Tesla #5: Most Valuable Automaker

As Tesla launched its car models, a pattern emerged, writes Tim Higgins.

“The juxtaposition of praise and doomsaying would become a hallmark of publicity for Tesla for years to come.”

The praise was for the cars. The doomsaying was about the financial prospects of the company itself.

 

Elon Musk had to manage this contradiction throughout the company’s history. The danger that the predictions of bankruptcy would become a self-fulfilling prophecy was all too real. One way Musk handled the situation?

“People at this point ought to be a little more optimistic about the future of Tesla because we’ve confounded the critics at every turn so at a certain point people have to get tired of being wrong”, Musk said with his typical bombast.”

 

Confidence, bordering on asking for the impossible, became Musk’s style:

“Announce something, then figure out how to make it happen.”

 

Musk is/was also the master of selling a dream. He also owned SpaceX, the rocket company. In early 2018, when SpaceX was launching a giant rocket, Musk put a Tesla car in it! Why?!

“It was a stunning shot (of a car in space), one that put Tesla’s cars in the same conversation as space travel… Tesla was offering you the future.”

 

The extensive software in the car and Musk’s own Silicon Valley background created a different kind of problem at the company – culture clash:

“The car guys felt the tech guys lacked respect for the auto industry’s hard-earned lessons, for the proper way to make a car. The tech guys felt the car guys lacked their engineering skills, relying on the past as a crutch.”

Musk thrived in a world with such conflicting views.

 

Given the problems and extremely low probability of success, Musk asked for a new compensation package from the board. It would be tied to the performance of the company over a decade, and if things worked out, he would be the richest CEO in history – a $50 billion payout for pulling off the impossible!

 

The hype, hope, the awesome cars, and Musk’s persona worked.

“Little Tesla was now the world’s most valuable automaker.”

More valuable than even Toyota and Volkswagen. Given the sales of these companies, how can Tesla be more valuable? Welcome to the world of the stock market, hope and bubbles. So is Tesla a bubble waiting to be popped? Only time will tell, but for now, like Steve Jobs’ famed “reality distortion field”, Musk has pulled off the impossible:

“Convince the world that the car should be electric.”

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