you so there’s no question. Joe, please pull up JX 682 and show the witness .002, the second page. Let’s go up, Joe, to the email on top of that towards the top, begins “No problem ….” let’s take a look at that email.

You see here, sir, you sent an email on or about November 9 saying, “I’d like to take board action as soon as possible,” and it continues. No doubt you sent that; right?

A. Yes.

Q. Now, isn’t it true that five days later, on November 14, you suggested the development of the plan be paused for a week or two? Do you recall that?

A. I do vaguely recall that.

Q. Joe, let’s just look at it to make sure we’ve got it straight. JX 668, please. Again, this is your email to your general counsel, Mr. Maron; correct?

A. Yes.

Q. And it’s subject “My comp package,” so that’s what we’re talking about in this email; correct?

A. Yes.

Q. Then true that by mid-December, the plan was back on the fast track again; true?

A. It was back on track, I suppose, yeah. I’d asked to just pause any discussions of compensation given the crisis level at the company was too high to think about anything else.

Q. Let’s look at what your staff thought about it. Please open to JX 718, and I’ll ask Joe to bring that up on the screen as well. So this is from Joy Liu, and it’s being sent out of the firm to PricewaterhouseCoopers, and you’ll see the second paragraph under “Hi Nancy.” “Our CEO grants is back on a fast track now.” Does that help set time and stage for you?

A. I mean, I did not see this email.

Q. It’s true, isn’t it, sir, that you weren’t intimately involved in the development of this plan; right?

A. Correct.

Q. So if the staff thought it was on a fast track, any idea where that would have come from?

A. I assume the board or — yeah.

(The court takes a 15 minute break)

Q. Mr. Musk, let’s switch topics again. It’s true, isn’t it, sir, that during the period the plan was being developed, you participated in Tesla’s May 2017 earnings call?

A. Yes.

Q. And you recall, don’t you, saying during that call that whether or not you are CEO forever, you intended to be actively involved with Tesla for the rest of your life, hopefully stopping before you got too old or too crazy?

A. Yes.

Q. And, sir, that was a truthful statement at the time. Correct?

A. Yes.

Q. And that statement of intent never changed between the time you gave it in May of 2017 and at least up to the time of your deposition in this case. True?

A. Yes.

Q. And, sir, when Tesla’s investor relations folks prepared a Q&A script for discussion with outside stockholders after your plan was announced, it included a specific question about whether you would quit if the plan wasn’t approved by stockholders, and it said in response, the specific answer was that, no, you wouldn’t quit if the plan wasn’t approved. Do you recall reviewing that and you recall that being accurate, sir?

A. Yes.

Q. And that’s because, as stated in the script, you were, quote, heavily invested in Tesla, both financially and emotionally and you viewed Tesla as part of your family. Right?

A. Yes.

Q. On the subject of being heavily invested, I want to focus for a moment on the increase in the value of your equity since early 2018. If we measured the value of Tesla equity that you actually owned, not derivatives or stock options or anything else, just the actual equity, from the point that the plan was approved at the board meeting in January of 2018, and then we took a snapshot of the value of that same equity right before you announced your bid for Twitter, do you have any idea how much it would have increased?

A. I don’t — I don’t know what it would have done.

Q. I didn’t do this math because it’s far too complicated for a lawyer from Delaware. I asked one of my colleagues who is an actuary, an accountant, and actually knows numbers to do it. And what I got back was that if you look just at your shares in those parameters, the value of your shares went from round numbers 11.7 billion to round numbers 197.3 billion. Order of magnitude, does that sound about right?

A. I think the stock has declined since then, but yes. I think the stock is not quite as valuable as maybe when that analysis was done, the current stock.

Q. But certainly quite high. Right? Close to $200 million?

A. I believe it’s less than that, quite a bit less than that at this point.

Q. I misspoke. I said 200 million. I’m still trying to get my mind around “billion.” $200 billion. Same answer?

A. Like I said, it’s less than that because the stock has declined.

Q. Do you recall being asked in a Q4 ‘17 analyst call about whether there was a search going on for CEO and responding that there was no search because you expected to remain CEO for the foreseeable future?

A. Yes.

Q. Different topic. It’s true, isn’t it, that nothing in your 2018 compensation plan requires you to devote any particular amount of time to Tesla?

A. No.

Q. No, it’s not?

A. It is not required.

Q. Thank you. And it’s also fair to say, isn’t it, that you have many different interests?

A. Yes.

Q. For example, you are chairman, CEO, and CTO of SpaceX. Is that right?

A. I’m really just the chief engineer of SpaceX, but yes.

Q. But at various times, you’ve held the chairman title and the CEO title?

A. You know, I think from a functional standpoint what matters is that I am designing the rockets.

Q. Did you change titles there too when you became Technoking? Are you king of rockets or anything like that?

A. The title I go by at SpaceX is “chief engineer.”

Q. Chief engineer. All right. And the mission of SpaceX is to extend the light of consciousness beyond Earth’s orbit in a sustained manner. Correct?

A. That is correct.

Q. In common parlance, that means colonizing Mars?

A. Making life multi-planetary in order to ensure the long-term survival of consciousness as we know it.

Q. And that means Mars. Right?

A. Mars is the only option.

Q. Yeah. And you spend a fair amount of time on average at SpaceX, don’t you?

A. Yes.

Q. And there have been periods of time when you’re working at SpaceX to the exclusion of anything else, including family and Tesla. Right?

