Sarah Lacy Is the Interviewer Elon Musk Was Looking For

Uh oh! Silicon Valley journalist Sarah Lacy laughed when Tesla Motors CEO Elon Musk called a New York Times writer a "douchebag." Now the Times is in a snit and she's calling the newspaper sexist!

Lacy conducted an interview with Musk that appeared last Friday. But instead of probing Tesla's uncertain future, she invited Musk to talk about the past. The column that sparked his outrage, published last November, asked whether taxpayers should subsidize a company which makes $109,000 electric sports cars for the wealthy. Musk claimed that the Times had retracted the story. In fact, the newspaper had corrected a minor bit about Tesla's application — still not granted yet — for $350 million in government loans. Randall Stross, a San Jose State University professor and Times contributor, initially wrote that the loans would go to the production of Tesla's expensive Roadster, as opposed to funding its vaporous plans for a $57,400 sedan, the Model S.

The New York Observer has the he-said, she-said between Times Sunday Business editor Tim O'Brien and Lacy, a former BusinessWeek reporter who freelances for TechCrunch, Yahoo, and other publications. Here's O'Brien:

I think Sarah Lacy was too busy giggling to do Journalism 101 and call Randy or me for comment to make sure what Elon was saying was accurate. Because it was not only inaccurate, it was flat-out wrong. We wrote a clarification of the headline. We didn't retract the story at all; we stood firmly by the story, and I still stand by Randy's column. You can't help but watch that interview and marvel at the squishy familiarity between Lacy and Musk. And I wonder whether or not some journalistic blinders had popped off.... It was so ridiculous that it was entertaining. It was so misguided and inaccurate and I was stunned at the poor quality of the journalism.

Lacy's response:

I think it's embarrassing that The Times would try to throw me under the bus because they did shoddy reporting that they wound up correcting. If they want to throw me under the bus to make up for their own column that they massively rewrote, you know, go for it.

Actually, that was an error, too. As the Observer notes, the Times removed one sentence from the story and rewrote another.

In her defense, Lacy implied that the Times was sexist for criticizing her. But then she goes on to defend herself on the grounds that she's a girl:

I think everyone has their own style in journalism. Look, I'm a girl from the South! Sometimes I laugh. Someone can pejoratively call it giggling. But if you look at the body of my work, I ask lots of hard questions, and break a lot of hard news.

Another error. If you look at the body of Lacy's work, you'll see a pattern of oblique references to unspecified insider knowledge trotted out after someone else breaks a story. Lacy knows far more than she reports, she always implies — and yet this knowledge never seems to make its way out to the public in a way that benefits the reader.

Lacy is right that the Times is making a lame critique of her journalism. Here's what the Times should have said.

First of all, it ought never have corrected the story. Because the truth of the matter is that if Tesla persuades the government to give it loans, it will in fact spend at least some of that money on ongoing production of the Roadster. It plans to open several expensive new showrooms in the U.S. and Europe. Until late 2011 at the earliest, those showrooms will have nothing but the Roadster to sell. If the Roadster is profitable now, it is barely so. Tesla's overhead will almost certainly have to be funded through the loan proceeds.

A tipster, who's given us inside info on Tesla before, has sketched the back-of-the-envelope numbers for what it will cost to get the Model S sedan into production and thinks, even with the loans, Tesla's more than $500 million short of what it needs. The Model S "prototype" Musk showed off last month was a "show car": a one-off model of what a car will look like, but far from a finished design that can be sent into production. The tipster thinks the earliest Tesla can go from concept to delivery is 2013 — not 2011, as Musk promises, which means another two years of peddling high-end sports cars for the wealthy, as some "douchebag" dared to point out.

Here's the tip:

The untrained observer and the Government may be persuaded by typical industry show car building tricks, but insiders and auto experts know that the Model S that was revealed was a reworked Mercedes CLS. To top it off the components and parts on the vehicle are not even those ever considered in the design.

The fact is Tesla had an agreement with an OEM [original equipment manufacturer] to use their off the shelf parts in the model S. Unfortunately that agreement expires in 2010, a good three years before Tesla can get the Model S engineered (assuming they get federal money). No other OEM has been willing to give Tesla the rights to buy parts or component CAD to design to, hence Tesla would need some additional $300M to develop all of the necessary hardware (suspension, air bags and sensors, modules etc.)

Cost:

D&R the Model S $250M
Build the Factory $300M
Components to put in the car $300M
Retail outlets $50M

Asking Musk about that would have made for a fascinating interview, though Musk probably would have lobbed his insults at Lacy rather than Stross. When we asked Musk about whether he was going to personally guarantee the deposits his company's collecting on those Model S sedans, this is what he said:

I'm not going to answer your questions until you start caring more about creating a truthful picture of Tesla. I know you think you are doing good by offsetting what you see as positive spin with negative spin, but that doesn't count as being honest.

That's the moral universe of Elon Musk: Only positive spin counts as "truthful." Lacy seems very comfortable in that world.