Elon Musk: The Madness of The Visionary Behind Tesla
I want you to visualize this. It’s a Saturday and you decide to go to the racetrack. It is the biggest derby of the year. You walk in and grab the pamphlet. You start looking at a list of all the jockeys and horses, you notice there’s this one horse called Tesla. Then you look at the jockeys and there is this jockey named Elon Musk. Then you take a step back because you’re about to make a big bet, before making the bet you decide to look at some stats on the horse. You study the trends of the jockey and their personality as well as the track record on the horse. In this article we are going to study Elon Musk and Tesla.
- First we are going to look at the sales Telsa did quarter by quarter from 2015 to 2019.
You’ll see Tesla sold 10.045 cars in Q1 2015, 11.532 in Q2, 11.603 in Q3 and 17.478 in Q4. Starting off 2016 they did 14.820 sales, then it dropped to 14.402 sales in Q2, increased to 24.821 in Q3 and 22.254 to finish Q4. Moving into 2017 Tesla sold 25.051 cars in Q1, 22.026 in Q2, 26.137 in Q3 and 29.967 to finish up Q4. Q1 in 2018 they sold 29.997 vehicles, Q2 they had 40.740 sales, Q3 increased two-fold to 83.725 and Tesla finished Q4 with 90.700 sales. Q1 2019 is where people are getting concerned, this is because Tesla only sold 63.000 cars, that is a decrease of a third compared to the quarter prior. Telsa projected they would produce 360-400 thousand vehicles in 2019, a goal they are behind on given they only produced right over 77 thousand cars in the first quarter of 2019.
2. Next thing to analyze would be Tesla’s market cap and see how that reflects on the company.
In 2015 Tesla’s market cap was at $26 billion, the next two years that increased first to $30 billion in 2016, then up to $36 billion in 2017. Then suddenly Tesla’s market cap jumps up to $54 billion in 2018 (peaking at $65 billion in August that year) before the market cap shrunk to $35 billion in 2019. That means Tesla lost roughly half it’s market cap in less than a year, something people are worried about. In order to get an understanding for Teslas market cap it is important to compare it to other auto makers. Toyota topped the list with a 2018 market cap of $195 billion. Number two on the list was Volkswagen with a $82 billion-dollar market cap, a drastic decrease compared to the dominant Toyota. Number three on the list is Tesla with a market cap of $62 billion. Number 4 is Daimler with a $57 billion-dollar market cap. Number 5 is BMW with a $53 billion, number 6 is Honda with a market cap of $49 billion. After Honda comes General motors at number 7 with a market cap of $46 billion. Number 8 is Nissan at $36 billion. Number 9 is Ford at $33 billion. Number ten is FCA with a market cap of $25 billion. Now you might wonder, didn’t the market cap of Tesla drop from 60 to 30 billion, and you would be correct. However, Tesla’s market cap would still be $2 billion bigger than Ford’s at a $35 billion-dollar market cap, something that is very impressive for a company that started only 16 years ago.
3. Having looked at Tesla’s car sales in 2018 and the market caps on the different auto maker companies, it is now time to look at the number of sales the different companies did in the Unites States in 2018. This is where you’ll get a good perspective on what’s going on.
Ford sold the most cars in the United States in 2018 with 2,3 million sales. Toyota had the second most sales with 2,2 million sales. Chevrolet had third most sales at 2 million, Honda came in at number 4 with 1,4 million sales. Nissan at number 5 had 1,3 million in sales. Jeep at number 6 had 973k sales. Subaru came in at 7th with 680k sales. Hyundai had 679k sales and had the number 8 spot. Ram came in 9th with 597k sales. Kia grabbed the 10th spot with 590k sales. GMC was 11th with 556k sales. Dodge had 459k sales at the 12th spot. Volkswagen got 13th with 354k sales. 14th was Mercedes Benz with 349k sales. BMW at the 15th spot with 311k sales. Mazda was 16th with 300k sales. Lexus was 17th with 298k sales. Audi was 18th with 223k sales. Buick was 19th with 207k sales and finally Tesla comes in at the 20th place with 198 thousand sales, just shy of 200k.
Tesla barely made the top 20 list of most sales in the American market in 2018, however, they have the 3rd biggest market cap? How does that make sense? How much of that is on the founder and how much of that is on the company? Having looked at the numbers it is now time to look at Elon Musk as an individual, the way he is wired.
