By: Imogen Rose-Smith
As COVID-19 began its deadly sweep across America, one tech CEO appeared unconvinced: Elon Musk.
On Twitter, the CEO of Tesla called the panic over the virus “dumb”, erroneously suggested that children were immune, and predicted “zero deaths” in the United States by the end of April.
Then, Musk pivoted.
Suddenly, Musk was promising that his electric vehicle (EV) company would start producing ventilators, much needed devices for an illness that ravages the lungs. In California, where Musk lives, Governor Gavin Newsom praised the efforts as “heroic,” even after it became apparent Tesla wasn’t making the equipment. The ventilators had been purchased from China.
Within weeks, however, Newsome’s office was reporting that none of the promised ventilators had arrived. Musk disagreed and said he had the receipts. He then insisted that the Governor of the worlds 5th largest economy take time out from dealing with a global pandemic to “fix this misunderstanding.”
It turned out most of what Tesla had delivered was not ventilators but other types of respiratory equipment. Musk, who has no medical training, argued that the less invasive equipment Tesla provided was actually better for COVID-19 sufferers. On Twitter, some of his million plus followers gave him their full backing. Some hospitals tweeted images of medical supplies received, their staff expressing gratitude.
And so it went.
Through the long months of spring, and into summer of 2020, Musk, 48, repeatedly broke through the unrelenting news cycle of death and global pandemic, arguably with really one other true competitor in bending the news cycle his way. There was personal news, the birth of a baby girl. Absurd news, the cryptic name he and his partner chose for their baby. There was political news. Musk ranting that California must reopen. manufacturing facility open. Theater, Musk opening his California factory. And space news.
The hype is a feature not a bug. Musk has always gone big in his battle to defend and grow Tesla. The short sellers have long been out for blood. But so far betting against the most outrageous of entrepreneurs has proven to be a bad bet.
Musk is an anti-hero for the current moment. A self-made white South-African-born American, immigrant with a vast fortune, and a seemingly unlimited supply of hubris. An entrepreneur with the ability to turn any new cycle to his own will, and scant regard for the rule of law as it applies to his own conduct. A leader of the clean-energy revolution who lives fast and furious. Musk regularly delights and infuriates. No the more so than in his stewardship of Tesla. The EV manufacturer with which Musk’s name has become synonymous. Now, he aims to keep the party going as Tesla enters its new phase of growth. But there are plenty who would see him fail.
COVID-19 is hardly the first global disaster to feature a bizarre Musk sub plot. (There was the time he accused a diver who rescued trapped children in Thailand of being a pedophile.) Rarely a week goes by that the tech billionaire is not in the news. Musk’s strategy of constantly hyping Tesla has been a feature from the very beginning of his relationship with the company. And, despite the consternation and the doubts of many on Wall Street, it is working.
Over the last 12-months Tesla’s performance has been on a moon bound rocket ship The Palo Alto, California based company’s share price has risen to stratospheric levels. On June 11, 2019 TSLA was trading at $217 a share, but opening bell on June 10 2020 it was at $940 a share. Yet, even before COVID-19 Tesla had been besieged by problems. Some of them of Musk’s own doing, with an assist from COVID-19.
Tesla has an enthusiastic retail investor base, which Musk takes pains to cultivate. But the company also includes institutional asset owners among its supporters, including mutual fund managers Baillie Gifford & Co. and Jenson Associates.
To believers, Tesla and Musk are a company ahead of their time transforming the world. To detractors, Tesla as a high-wire act, always on the verge of falling. But both groups agree that Tesla is where it is largely because of its high-profile, mercurial, CEO.
“The stock is where it is ENTIRELY because of Musk’s promotion to his cult,” says Tesla sceptic and Musk critic Mark Spigel. Founder and chief investment officer of New York based hedge fund Stanphyl Capital Management, Spigel believes that “the equity would be at $0 (or near-$0) without him.” Spigel calls Musk “a sociopathic narcissist” and accuses him of deliberately committing securities fraud. (Musk was investigated by the Securities and Exchange Commission after Tweeting about Tesla’s stock price, but a settlement was reached and no charges were fined.)
