I’ve always liked Elon Musk.
The guy has vision. He wants to make a real difference in our world.
He heads up three companies with ambitious goals: SpaceX’s long-term goal is to make humans a multi-planetary species. SolarCity will bring low-cost clean energy to the masses. Tesla aims to speed the transition to a sustainable-energy economy. Any one of these would be an audacious ambition for a corporate leader, but Musk wants to be in the fast lane.
Despite the inspiring goals, I often wondered if he is a little too committed to humanity and a little too uncommitted to making company profits.
Case in point, his company Tesla. It is in deep shit.
Under Musk, Tesla has racked up 5 billion dollars of debt. The company actually lost $20,000 per vehicle last year because it costs more to build, sell, service, charge and maintain these cars than they collected in revenue. Tesla can’t make a profit on a $35,000 to $50,000 car once you account for production, distribution and maintenance costs.
Musk is also facing allegations that he lied to shareholders about production numbers, lowered safety standards and used substandard materials which puts customers in danger.
Employee Martin Tripp, who was fired from Tesla claims Musk overstated the number of Model 3s being produced each week by as much as 44%, and knowingly placed batteries with dangerous puncture holes in the cars.
Tripp could simply be stirring up trouble to exact revenge after a bitter and public fight with Musk… or maybe not. This isn’t the first time Tesla has been under federal investigation.
And now they face much stiffer competition with BMW’s i3 - a $50,000 electric car that has been leased for as little as $54/month.
Tesla also lost half their tax credit of $7,500 per car – reduced to $3,750 after they successfully delivered 200,000 cars to US buyers.
Despite all the challenges Tesla faces, the allegations, despite hemorrhaging money, despite the need to raise somewhere between $5-$10 billion in the next couple of years to stay afloat, Musk has faced many challenges before and overcome them. I was actually cheering for him. And I obviously was not alone. Despite all the controversy, Tesla’s stocks remain unaffected.
Then I learned Musk recently won the largest CEO pay package in the history of the world – 50 BILLION dollars! You read that right.
50 Billion Dollars for failing to deliver? For leading a failing company? What the hell, Musk? You just lost me.
Warren Buffet said, “Be fearful when others are greedy and greedy when others are fearful." If I had purchased any stock with Tesla, I'd be fearful right now and I'd be selling it.
Even so, I completely understand if you own some stock and you don't want to sell it. I like the guy and I hope to be proven wrong. Unfortunately, 50+ years of experience studying people and business tells me I won't be wrong.