Many Tesla Motors investors are wondering if Musk, 45, has begun to lose his way as well. This summer the company was already burning through billions of dollars as it constructed a battery factory in Nevada that will be the largest building in the world and prepared to deliver its first electric car for the masses, the Model 3. Then in July he announced that Tesla would buy the solar-panel provider ­SolarCity for $2.6 billion in stock. As he wrote in a blog post titled “Master plan part deux,” the combined company will generate power for customers on stylish roofs with embedded solar panels, store it in Tesla battery modules, and, of course, use some of it to power Tesla vehicles. The company won’t just sell traditional cars, mind you; it plans to introduce an expanded portfolio of autonomous models, including a new type of small bus and an 18-wheeler. Musk has also described a ride-sharing service, in which Tesla customers make their self-driving cars available when not using them.

And he’s pursuing all this while running the commercial rocket maker SpaceX, which lets him pursue his life’s dream: enabling mankind to colonize Mars. In September he revealed plans to create a fleet of rockets capable of taking 100 people at a time to the Red Planet for around $200,000 per ticket.

“You have to respect his chutzpah, but that doesn’t mean it’s going to be successful,” says Jigar Shah, a former solar industry executive and cofounder of Generate Capital, which invests in sustainable-power infrastructure.

The Tesla-SolarCity deal looks so bad on paper that many investors worry it’s simply a bailout of SolarCity, which Musk cofounded and continues to chair. Fellow cofounders Lyndon and Peter Rive, the CEO and chief technologist, are Musk’s cousins. While SolarCity dominates the market for leasing, installing, and maintaining solar panels for residences and businesses, it’s racked up more than $2 billion in losses over the past five years. Its business model requires it to raise huge amounts of capital to cover the up-front costs of providing panels for no money down to consumers on multiyear contracts. Since its inception, the company has accumulated more than $3 billion in debt against just $1.5 billion in revenue. Now it is having a harder time convincing people to lend it money. The company recently offered “Solar Bonds” at a cushy 6.5 percent interest rate, sending e-mails to its customers to invite them to invest. “Nobody bought it,” says Ross ­Gerber, president of the investment firm Gerber & Kawasaki, which also passed on the deal. Instead, Musk and the Rive brothers bought $100 million of the $124 million bonds on offer. There was a similarly friendly buyer for $165 million worth of Solar Bonds last year: SpaceX, which has committed to loan SolarCity another $90 million. SolarCity also raised $305 million by selling future cash flows to a fund advised by billionaire George Soros.

Tesla is no exemplar of financial stability either. It’s lost $2.5 billion in the last five years, even more than SolarCity. It hasn’t had a quarterly profit since 2013. This summer Musk beseeched employees to cut costs so the company could get back into the black in the third quarter before it begins burning cash again as it races to complete the Model 3 factory and the huge battery “gigafactory” in Nevada. Last week the company said it delivered 70 percent more cars in the third quarter than in the previous one, but it won't reveal whether it turned a profit for a few more weeks. “The simple reality of it is that we will be in a far better position to convince potential investors to bet on us if the headline is not ‘Tesla Loses Money Again’ but rather ‘Tesla Defies All Expectations and Achieves Profitability,’” Musk wrote in a memo this summer to the entire company. “That would be amazing!” (Musk declined to comment for this story.)

It also would be amazing if he could get the financing to pull everything off. Analysts think Tesla will need to raise $1 billion or $2 billion in the next year to build the Model 3 and develop the bus and the 18-wheeler. If it goes ahead with the plans to buy SolarCity, which is in the process of building a gigafactory of its own in Buffalo, New York, it could need $3 billion or $4 billion in that time, Gerber says. Earlier this year, Musk said his grand plan would cost tens of billions of dollars, although he didn’t say how much of it he expected to finance from the company’s cash flow. That’s a main reason Tesla shares dropped 10 percent in the two months after the merger was announced. “I’d only invest if I knew the money would only be used by the Tesla side,” says Gerber, whose firm has sold 20 percent of its stake in Tesla since the SolarCity deal was announced. He’s hoping Tesla or SolarCity shareholders kill the merger when they vote on November 17. “The last thing a cash-flow-negative company needs is another cash-flow-negative company,” Gerber says.

“You have to respect his chutzpah, but that doesn’t mean it’s going to be successful.”

A debacle for Tesla would be a shame for anyone who is building technologies meant to combat global warming. No one has done more than Musk to spur demand for electric cars and residential solar power, disproving naysayers by reaching milestones once thought unattainable. If the SolarCity deal proves to be one big hairy audacious goal too far, he could make life far more difficult for other green-energy entrepreneurs, who already struggle to raise funds to pursue ambitious long-term goals. Perhaps if Musk flames out or just muddles along, future entrepreneurs will be told, “Oh, please: even Elon Musk couldn’t make green tech work.”