A. In recent years, that has been relatively rare. Tesla has taken more time than anything.

Q. Let’s look at one of those relatively rare examples. Joe, would you pull up JX 1202, if you would.

Sir, this is an email you sent in 2020. Correct?

A. Yes.

Q. And you write: “Subject: BOCA.” That refers to Boca Chica, Texas. Is that right?

A. Yes.

Q. And Boca Chica, Texas is where SpaceX is based. Is that true?

A. No. That is where the Starship program is based. SpaceX’s headquarters are in Hawthorne, California.

Q. And you write “I’m staying in Boca 24/7 until Starship flies, despite the pain that this will cause many other company and personal obligations.” You sent that email, didn’t you, sir?

A. Yes. I subsequently had to not do that in order to devote time to Tesla.

Q. And the pain that you talk about here, that included pain to Tesla as well. Right?

A. It’s a lot of pain to spread around, so yes.

Q. You’re also co-founder of something called The Boring Company. Is that true?

A. Yes.

Q. You lead that company?

A. No.

Q. No?

A. No.

Q. That’s interesting, because your counsel in this case and my side, both sides, sat down and came up with certain facts we agree to for purposes of the case, and we put that together in something called a pretrial order. And what you’ll find in the very first tab of your book is something titled “Stipulation and [Proposed] Pre-Trial Order.” I want to go, if I can, to paragraph 58 of that. And let’s take a look together at what your counsel stipulated to. You can read it along with me. It appears to read “58. Musk leads The Boring Company.” Have I read that correctly?

A. Umm.

Q. Have I read that correctly?

A. Yes.

Q. So I’ll represent to you, sir, that’s stipulated as fact for purposes of this trial. The Boring Company builds tunnels and recently opened one under Las Vegas. Is that right?

A. Yes.

Q. And the vision of The Boring Company is to dig tunnels faster than a snail. Is that true?

A. Yes.

Q. It’s true, isn’t it, that during the same time you were working on getting the 2018 Tesla plan before stockholders, you were also helping The Boring Company sell flamethrowers. Is that right?

A. I mean, for a split second.

Q. Let’s take a look at one of your tweets about flamethrowers. Joe, let’s put up JX 1564.

This is a tweet you sent out on behalf The Boring Company about flamethrowers. Right?

A. Yes.

Q. And you sent it out on January 27, 2018, that’s after your plan was approved and before the stockholders met. Right?

A. Yes.

Q. And then there came a time when you had some interaction with the ATF, correct, about flamethrowers for The Boring Company?

A. I don’t recall talking to the ATF. Oh, that’s just the website, the ATF website.

Q. I see. Were you involved in the development of the flamethrower that The Boring Company sold?

A. Well, this was a joke product, you see. It was not a real flamethrower.

Q. I see. So you were joking about it.

A. Yes. It’s a roofing torch that you can buy at Home Depot, which is — then looks like a flamethrower, but it’s not — it’s not like a dangerous thing. It’s literally something you can buy at The Home Depot.

Q. I see. Let’s take a look at JX 1565, if we a tweet you put out on February 1st. “Flamethrowers sold out.” Did you actually sell any of these flamethrower lookalikes or whatever they were?

A. Yes.

Q. In fact, you sold them out. Right?

A. Yes.

Q. Great. Then let’s take a look at JX 1567, if we could. So this is a series of pictures of the flamethrower in front The Boring Company. Is that the fake flamethrower?

A. Yes.

Q. I see. And you sent that out to the millions of people that follow you on Twitter. Right?

A. Yeah.

Q. And you’re announcing that the first thousand flamethrowers were being picked up. Correct?

A. Yes.

Q. And then more recently, you’ve had occasion to advertise for a new cologne that The Boring Company was offering called “Burnt Hair.” Correct?

A. That is correct.

Q. And I think —

A. Enticing, enticing, I know.

Q. I think I saw somewhere where you suggested a tag line for this, burnt hair from the folks who brought you the flamethrower. Is that right?

A. Yes. I think we —

Q. That’s quite —

A. Far from singed.

Q. Singed?

A. Singed.

Q. Mid-October, The Boring Company had sold $1 million worth of Burnt Hair. Right?

A. I think it might be higher than that. I think maybe 3 million.

Q. I’m sorry.

A. No. Well, it depends on which date. In total we sold $3 million worth of — or at least we have orders for $3 million worth of Burnt Hair perfume, the essence of repugnant desire.

Q. Great. And then the day you announced the first million dollars of Burnt Hair being sold, you tweeted requesting that your followers or fans or whatever one calls people who follow other people on Twitter buy your perfume so you could buy Twitter. Right?

A. Yes. I mean, obviously, that’s a joke, you know.

Q. I get it. So, lately, in addition to flamethrowers and perfume, you’ve asked your Twitter followers to vote on some proposals you had for a peace plan for the Ukraine conflict. Correct?

A. Yes.

Q. We’ve been talking about your use of Twitter. I think we established also that you recently closed on a purchase of the company. Correct?

A. I like the product so much, I bought the company. There’s an ad, Hair Club for Men. I liked the product so much, I bought the company. So I guess that’s what happened with Twitter.

Q. Let’s open, if we can, to JX 1571. This is another tweet you put out. Correct? This is something you sent out, sir?

A. Yes.

Q. And you say here, “To be clear, I’m spending less than 5% (but actually) of my time on the Twitter acquisition. It ain’t rocket science!” And you continue to talk about being at Starbase, and then you got a lovely picture here suggesting that perhaps you were hearing that your attention was being deflected towards Twitter at the time. Is that what you were trying to convey?

