New York Vs. Tesla — The Grudge Match Is ON!

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The vast majority of New York residents seem to be infected with the “woke mind virus” Elon Musk is always complaining about. [Some say the virus is just another name for common sense.] Both the City and State of New York are considering taking legal action against Tesla based on what officials see as a lack of bona fides by Elon Musk, who has been gallivanting around the world in support of dictators and tyrants instead of doing what he is being paid to do by Tesla, where his compensation package is a staggering $47 billion — the highest in the history of the world by a wide margin.

New York City comptroller Brad Lander is the investment adviser to the city’s five pension funds. He has recommended the city file a shareholder lawsuit against Tesla because he believes the company misstated how much Musk’s work for the Trump administration has pulled him away from the company. Lander said Tesla made material misstatements to shareholders by maintaining Musk is spending significant time on the company despite his job as the head of the so-called Department of Government Efficiency, according to Bloomberg.

“Even as Tesla’s performance is floundering, the board has yet to ensure that Tesla has a full-time CEO who is adequately focused on the long-term sustainable success of our company,” Lander wrote in an SEC filing. In less than three months, New York City’s $285 billion pensions have lost more than $300 million as Tesla stock has lost almost 40 percent. “Tesla shareholders don’t have a full time CEO paying attention to the company and their interests,” Lander said at a news conference on Tuesday.

Lander is one of a dozen Democrats running to be mayor of New York. He has called on the New York City Law Department, which is authorized to be the legal representative for the pension funds, to back a shareholder lawsuit against Tesla. A spokesperson for Mayor Eric Adams pooh-poohed Lander’s suggestion, saying he is publicly pushing the city to file suit in order to bypass the pensions’ board of directors and attract political attention. “We also respect the pension boards in place to provide input on matters such as these,” said Liz Garcia, a spokeswoman for Adams. “It’s a shame Comptroller Lander doesn’t share the same respect and is attempting to bypass the boards for political gain.”

Although the mayor and comptroller are members of the pension boards, power resides with trustees representing politically formidable public employee unions. The city’s Law Department is reviewing the possibility of a case, but hasn’t made a decision, according to a person familiar with the matter.

New York City’s pensions have previously led shareholder campaigns over governance reforms at Tesla. At the company’s 2024 annual meeting, the city pensions and seven other investors urged shareholders to reject Musk’s $47 billion compensation package and vote against the reelection of Musk’s brother Kimbal and James Murdoch, Rupert Murdoch’s son, to Tesla’s board. In a December 2024 US Securities and Exchange Commission filing, Tesla said it was “highly dependent on the services of Elon Musk” and that he spends “significant time with Tesla.”

CleanTechnica readers, who are all well above average, know that claim about Musk spending “significant time” on Tesla management is a steaming pile of horse puckey. Last week he was in Wisconsin handing out million-dollar checks to voters in an effort to get a radical right-wing candidate elected to that state’s Supreme Court — when he wasn’t busy making hundreds of posts on his personal antisocial media channel.

New York State To Review Tesla Buffalo Deal

While all this is happening in the Big Apple, in Albany several state legislators are proposing a law that would require an audit of the state subsidy deal that saw the state spend $959 billion to build and equip a factory in Buffalo where the company is supposed to be building solar panels and manufacturing components for Tesla automobiles.

Tesla pays the state of New York $1 a year as rent. The bill in the legislature is intended to “identify waste, fraud, and abuse committed by private parties to the contract.” It would determine whether Tesla is meeting job creation targets, making promised investments, paying enough rent, and honoring job training commitments. If Tesla was found to be not in compliance, the state could claw back state benefits, impose penalties, or terminate contracts, according to the New York Times.

“It is the height of hypocrisy that Elon Musk, the man who is dismantling federal agencies and doing enormous damage on the basis of wildly unsubstantiated claims of waste, fraud and abuse, is the beneficiary of one of the biggest, shadiest subsidy deals of all time,” the two lawmakers, Senator Brad Hoylman-Sigal and Assemblyman Micah Lasher, said in a statement. The title of the proposed legislation says it all. It is called the “New York Determining Obligations and Guaranteeing Enforcement (DOGE) in Government Contracting Act.”

“The moment demands a new way of thinking about legislation,” said Lasher, who introduced several such bills. “You cannot look at what is going on and say that a normal set of responses is adequate, and you cannot talk to constituents and think they will expect business as usual.” The bill could also prove embarrassing to former governor Andrew Cuomo, who is trying to stage a political comeback in the New York City mayor’s race, by reminding voters of one of the biggest controversies during his decade in Albany.

In August 2015, when the solar panel manufacturing facility was completed, Cuomo marveled at the transformation of an abandoned brownfield into a high-tech plant sure to revive the ailing city. The factory was being operated by SolarCity, a Musk company later absorbed by Tesla. Cuomo claimed the project would create 5,000 jobs statewide while Musk had predicted that by 2020 the Buffalo plant would pump out enough solar panels to outfit 1,000 roofs a week. Those rosy projections never materialized. The plant now produces chargers and related components for Tesla cars and trucks. According to a report by the consulting firm Wood Mackenzie, an average of 21 Tesla solar roofs were produced weekly in 2022.

Amendments to the agreement that relaxed deadlines and job targets have allowed Tesla to avoid tens of millions of dollars in penalties. The state is now offering to lower the job target from 3,460 to 3,000 statewide; officials say Tesla is currently at about 2,900 jobs, with over 2,000 of them in Buffalo.

Empire State Development is the agency with oversight of the deal with Tesla. It said it has been negotiating for higher rent payments and accountability measures with the company but a formal lease renewal agreement has yet to be signed. The agency’s chief operating officer, Kevin Younis, said keeping good jobs in Buffalo remains the state’s top focus. “We’re not doing this for Elon Musk. Our goal is to get these jobs created in Buffalo and to get them to stay here as long as possible.”

Under the proposed agreement, Tesla would start paying $2 million a year in rent instead of $1, with the payments rising over time. The new deal also requires Tesla to spend at least $500 million building a “dojo” supercomputer at the site. Rent payments were supposed to begin last year under the proposed deal, so if Tesla and New York State sign the agreement in the coming weeks as Mr. Younis anticipates, the state soon will receive a rent check of about $3 million covering all of 2024 and half of this year. “We expect to get paid this summer,” he said.

The two Democrats behind the bill say New York should not renew its agreement with Tesla if a review shows taxpayers got snookered in the original investment, which a conservative New York think tank characterized as “the single biggest economic development boondoggle” in US history. When the deal was originally signed, the expectation was that the state would realize $30 in economic benefits for ever dollar spent.However,  a state audit in 2020 found the project had returned only 54 cents of economic benefit for every $1 in public money invested. “There is an opportunity for an exit here and it may be in the interest of New York’s taxpayers for the state to take it,” the lawmakers said.

There is more to this, of course. Democrats in New York are anxious to give both Musk and his Mar-A-Loco buddy a black eye after they have had virtually their own way since the inauguration. Jessica Ramos, a state senator who is one of those dozen Democrats running for mayor of New York City, told the New York Times, “Democrats need to bring a gun to a gunfight. The overwhelming feeling from constituents is, ‘We want to see Democrats have a spine. We want Democrats to fight back against the Republicans.’” There are plenty of Americans who would agree with that sentiment.