No more glitches

At this point, any investors who believe that Tesla and ­SolarCity ought to be combined are giving Musk the benefit of the doubt. He has already written himself into the history books alongside Edison for a series of epic accomplishments. Tesla’s Roadster, unveiled in 2008, wiped the boring off of electric cars with its stylish design and record-setting acceleration—faster than any Porsche, going from zero to 60 miles per hour in 3.7 seconds. He earned his rep as a real-life Tony Stark from his work as CEO of SpaceX, which is threatening to revolutionize space travel with rockets that cost a fraction the price of those operated by state space agencies such as NASA. SpaceX was the first private company to deliver a satellite into orbit, and the first to build a rocket that could launch payloads into orbit and make a return trip so it could be used again.

While Musk is often compared to Steve Jobs for his ability to shake up hidebound industries, he doesn’t share the Apple cofounder’s reticence about predicting the future. Musk says the opportunity in sustainable energy is so large that Tesla could be the first company in the world to be worth more than a trillion dollars, surpassing even Apple’s $600 billion valuation.

For anything close to that to happen, many unlikely things need to work out incredibly well. Job one is to deliver the Model 3 on time and glitch-free. Musk says that it will have a base price of $35,000—roughly half the price of Tesla’s cheapest car today—and will begin shipping next July. More than 373,000 people have plunked down $1,000 to preorder the car. But Tesla has missed its delivery target on its first three cars by an average of 11 months. And the stakes are higher this time. While Tesla had the market mostly to itself in the past, all the big car companies are rushing electric vehicles to market. Even if Tesla remains the iPhone of electric cars, plenty of people will opt for more yeoman-like models such as the Chevrolet Bolt.

“The last thing a cash-flow-negative company needs is another cash-flow-negative company,”

Moving from affluent early adopters to mainstream buyers will require Tesla to improve the quality of its cars. Its first three models have had a variety of bugs, from faulty drivetrains to body panels that don’t align properly. Until a recent software fix, the falcon-wing doors on the Model X SUV sometimes refused to close because they erroneously detected objects in the way (now they’ve been compared to guillotines, since they are more apt to close regardless of obstructions). Musk told analysts in August that the quality of the cars was rising “quite dramatically,” even as the company’s weekly production passed the 1,000 mark.

The problems haven’t seemed to bother Tesla’s early adopters, including many wealthy Silicon Valley techies. Despite poor reliability ratings from Consumer Reports, Tesla’s Model S enjoys the highest customer satisfaction score among all cars on the market, says Jake Fisher, director of auto testing for the group. But mainstream consumers won’t be as forgiving, predicts Horace Dediu, an analyst with Asymco: “If your mission is to change the world, you have to cross the chasm from people who are tolerant of being abused to people who are not tolerant of being abused.”

The most difficult challenge will be to meet Musk’s aggressive plans to increase the production capacity of Tesla’s factory in Fremont, California, from 50,658 cars in 2015 to 500,000 in 2018 and a million in 2020. While the company shows off its robots and automated processes during tours of the facility, basic math suggests it is one of the more labor-intensive plants in the car business—as does the daily competition for scarce spots in the vast parking lot. A typical 3,000-employee factory might make 250,000 or so cars in a year, but the 6,000 workers in Fremont will build around 80,000 this year.

Musk says the Tesla factory will roll out a radical, as-yet-undisclosed manufacturing process that will look as familiar to traditional carmakers as an “alien dreadnought” (see "Tesla's Next Broken Promise"). With smarter placement of equipment and improved processes, the company believes, it can deliver a fivefold improvement over the most efficient existing car factories. But the company is relying on old-fashioned expansion as well. It plans to double the size of the Fremont plant, with 4.6 million square feet of new space in 12 buildings. That could accommodate a 30 percent increase in employee levels.

The plan will also depend on the smooth ramp-up of battery production from Tesla’s gigafactory 240 miles to the east near Reno, Nevada. Now roughly 15 percent complete, the building will be as large as 100 football fields and have the capacity to double the worldwide production of lithium-ion batteries.

Buying SolarCity will put another major manufacturing challenge on Tesla’s plate. SolarCity, founded in 2006, got big by getting homeowners to lease panels made by low-cost suppliers, mostly in China—a hyper-competitive market that has destroyed dozens of startups. Profit would come by charging the customer more over the life of the contract than the cost to finance, install, and service the panels, and by selling excess energy back into the grid. Flush with growth, ­SolarCity was also able to securitize its leases, much as Wall Street banks do with mortgages, by bundling them into financial instruments that it could sell to investors willing to put up cash in exchange for future cash flow from those leases.