A. Yes.

Q. Now, that less than 5 percent, it kind of went up over time. Isn’t that right, sir?

A. Well, you know, there is an initial burst of activity needed post-acquisition to reorganize the company. But then I expect to reduce my time at Twitter and find somebody else to run Twitter over time.

Q. So indeed, sir, isn’t it true that following closing, you’re spending a lot of time at Twitter?

A. In the first few weeks, yes.

Q. You’re sleeping there?

A. Hardly. That’s where I came from.

Q. By the way, about a day or so after you bought Twitter, the press was reporting that you had brought in Tesla software engineers to review the software code at Twitter. Did that actually happen?

A. There was — not to review the code, but just to evaluate some of the engineering talent at Twitter. It was just on a voluntary basis to spend a few hours evaluating the Twitter engineering team.

Q. And the press reports was that about 50 engineers were sent over from Tesla to Twitter. Is that true?

A. I don’t know the number. But, like I said, this was a voluntary basis after-hours, mostly short-term matter.

Q. Did Tesla no longer need those engineers?

A. No. Tesla needed the engineers. This was just a voluntary thing. If you’d like to help me evaluate Twitter engineering, that would be appreciated. That’s all.

Q. I see. So this was all after-hours work, not during Tesla office hours. Right?

A. I actually asked for some volunteer time.

Q. And did anyone suggest to you that perhaps as a public company, it might not be a good idea to use the resources of the public company for your private company?

A. Again, this was sort of an after-hours, just if you’re interested in evaluating the — helping me evaluate Twitter engineering, that would be nice. It was very short term. I think it lasted for a few days and it was over.

Q. So the answer was no?

A. It was a minor thing.

Q. Yeah, yeah, I know, but did anyone call you on it? Any of the so-called independent board members call you and say, you know, Elon, it’s probably not a good idea to be using Tesla assets for your personal use?

A. Well, I didn’t really regard this as using Tesla assets, as I had asked just for a voluntary basis, and I did not specify any number of people. I don’t know what the number was, but I don’t think it was quite 50. But it was a small number. There’s 120,000 people at the company, just to be clear, so this is de minimis.

Q. So the answer to my question is no?

A. No?

Q. You didn’t receive a call from anyone suggesting it might not be a good idea?

A. No. I don’t think I got a call, such a call.

Q. Separate issue. You co-founded and were involved with for some period of time a nonprofit called OpenAI. Is that true?

A. Yes.

Q. And you were involved with OpenAI at the time of the 2018 grant?

A. My time allocation was very small, but yes.

Q. And you came up with the OpenAI name, the initial concept, and provided the initial funding. Right?

A. Yes.

Q. And you were spending at least some of your average workweek working on OpenAI at the time the plan was being developed. Correct?

A. Very small amount of time, but yeah.

Q. You also co-founded and led, and lead currently, Neuralink. Is that right?

A. Yes.

Q. And that’s a company which develops brain computer interfaces whose long-term goal is to help address the human species level threat posed by AI. Is that right?

A. That is the long-term goal. The short-term goal is to enable people who have a broken spine or neck to walk again.

Q. How’s that coming, by the way? When we chatted, you were saying that you were expecting FDA clearance for that on an accelerated basis. Did you get it?

A. We’re expecting to get it soon.

Q. Congratulations. I hope you do get that. And certainly at the time the plan was being developed, you spent some period of time of your average week at Neuralink. Right?

A. Yeah. Lately, I’ve not spent much time at Neuralink, really. I have not been to Neuralink in about a month or so.

Q. Well, actually, you know, that’s interesting. In September of ‘17, you recall while this plan was being developed, you asked your brother and Mr. Gracias to look deeply at OpenAI and Neuralink, to advise you whether you should be spending more of your time on these projects?

A. I don’t recall that.

Q. Joe, let’s pull up JX 362.02. Mr. Musk, this is a series of texts, and I think, happily, there’s only one text I want to focus on. You’ll see here a text from you, and we can scroll up or you can see it, it goes to your brother and Mr. Gracias, but it appears to read, “OpenAI and Neuralink are both critical to a good future for humanity. My instincts tell me that I should be devoting a much higher percentage of time to them. Would be great if you guys could gain an understanding of both.” Do you recall sending that text, sir?

A. Yes.

Q. And after looking at the two companies, Mr. Gracias and your brother came back to you and told you that they generally agreed that these companies could help mitigate the danger to humanity posed by artificial intelligence. Right?

A. Yes.

Q. And at some point thereafter, the percentage of your time that you spent on Neuralink went up. Right?

A. Slightly.

Q. Well, it increased about 500 percent, didn’t it, went from about 1 percent to 5 percent a week?

A. I — yeah. I mean, at times.

Q. At the time the plan was being worked on, is it true that your typical workweek was to spend Monday and Thursday at SpaceX, Tuesday and Wednesday at Tesla, Friday afternoon at Tesla’s LA design studio, and then weekends doing catch-up work?

A. That would be my general routine. But really, I would just be — there would, of course, be calls and meetings interspersed throughout the week for Tesla.

Q. Joe, please put up the demonstrative pie chart. That’s the one.

Mr. Musk, what we did was we took some answers you gave to interrogatories and put them into percentages and created this chart. At least up until the point of the grant, this is roughly an accurate depiction of your average time in a particular week, understanding that it could be radically different at any particular time. Is that fair to say?