To the shock, and financial pain, of some short sellers, Tesla’s last half of 2019 proved to be a massive success. Not only did the company deliver a record number of vehicles globally, it also began production out of its new manufacturing facility in Shanghai, China. Being able to produce companies in China – the major center of growth for EV’s – was a significant milestone for the company.
Now, Tesla was once again looking at possible disaster, this time a result of COVID-19. The company was forced to close down, at least temporarily, two of its three manufacturing facilities in the U.S. Production in China was also briefly halted twice. Consumer confidence fell, diminishing demand for automobile sales.
Yet, after an initial dramatic dip in March, along with the overall stock market, the car company’s share price recovered and kept soaring. The company’s Q1, 2020 results were even better than its previous quarter.
Catherine Wood CIO and founder of $11.4 billion New York based ARK Investment Management believes institutional investors and analysts do not understand Musk and Tesla. “Traditional analysts and portfolio managers have become so short term in their orientation,” she says. “All these analysts are focused on this quarter, and the next quarter.. And we’re focused on five years out and we could care less about this quarter. And anything could go wrong in one quarter when you’re dealing with an innovator. You expect things to go wrong. These analysts don’t. They are dealing with mature companies and they are spoon fed by the management teams.”
Wood says Musk is building for the future. She is not bothered by the CEO’s day-to-day antics on Twitter. Saying “I don’t really care what he is Tweeting at all, except when the SEC is going to come down on him.” Instead, she is interested in his vision and what Tesla is ultimately capable of. In particular Wood is excited by Tesla’s lead in automation and the transformation of production. Musk has spoken extensively about automation of the production line, and Tesla is among the leading proponents of automated driving. ARK estimates that Tesla could reach as high as $15,000 a share by 2024.
Like Henry Ford before him, Musk is not just building cars. He is building a whole new means of production. Ones that could have profound implications for labor and manufacturing. But Tesla also has the potential to transform the entire electric grid and the world power system. The company also benefits from an unionized workforce, typically a major cost center for the century-old automotive sector.
Yet even Musk can’t turn a blind eye to the disruptions taking place today in the real world economy. Or can he?
By late May America had erupted in violence. The trigger, a police killing of an unarmed black man in Minneapolis.TV News on Saturday May 30th was filled with sad scenes of rioting and police violence around the country. Then the news cut to images of another of Musk’s portfolio companies, Space Exploration Technologies Corp or Space-X. The space exploration company, in partnership with the National Aeronautics and Space Administration (NASA) , was launching two astronauts into space.
It was the first time in almost a decade that NASA has sent astronauts into orbit from American soil. They would be flying to the International Space Center, which circles the earth, on a Space X built ship, Dragon 2, or Crew Dragon. The astronauts, Doug Hurley and Bob Behnken, named the ship Endeavor.
Crew Dragon’s mission marked the first such partnership between the U.S. space force, and a private company. One small step for Musk, one giant leap for the privatization of space and space travel.
By May 30th over 100,000 Americans had died from COVID-19. The spread of the global pandemic had resulted in economic shutdowns across the globe. Unemployment was at record highest, and the world was on the break of a massive recession. Tesla’s stock price had ducked and dived during the week but was marching toward $900 a share.
“Congratulations to the astronauts that left earth today. Good choice,” was a tweet that went viral.
Watching the take-off from the Kennedy Space Center balcony in Florida were President Donald Trump and Vice President Mike Pence. “When you see a site like that, it’s incredible,” the President said.
During lift off, Elton John’s Rocket Man played. “It’s lonely out in space / On such a timeless flight” Elton John sings. “Rocket man burning out his fuse up here alone.”
Elon Musk is a Rocket man Musk, flying close to the sun.