4. We also need to look at how things are within Tesla the company. Let’s look at Elon Musk first:
Elon Musk is a visionary. I mean more than creating an impressive company. Don’t forget that his vision includes transitioning humans from fossil fuels to sustainable energy, producing high speed transportation, saving humanity from AI, and make humans a multi planet species. That’s an impressive vision. Elon musk is extremely creative, he’s a clear inventor and a workaholic that gets bored quickly, leading to him doing as much as he does and flying around as much as he does. He has been married three times, twice to the same girl and has 5 kids, one set of twins and one set of triplets. Elon musk is a worried genius that has struggled with loneliness and bullying ever since his childhood. He always needs people around him and he can’t stand not having a girlfriend/wife. Elon Musk likes having enemies and enjoys proving doubters wrong, it drives him. Elon Musk is the only person to have built 4 separate billion dollar companies which include Tesla, PayPal, Space X and Solar City. Elon Musk is a very unpredictable guy, making it hard for investors to always feel safe when they don’t know what he is up to, but also hard for his competitors, because they never really know what he is up to. Elon Musk deliberately left open patents so that his competitors could copy parts of the tesla that would allow them to increase their production of electric vehicles. Elon Musk is the biggest shareholder in Tesla, owning 33.7 million shares, roughly 19% of the company and he has no guaranteed salary, it is all at risk performance based. This means he has certain milestones he needs to hit in order to get more equity in the company. This means if the company grows, he makes money, if the company doesn’t grow, he doesn’t make money. Elon Musk is a very rebellious person that does things that pin him against the status quo, most noticeably was when he smoked weed on the Joe Rogan podcast which lead Tesla stock to drop significantly.
5. Now let’s look at the horse and what the horse has been going through recently.
Tesla owns and operates 100% of their Gigafactory in China, something that is very rare based on the regulations China has in place on foreign companies, this is very big for the company. Tesla recently laid off 7% of their employees in January, just seven months after cutting 9% of it’s workforce. Those are big layoffs for the company, this doesn’t look good. Within the company there are high turnover rates meaning a lot of people start and then quit rapidly. The CFO of the company left twice; the VP of global recruiting left as well as parts of their general council resigned. Telsa and Elon Musk were both fined $20 million each by the SEC for his tweet saying “ I’m considering taking Tesla private at $420 a share funding secured.” Something that didn’t happened to be true. This tweet ended up costing Elon Musk his chairman seat, leaving him as the CEO and not both. Possibly the biggest thing Tesla has going for itself is the fact that it has scored high on consumer reports. Recently the model three toped the list as the most satisfying car. The Model 3 scored 99/100 on driving experience, 84/100 on comfort and 67/100 on value. However, the most surprising thing was that it 92/100 customers said they would buy one again. How often do people buy something and then 3 years later they buy the exact same thing again? This means Elon Musk and Tesla have produced a product that people are really liking. This phenomenal product is standing on its own. With all this information at hand, are you looking to bet on the jockey or the horse?
“Good jockeys will always come with baggage”
You’ll very rarely find people that take that much risk while being very “normal or traditional”. Starting companies that are looking to revolutionize industries requires more than what most people are willing to do. Elon has started 4 successful ones and done so successfully; this means he has a track record. However, the horse is producing a good product, making it be able to stand on its own, but this doesn’t mean you can just look away from the fact that the companies market cap dropped by $30 billion in the last 12 months.
Who are you betting on? What do you think is going to happen the next few months? We want to hear your thoughts.
Recommended video: Why the best entrepreneurs are childlike: https://www.youtube.com/watch?v=GHocLiH0kx8
Sources for this video:
https://ir.tesla.com/index.php/news-releases/news-release-details/tesla-announces-new-long-term-performance-award-elon-musk
https://en.wikipedia.org/wiki/Tesla,_Inc.#Production_and_sales_by_quarter
https://www.statista.com/statistics/502208/tesla-quarterly-vehicle-deliveries/
https://cleantechnica.com/2019/01/20/30-nasty-tesla-charts/
http://www.goodcarbadcar.net/2019/01/u-s-auto-sales-brand-rankings-december-2018-ytd/
https://cleantechnica.com/2018/12/10/doctor-checkup-10-auto-companies-with-largest-market-cap/
https://www.businessinsider.com/teslas-biggest-challenges-in-2019-2019-3#the-sec-accuses-musk-of-violating-their-settlement-4
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