A. Yeah. I mean, it depends over what time period, but that’s probably roughly accurate for that time.

Q. As of right now, if we recut this and included Twitter, would Twitter be the lion’s share of this chart?

A. For the past few weeks, it would be. But that’s not likely to be — that won’t be the case long term.

Q. In fact, your tweet about sleeping at Twitter said you intended to continue to do so until the org was fixed, meaning the organization. Right?

A. Yeah, which I expect that to be probably this week, end of this week.

Q. We’ve heard you’re terribly bad at predicting things.

A. Well, my record varies. Sometimes it’s accurate; sometimes it’s not.

Q. You think you’ll be able to fix Twitter in a week or so?

A. No. I think the fundamental organizational restructuring will be done at the end of this week.

Q. Got it. Got it. Let’s shift topics again. There’s been some testimony in this trial about an interview that you gave with Robyn Denholm and Ira Ehrenpreis during the development of the plan. I believe it happened in September. Do you recall that Denholm and Ehrenpreis called you to discuss your views on the plan during September? This is 2017.

A. There is a lot of water under the bridge since then, but I assume — I’ll take your word for it. I’m sure that’s what happened.

Q. Well, without trying to nail down September, which isn’t particularly relevant to me, do you recall that during the development of the plan, Robyn and Ira called you to talk about your views on the plan?

A. I do vaguely recall that.

Q. It’s true, isn’t it, that you have no recollection of either Robyn or Ira raising with you whether there should be some assurance about the amount of time that you spent on Tesla vis-a-vis other activities. Right?

A. I don’t recall.

Q. In fact, you viewed asking that question as silly. Do you recall that?

A. No.

Q. Let’s take a look at your deposition to see if we can refresh your recollection. Counsel, page 160, lines 11 through 18.

(A video clip was played as follows:)

Q: My question to you was, was this topic discussed with you?

A: I mean — do you mean — do you mean — can you be more precise about what you mean by “this topic?”

Q: The topic of whether there should be some assurance about the amount of time you spend on Tesla vis-a-vis other interests.

A: No, because that would be silly.

Q. Does that help refresh your recollection, sir?

A. Yes.

Q. You recall being asked those questions and giving those answers at your deposition. Right?

A. I do.

Q. It’s true, isn’t it, that during the call you had with Robyn and Ira, you made clear to them that if you’re going to allocate a lot of time and effort to Tesla, that wouldn’t necessarily come at the expense of making life interplanetary, but it would be okay with you if there would be economic resources to pursue your other goals, like making life interplanetary?

A. That is correct.

Q. So, effectively, what you told them was, you saw, in working hard at Tesla to achieve the plan, a way to earn money to go to Mars. Fair to say?

A. Well, there would have to be — it’s like, what would be the trade-off of time. What would serve the greater good, ultimately, since — I’m trying to take the sort of actions that maximize the probability that the future is good for civilization. If I allocate time to Tesla — if I overallocate time to Tesla at the expense of making humanity a space-faring civilization, then I’m not sure that would serve the greater good. But if there were additional economic resources available that could then subsequently be applied to making life multi-planetary, then perhaps that would serve the greater good.

Q. So the answer is yes?

A. I guess, yes.

Q. Bad question. Let me ask it again if I have to. My question —

A. It’s difficult to answer complex questions with yes or no. So I think if there is a complex question, a yes or no is a misleading answer.

Q. You know, the funny thing is the way this works is if I ask a complex question, you’ve got a lawyer here who is very well renowned, he’s an excellent lawyer, he’s well paid — I assume he’s well paid, anyway — who will stand up and say, objection, Your Honor, compound question. And then Her Honor will make a ruling. But he hasn’t done that. So would you be so kind as to answer my question?

A. Yes.

Q. Let me repeat the question so we have a clear record as to what you’re responding to. What you did was you told Robyn and Ira that the benefit you saw in working hard at Tesla to achieve the plan was that you would have money to go to Mars. Fair to say?

A. Well, not me. To get humanity to Mars.

Q. That there would be funds available to pursue your long-term goal of making life interplanetary?

A. Yes.

Q. Saving the world?

A. Well, saving civili — consciousness, yes.

Q. I want to talk about an entirely different subject. I want to talk about the S-curve. True that the S-curve describes a manufacturing ramp starting off slowly and increasing exponentially and then leveling off?

A. Yes.

Q. And you at least aspired for that to be the path that Model 3 production would follow. Right?

A. Yes.

Q. Joe, I’d like you to put up on the screen JX 1539. And just for clarity’s sake, Mr. Musk, this is taken from a Tesla presentation. I just want to know if you can tell me if that’s a fair pictorial representation of an S-curve.

A. Yes. That’s — yes. It’s — I’m sorry. I’m reminded of, what do you call a speeding snail? An escargot. But — sorry. That, of course, begins with a bad joke.

Q. But this is what the S-curve looks like when we are talking about an S-curve?

A. Yes.

Q. All right. Good. It’s true, isn’t it, that in October of 2017, Tesla management was expecting that the production rate on the Model 3 would soon enter the steep portion of the S-curve — Joe, would you put that back up for me, please. — the steep portion of the S-curve, resulting in nonlinear production growth. So here, just to be clear so everybody is on the same page, originally, the manufacturing process starts off kind of slowly, and then that curve begins to get — bend steeply upward. Right?

A. Yes. These things are easier said than done, easier illustrated than done, but yes.

Q. And you understand, don’t you, that by October — I’m sorry — October 2017, Tesla management expected that the production rate on the Model 3 would soon enter the steep portion of the curve?