In recent years, with panel prices continuing to plunge, more customers have decided it’s a better deal to buy their solar setups outright rather than lease from companies like SolarCity. So in 2014, the company changed course and bought Silicon Valley–based Silevo, which makes panels that are better-looking and slightly more efficient at converting sunlight to electricity than commodity models (see “10 Breakthrough Technologies: SolarCity’s Gigafactory,” March/April 2016). With the help of $750 million in incentives from New York State, the company decided to quintuple the output of a plant Silevo had planned to build in Buffalo. ­SolarCity expects that Silevo’s technology will give it an edge in the solar business. But if it can’t keep pace on price or deliver a truly differentiated product, the panel factory could become a boat anchor.

“That’s not how people think”

“Master plan part deux” relies on a bold new sales and marketing strategy as well. Rather than continue hiring thousands of door-to-door and telephone reps to sell solar panels, Tesla intends to push SolarCity’s business through its rapidly growing chain of retail stores by converting them into one-stop shops for environmentally conscious consumers. Instead of buying an electric car only to have it use electricity from a far-off coal plant, a customer would be able to lease or buy solar panels as well as Tesla Powerwall storage units so power is available on cloudy days and at night—or to sell back into the grid. Musk hasn’t provided details on what such a package would cost, but Shah, the Generate Capital executive, thinks Tesla could charge $900 a month on a 20-year contract to get a Tesla, a solar roof, a storage unit, and the right to upgrade to a newer-model Tesla twice during the life of the contract.

Like so much else with Elon Musk, the vision is elegant and ripe with potential. So far, only around one million of the world’s 2.5 billion cars are electric, and only 1 percent of U.S. homes have gone solar. Sales of the Powerwall and a higher-capacity version designed for businesses have been disappointing. Tesla says production problems are to blame, though it’s not clear that fixing those issues will be enough make the Powerwall a cost-effective way to run a home entirely on solar power. But if consumers do decide to buy these soup-to-nuts renewable-power setups, and if solar penetration rises to 15 percent, as it has in Australia in recent years, the overall market opportunity just in the U.S. will be $470 billion, says Shah. And Tesla is also hoping to become a leading provider of equipment and services to large utilities. The company recently announced a deal to provide 20 megawatts of power storage to Southern California Edison for the “largest lithium-ion battery storage project in the world.”

That said, Tesla has yet to show it can build a world-class industrial sales organization. And how many people are really going to go to their local Tesla store and buy in to Musk’s dream? Even Tesla’s affluent true believers might balk, says Gerber. “Elon seems to think that green-minded rich guys like me will decide to put solar on my house, and buy a car or two while they’re at it,” he says. “That’s not how people think.” What’s more, 37 percent of U.S. households consist of renters, according to the National Multifamily Housing Council. The owners of their homes have less incentive to invest in solar and storage.

Possibly the biggest risk is that Musk loses credibility by taking on so many huge challenges at once. While he’s delivered on many bold product promises in the past, his luster could fade with a few well-publicized misses. Tesla is facing criticism for the aggressive way it marketed its Autopilot feature, leading some people to believe they could leave the driving to the car. “They’re pushing hard to be seen as being on the leading edge, and I’m not sure safety is their number-one priority,” says Fisher of Consumer Reports. After a Florida man was killed in May, Tesla updated the cars’ software so that drivers who ignore too many warnings to keep their hands on the wheel won’t be able to reactivate Autopilot for the rest of the trip.

Just how safe Tesla investors are is another matter, judging from the daunting degree of difficulty facing Musk. Many investors think Tesla was assuming appropriate levels of risk with its crisp plan to take on Detroit. Others believe the company’s best opportunity is to become the leading maker of batteries for storing solar power and powering multiple manufacturers’ electric cars. That could be lucrative even if Musk can’t dominate the electric-car or solar-installation businesses. But unless shareholders shoot down the SolarCity merger, Tesla investors will not be taking one of those routes.

Instead, Musk will ask them to go along with something far bolder. His record as an innovator and visionary is beyond question. But the next year or two will determine whether he can do what ­Edison failed to do: translate his sweeping vision into historic business success.

Peter Burrows is a business journalist in California who wrote about Intel and deep learning in the July/August issue.

This story was updated on October 18, 2016, to correct the number of electric cars currently on the road. It was also updated on November 22, 2016, to correct the percentage of households occupied by renters.