A. Well, aspirationally, yes.

Q. And that was the expectation of the organization at the time. Fair to say?

A. It was the hope of the organization.

Q. Let’s look at JX 1540.084. These are materials presented to the audit committee. And Joe, would you band right about the middle of the page, beginning the Model 3, “the rate of Model 3 production”?

Let’s take a look at what management was telling the audit committee. A couple sentences down, it appears to read, “The production rate will soon enter the steep portion of the manufacturing S-curve, which should result in non-linear production growth in the weeks ahead.” So when we’re talking about nonlinear production growth, we’re talking about, effectively, exponential growth. Right? Is that correct, sir?

A. Yes.

Q. And understanding that it didn’t quite happen this way as of the date of these materials, that is certainly what management believed. Right? They wouldn’t be lying to the audit committee, would they?

A. Well, I mean, that was certainly the goal and the aspiration. But many companies have aspired to do this and they have all failed. There’s been several hundred car companies that have attempted to succeed since Chrysler in the ‘20s, and they’ve all failed.

Q. In fact, I think you told me several times the default state of the car company is dead. Right?

A. That is correct.

Q. Yeah. I got it. My question is, at this point in time, management was telling the audit committee that you were soon to begin and hit the exponential portion of the S-curve with respect to the Model 3. Right?

A. Yes.

Q. And then in your Q3 earnings call on November 1, 2017, you told analysts that you expected a production rate of 5,000 cars per month by March of the following year. Do you recall that?

A. Yes.

Q. Okay. So that would be hitting the exponential part of the S-curve. Right?

A. Well, the 5,000 would be the flat part at the top of the S-curve.

Q. And then by February 7 of 2018, that earnings call, you told the analysts that Tesla would climb the S-curve for Model 3 by mid-2018. Right?

A. That was my goal, yes.

Q. Yeah. And the Model 3 is a ten-year program. Right?

A. I’m sorry. Ten-year program?

Q. The Model 3, is that set up to be a ten-year program?

A. No. There’s no fixed end date for the Model 3.

Q. Let’s pick up, if we can, Joe, JX 1651.004. So this is a new exhibit your counsel sent us late last night for which I’m very appreciative. Appears to be the transcript of the Q3 ‘17 earnings call. Right?

A. Yes.

Q. And drawing your attention, if I can, to page 004, I want to highlight and focus in on the second full paragraph beginning “So, based on what we know.” And in fairness to you, sir, these are remarks that the transcript attributes to you. I’m happy to flip back to the page before, but I’ll make that representation to you. And you’re talking about production rate of Model 3 vehicles for late Q1 ‘18, and you say, “in the grand scheme of things this is a relatively small shift, the Model 3 is a 10-year program, and so we’re talking about a few months out of a 10-year program. It’s the grand scheme of things net present value calculation, this is immaterial.” Do you recall saying that?

A. I recall saying something like that. I think the — I think what I was referring to here is that it is a long-term program. But it’s not like the Model 3 will stop production after ten years.

Q. That’s fine. What you’re really saying here is that in the scheme of things, whether you hit the exponential portion of the S-curve on one day or three months later, it really doesn’t matter because it’s going to be exponential, not linear growth, and it’s going to be fabulous. That’s what you’re saying to the analysts. Right?

A. That was aspirationally the goal, yes.

Q. Aspirationally fabulous. How about that?

A. Well, like I said, no car company has ever succeeded, but no car company has succeeded in the past hundred years in doing this. So it should not be regarded not as something that will automatically happen but something that is highly unlikely to happen when referenced against the history of the past hundred years.

Q. And you worked hard, and it did happen, and you a hit that S-curve, and you enjoy the exponential growth. Right?

A. The sheer amount of pain required to achieve that goal, there are no words to express.

Q. I appreciate that it was hard work, sir, but it happened, didn’t it?

A. Barely.

Q. And you benefited from it happening by your shares going from some roughly $10 billion worth of value to almost $200 billion in value. Right?

A. The number is less than that, but yeah. As I said, there’s no — the sheer pain required to achieve that goal, I would not wish to inflict upon anyone.

Q. I appreciate it was hard work, sir, but you did enjoy the benefit of your shares increasing in value. Fair to say?

A. I don’t know about “enjoy.” That’s not the word I would use.

Q. Let’s switch topics for a couple of minutes and talk about the negotiations around this transaction, the plan. I think you said in response to Mr. Chesler’s questions that there were two areas you recall being negotiated: one, fully diluted versus something else; and two, that you couldn’t sell your shares for five years. Do you recall that testimony?

A. Yes.

Q. So let’s start with the couldn’t sell my shares for five years. At the time that this plan was being worked on, you owned roughly 22 percent of the firm. Right?

A. Yes.

Q. And there was nothing which prohibits you from selling the 22 percent of the firm other than not being able to trade on nonpublic information and such. Correct?

A. Yes.

Q. And you’d agree with me that shares are effectively fungible?

A. Fungible?

Q. Well, look, if you were tied up for five years on the shares that became shares if you were able to get options and convert those options to shares, and you wanted to sell shares, you could have sold any of the 22 percent you owned. Right?

A. I could have sold other shares, yes.

Q. Yes. Thanks. So let’s talk about the fully diluted. We saw earlier the draft disclosure from early January saying you asked originally for 15 percent of the total outstanding shares, and you told me you didn’t have a basis to dispute that. There came a time, didn’t there, when there was a back and forth between you and representatives of the board over whether this plan would be denominated as total outstanding shares or fully diluted shares. Correct?

A. Yeah.

Q. So, originally — let’s look at JX Exhibit 678. On November 9 — I think we saw this already — you emailed Mr. Maron saying you wanted to “move forward with [the grant] now, but in a reduced manner than before.” And let me take a look at this actual exhibit. I’ll do better that way, sir. Take a look with me at the exhibit, if you would. It’s at 678 in your book.

A. Yeah.

Q. And I want to bring you first, if I can, to the second page. And let’s look at the very last email on the bottom of the second page, JX 678.0002. This is November 9, 2017, from you to Maron. Right?

A. Yes.

Q. And you say you want to move forward but in a reduced manner than before. Correct?

A. Yes.

Q. And the only number we’ve seen from you so far is 15 percent of total outstanding shares, so I assume that means something less than 15 percent of total outstanding shares. Right?

A. Yes.

Q. And then up top, same page, 002, second paragraph, you say, “I think the amount should be reduced to a 10% increment in my Tesla ownership if I can get us to [] $550B valuation, but that should be fully diluted 10%.” That’s what you sent to Maron by way of what you wanted to move forward with. Correct?

A. Yes.

Q. And then on the first page, Maron sends you on the 29th a series of illustrations, and one illustration is 15 percent of total outstanding shares showing about 25,217,000 shares and a 10 percent increase showing about almost 29 million shares. Right?

A. Yeah.

Q. All right. And then let’s look, if we can, at the next exhibit in your book, JX 702. And you’ll see a gentleman by the name of Jonathan Chang communicating with Deepak Ahuja, who you identified earlier as the CFO of the company, copying Todd Maron, the general counsel. And what Jonathan is doing is comparing grant size and what it means as a matter of total outstanding shares and fully diluted shares. Right?

A. Yes.

Q. And he says if you had 10 percent — I’m sorry — if you had 20,173,860 shares, that would be roughly 12 percent of total outstanding and roughly 9.8 of fully diluted. Correct?

A. Yeah.

Q. And what you settle on is 12 percent of total outstanding shares, which we see from Jonathan’s calculation is about 9.8 percent of current then-outstanding fully diluted shares. Right?

A. Yes. I think so.

Q. I want to talk about your board for a moment or two. It’s true, isn’t it, you’ve known Antonio Gracias for more than 18 years now?

A. Yes.

Q. And you consider Mr. Gracias a friend. That’s right?

A. Yes.

Q. Indeed, he’s a close friend?

A. Yes.

Q. And your friendship with Mr. Gracias also existed during the period when the grant was under discussion. Right?

A. Yes.

Q. And during that period, when the grant was under discussion, you and Mr. Gracias socialized together. Correct?

A. Yes. I should say there wasn’t much socialization. There was not — I was working almost all the time, so not a lot of socialization or nonwork happening, at all.

Q. Well, you know I’ve got another set of interrogatories for you. Let’s take a look at the second-to-last exhibit in your book. It’s JX 1260. This is your responses and objections to the second set of interrogatories. And I want to draw your attention, if I can, to page 005. And you submitted this under oath as testimony for the Court. Correct?

A. Yes.

Q. So drawing your attention towards the bottom of 005, there is a bullet point that says, “During the relevant period, Mr. Musk and Mr. Gracias were friends and they socialized together.” You gave that testimony in this Court under oath. Correct?

A. Yes. I’m just saying that in terms of — there was just not a lot of socialization, if that’s a word applicable in the circumstance.

Q. You’re arguing about quantum rather than existence. Right?

A. Just saying that nonwork time was very, very limited.

Q. Well, that nonwork time included vacationing with Mr. Gracias and your respective families. Correct?

A. I mean, for a few days.

Q. Yep. And your vacations included vacations outside the United States. Right?

A. There was one.

Q. And you’ve attended each other’s family birthday — each other’s family’s birthday parties. Correct?

A. Sometimes.

Q. And also, you previously invested or committed to invest in Mr. Gracias’ fund Valor, as much as $10 million in 2013, for example. Is that true?

A. Yes, although I subsequently exited my Valor investment.

Q. Now, Mr. Murdoch, you’ve known him for about two decades. Right?

A. Not well. We met two decades ago.

Q. But you’ve been more than an acquaintance for about a decade?

A. Correct.

Q. And you’ve vacationed with Mr. Murdoch and his family over that time. Right?

A. We have, yes, I think there were two vacations with kids. “Vacation” is a strong word. For me, it is email with a view.

Q. Yeah. And email with a view including outside the country. Right?

A. Yeah.

Q. And your friendship with Mr. Murdoch also existed during the period the grant was under discussion. True?

A. Yeah. Maybe. I’m not sure.

Q. And during the period the grant was under discussion, you and Mr. Murdoch socialized from time to time. Correct?

A. Yes.

Q. And you’ve known Mr. Ehrenpreis for roughly a decade and a half. Right?

A. Yes.

Q. You consider him a friend. True?

A. Yes.

Q. And Ira Ehrenpreis gave you the rights to the first Tesla Model 3 car as a birthday present to you. Is that true?

A. It’s — yes. Well, I mean, there’s more to it than that, but yes.

Q. Thank you. You’ve also told millions of people in a tweet that you loved Ira. Correct?

A. Ira has done great service to Tesla. The shareholders should be appreciative of that service.

Q. Well, that’s interesting. In your view, Ira has made great contributions to the company and is an unsung hero. Correct?

A. Correct.

Q. This tweet about loving him, it’s — you said, it’s not a secret but he’s also not your valentine. Fair to say?

A. Like I said, comedy, I believe, is legal.

Q. I’m about to finish, Mr. Musk. I want to show you a picture of the Tesla Roadster in space. Can you pull that up, Joe?

I really like this picture, Mr. Musk. I think it’s amazing marketing. As you described it to me, and let me see if I get this right, you launched this car — this is an original — not the original, but an original Tesla Roadster — you launched this car into space with a mannequin in a spacesuit in it, and it’s currently in orbit between earth and Mars. True to say?

A. That’s correct. It’s an art piece that will last for millions of years.

Q. You’ve always thought about the value coming out of the 2018 plan as money you would help use to get to Mars. Right?

A. Yes.

Q. In that limited context, sir, can we say that Tesla was your ticket to Mars?

A. It’s not my ticket to Mars. It’s a way to get humanity to Mars, with a — because getting — establishing a self-sustaining city on Mars will require a lot of resources. So Tesla can assist in potentially achieving that.

Q: Mr. Musk, I thank you for your time. It was a pleasure to chat with you again. And, Your Honor, I pass the witness.

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Redirect examination

Musk Defense Attorney Evan Chesler: Mr. Musk, I just have a few questions. I’m apparently your renowned and well-paid lawyer, and I want to earn my keep.

Elon Musk: I do admire your skills.

Q. Mr. Varallo, early on in your examination, took you to a page in your deposition, I think it was transcript page 25, where you were asked if you had consulted with the board about your new title of Technoking. Do you recall being asked about that?

A. Yes.

Q. Okay. I’d like to put up, Michael, on the screen, page 25, the same page of the transcript of the deposition of June 3, 2021, please. Can we put that up?

If you’d look, Mr. Musk, the question that you were directed to I think is at line 13. “Did you consult with the board….” Do you see that question?

A. Yes.

Q. And you say, “No, but it was communicated to the board. I think with Zach and Bill Berry, yeah.” Who was Zach?

A. Our chief financial officer.

Q. And who was Bill Berry at the time?

A. General counsel.

Q. And then the question is, “I’m sorry?” And you say:

A: The 8-K was, you know, that was discussed with the board, or at least with Robyn Denholm. Yeah.

Q: It was discussed with the board after it was filed or before?

A: No, before.

Q: Okay.

A: Before.

Q: So other than Ms. Denholm, did you review it with anybody else on the board?

A: The review was done by Zach and Bill. So I’m not sure, but, you know, it went through the standard 8-K review process.

Were you asked those questions and did you give those answers at your deposition, sir?

A. Yes.

Q. You recall you were asked by Mr. Varallo about some comments you’ve made, tweets you’ve made, that were critical of the San Francisco office of the SEC?

A. Yes.

Q. Did you believe that the SEC controls your ability to say things about the SEC?

A. No.

Q. You were also asked some questions about some of the findings by the Vice Chancellor in the SolarCity litigation. Do you recall that?

A. Yes.

Q. I’d like to go back to that exhibit, which is JX 1554. If we can put that up, Michael. Can we look at page 0098 of 1554, please.

You see, Mr. Musk, there is a statement, in fact, a section heading by the Vice Chancellor, “The Tesla Board Was Not ‘Dominated’ by Elon.” Do you see that?

A. Yes.

Q. Is that also a finding made by Vice Chancellor Slights in that case?

A. It is.

Q. Can we look at page 0104, please. You see that the Vice Chancellor wrote, just above the “Fair Price” section, the last two sentences, “In other words, despite its assumed conflicts, under Denholm’s leadership, the Tesla Board meaningfully vetted the Acquisition. In sum, Elon proved that the process did not ‘infect’ the price. And ‘[t]he proof lies in the results.’” Did the Vice Chancellor also make that finding?

A. Yes. I should also say that Ms. Denholm’s contribution to Tesla has been tremendous as chair of the board.

Q. Thank you. You were also asked — you were shown an interrogatory answer where you said that you did not recall the substance of conversations before June 23, 2017. Do you recall being shown that on cross-examination?

A. Yes.

Q. Okay. I’d like again to direct your attention to your deposition transcript, which was taken subsequent to that. And, in fact, I’d like to draw your attention, if we can put it up, please, to page 144 of the deposition. Beginning at line 13, my question is going to be whether you were asked these questions and gave these answers, sir. At line 13, Mr. Varallo asked you:

Q: What’s the first you remember about discussing the 2018 plan with anyone?

A: I think there may have been a conversation, I think, where Ira Ehrenpreis called me and said that we should talk about future compensation, as the milestones for the prior plan had almost entirely been achieved.

Q: And I take it that was in the spring of 2017 or earlier?

A: I don’t remember exactly when. It was towards the end of when basically the prior plan’s milestones had — most of them had vested and/or were about to vest, and so Ira said we should talk about the future. Yeah.

Did you give that answer to that question, sir?

A. Yes.

Q. And on the next page, on 145, Mr. — let me make sure I have the right question. Yes. Mr. Varallo asked, “What did you say in response?” You said, “I said I think something similar to what was done in the past but with even harder milestones. So a larger amount, but with much harder milestones. And I think I proposed something that would result in a 10 percent — owning 10 percent of the company, incrementally taking into account dilution of my own shares.” And then it goes on from there. Did you give that answer to those questions, sir?

A. I did.

Q. You were also asked about your testimony that you had not attended any board meetings where the plan was being formulated. Do you recall that?

A. Yes.

Q. I’d like to put up on the screen what’s been previously marked as DDX 1, page 1, to the witness, please. Do you see this chart, Mr. Musk, you see down the left-hand side, there are dates going from June 6th of 2017 through January 21st of 2018?

A. Yes.

Q. And then there’s a list of board meetings and comp committee meetings. Do you see that, sir?

A. Yes.

Q. And then there are a bunch of names across the top, and the next-to-the-last name in that first big section is E. Musk. Do you see that?

A. Yes.

Q. This indicates, as Mr. Varallo suggested in your cross-examination, that you were in the room for the June 6, 2017, board meeting. Correct?

A. Yes.

Q. Do you believe you were in the room for any of the other board or comp committee meetings that took place over the ensuing eight months?

A. No.

Q. You were asked some questions about the S-curve. Do you recall that, sir?

A. Yes.

Q. Did your aspirations for the S-curve as it applied to the Model 3 turn out to be right as a matter of fact?

A. No.

Q. I don’t want to go back through how painful it was, but is it fair to say that you missed the curve pretty substantially from what you were aspiring to?

A. Yes. We barely survived. It was a very close call.

Q. Lastly, you were asked some questions about JX 678. This is the back-and-forth in email with you and Mr. Maron in November of 2017, and it relates, in general, to total outstanding shares and fully diluted shares. Do you remember looking at this document a few minutes ago?

A. Yes.

Q. Do you recall, sir, that — Yeah, let’s look at the second page, please, 0002, JX 678. In a paragraph to which Mr. Varallo drew your attention, it says, this is the second paragraph on the page, “I think the amount should be reduced to a 10% increment in my Tesla ownership if I can get us to a $550B valuation, but that should be a fully diluted 10%, factoring in that it dilutes me too.” Do you see that you wrote that, sir?

A. Yes. Q. Did you ultimately agree to a $550 billion valuation for the top of the plan or a higher valuation?

A. Higher valuation.

Q. Do you recall by how much?

A. I think 100 billion.

Q. So you agreed that you would not top out the plan unless you achieved an additional $100 billion of valuation over what you wrote back here in November of 2017?

A. Yes.

Q. And did you, in fact, get a fully diluted denominator for your grant?

A. No. The board declined that.

Q. The board declined that. And you agreed to total outstanding shares?

A. I agreed to a lesser number — the board agreed to a lesser number than I requested.

Q. And over time, as a result of dilution, both dilution that was known back in 2018 and dilution that has occurred afterwards, do you have an understanding of whether you would end up with an even lower percentage of equity increase were you to achieve all of the targets?

A. Due to dilution, yes, the equity increase would be much less than 10 percent.

Q: Thank you, Your Honor. I have no further questions.

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Recross examination

Plaintiffs’ lawyer, Attorney Greg Varallo: Mr. Musk, I’m easily confused, so I want to see if you can’t help me. You gave a sworn interrogatory saying you don’t recall the substance of calls prior to June 23rd about your plan. Is that still your testimony, or have you just changed it? Just in case I misheard what you said.

Elon Musk: I think if you said like the substance of calls, probably; if you say the details of calls or the precise date, I do not have such a good memory.

Q. And you — are you testifying now that you do recall the substance of calls prior to June 23rd?

A. I mean, I think I recall the substance of some calls. Is there one in particular you’re referring to?

Q. Do you recall the substance of the first call with Ira Ehrenpreis in April of 2017 about your plan?

A. Yes.

Q. And that recollection was as a result of you being refreshed by your counsel showing you documents to get ready for your deposition. Correct?

A. I don’t recall.

Q. No? You don’t recall that? You don’t recall how you recalled, but there was a time when you didn’t recall, and now you do recall, but somehow in between, you don’t know how that came about. Right?

A. There’s a lot of things going on here. It’s a busy time, to say the least.

Q. All right. Different topic. The S-curve. You say you missed it, but what you really mean is the timing of hitting the S-curve was missed. Tesla, in fact, did hit the S-curve. Correct?

A. We missed the timing of the S-curve, and we achieved volume production by the skin of our teeth, very — very closely skirting bankruptcy. That’s why we were shorted so much.

Q. You hit the S-curve though. Right?

A. That’s why we were shorted so much by the hedge funds, because they were certain we would go bankrupt. And they were very close to being right.

Q. But you did hit the S-curve?

A. With great difficulty.

Q. And you’re in the — you hit the exponential portion, and instead of increasing linearly, the value of Tesla and the production went exponential. Right?

A. Yes.

Q. You were asked some questions by Mr. Chesler about the 10 percent fully diluted, not fully diluted, so forth and so on. To the extent there was any negotiation at all about the quantum of shares that you received, you were effectively negotiating against yourself. Isn’t that right, sir?

A. No.

Q. Let me show you a clip from your deposition. Counsel, this is 263, lines 2 through 4.

(A video clip was played as follows:)

Q: So that was your proposal on December 1?

A: That was — that was, I guess, me negotiating against myself, yes.

Q. I asked you that question and you gave that answer. Is that right, sir?

A. I guess I did give that answer.

Q. You were asked that question and gave that answer?

A. Yes.

Attorney Varallo: No further questions. Thank you, Your Honor.

The Court: Thank you, Mr. Varallo.

Attorney Chesler: No further questions, Your Honor.

The Court: Thank you. The witness may be excused. Safe travels, Mr. Musk.

Elon Musk: Thank you.

(Witness excused.)

Source: The Verge Elon Musk’s giant payday on trial: everything he said in court