Electric personality: Tesla CEO Elon Musk Serial entrepreneur’s reputation surges along with his company’s stock Nov 14th 2013 Tesla’s showing of its Model S at the Frankfurt Motor Show this year was seen as a bold shot across the bow aimed at the likes of BMW and Audi. It has been quite a ride this year for Tesla Motors Inc., and, despite some bumps in the road, shares of the electric-car maker are up more than 300%. The stock that investors place in CEO Elon Musk has also surged in 2013. Musk has faced down the Tesla TSLA -1.56% short sellers; paid off — years ahead of schedule — a big Energy Department loan; and staked a claim to the CEO-as-innovator-in-chief role most closely associated with the late Steve Jobs, with whom Musk draws frequent comparisons. Like Jobs, Musk has not hesitated to fire back at critics of his products, even those named George Clooney or Jeremy Clarkson. For these reasons and more, Musk is the MarketWatch CEO of the Year for 2013, joining the ranks of previous MarketWatch CEO of the Year winners, including Ford’s Alan Mulally, Disney’s Robert Iger and Amazon’s Jeff Bezos, as well as Apple’s Jobs, who in 2010 was named CEO of the Decade. Beyond stock performance and even public persona, Musk, 42, who first came to prominence with the success of PayPal, dominated this year’s field with his uncommon blend of energy, innovation and relentless drive. Musk, not content to disrupt one industry at a time, also runs the first private-sector company to build rockets to supply the International Space Station. Musk was chosen by MarketWatch editors and readers, who cast more than 12,000 votes in our selection process. He declined requests to be interviewed for this story. Our other nominees this year — chief executives of publicly traded companies who made this a great year for their shareholders, employees and customers — were Reed Hastings of Netflix, Gary Kelly of Southwest Airlines, Marissa Mayer of Yahoo, Jeff Weiner of LinkedIn and Mark Zuckerberg of Facebook. A year ago, when Musk addressed students at Oxford University, he told them that Tesla’s “goal is to create electric vehicles that are more compelling than gasoline vehicles as a product,” and, this year, he has made that goal a reality. Sales of the sleek and speedy electric vehicles hit 5,500 in the latest quarter, claiming a considerable chunk of the luxury-automobile market. A network of high-speed electric chargers has been completed along the West Coast, and the one along the eastern seaboard is being extended. The car has been introduced in Europe, where its sleek styling and politically correct power source carry cachet with elites. In May, Tesla sent the U.S. government a check for $451.8 million, paying off its Energy Department loan with interest and, by the company’s count, nine years ahead of schedule. That followed a secondary stock offering that, unusually, caused barely a ripple of complaint among shareholders. With the company turning a profit for the first time, the loan repayment and Musk’s bold announcement that he would invest another $100 million in the company, there was little to balk at. The company’s swing to profitability was helped by sales of environmental credits to more traditional car makers and ignited a stock surge that sent shorts running for cover in May. Then, as the broader market rallied, the stock was added to the Nasdaq-100, fueling more demand. Tesla, of course, is all about new technology, such as the lithium-ion battery packs that power its vehicles. And because a few such battery packs spontaneously combusted on Boeing’s high-profile 787 Dreamliner, public trust has been particularly slow Indeed, the safety of Tesla vehicles themselves has been called into question by three car fires involving Model S sedans, one in Tennessee, one in Washington and a third in Mexico. Tesla shares had hit an all-time high of $194.50 on Sept. 30, a day before video of the car fire in Washington state went viral. That episode and a third-quarter earnings update earlier this month — in which Musk said financial performance was likely to flatten out in the fourth quarter — hit the stock hard. Musk said in an interview at the DealBook conference in New York this week that concerns over the fires are overblown. About 15,000 Model S cars are on the road, he said, so the trio that have caught fire represents less than 0.02% of the fleet. He noted that all three fires occurred after accidents and that the Model S’s safety features had probably saved lives. The Tesla CEO said he’d spoken with the drivers involved in all three incidents, and each, he reported, asked for a replacement Model S as soon as possible. In fact, the owner of the car in Tennessee, which caught fire after running over a large trailer hitch, observed in an online posting that the car had “performed perfectly” after hitting that object. On Tesla’s website, the owner, a medical doctor named Juris Shibayama, wrote that he “never felt as though I was in any imminent danger” during the incident. He said he “would buy another [Model S] in a heartbeat.” With the pullback in shares over both safety and financial-performance concerns, Musk said he sees the stock as “a pretty good deal right now.” These concerns aside, the market has bought so completely into the Tesla story this year that Musk will have to deliver on his promise of cheaper consumer-oriented electric vehicles in the coming years — or see shares plunge. He has said that, with good design and economies of scale, the company can manufacture an electric vehicle for $35,000 with a range comparable to that of the Model S, which can travel about 200 miles between charges and carries a base price of $62,400, including a $7,500 federal tax credit. Doubts, of course, remain and won’t be laid aside any time soon. But the trouble for doubters is that every time people sell Musk or one of his enterprises short, it seems to turn out badly for those betting against, or even quibbling with, him. Early in the year, Musk tangled directly with a New York Times automobile reviewer who questioned the company’s range claims for the Model S. Musk adroitly employed social media to counter the reviewer’s claims, and he offered up evidence that forced the paper to backtrack. Similarly fierce is the brand loyalty Tesla appears to engender — which is not unlike that which Apple AAPL -0.60% enjoys among its own legion of loyal fans. In fact, it’s another reason Musk draws comparisons to Apple co-founder Jobs. Headquartered in Palo Alto, Calif., Tesla attracted its earliest support from some of the leading lights of Silicon Valley and had technology-industry titans lining up to get behind the wheel of its first high-end sports cars before they were available. Since Teslas tend to be purchased by the 1% crowd, the car’s owners carry outsize clout, and that, too, works in the company’s favor. The commercial rollout of the Model S, the stock performance, the brand affinity and the reader votes would have been enough to make Musk the 2013 MarketWatch CEO of the year. But they’re only part of what he’s accomplished. At SpaceX, Musk has continued to oversee the first private-industry rocket flights in support of missions to the International Space Station. The company has also begun testing larger launch vehicles and a prototype reusable rocket, which soared more than 700 meters before returning to Earth. Musk’s interest in space exploration is of long standing, growing out of a project whose goal was the delivery of seeds and plants to Mars. He went so far as to price old Soviet ballistic missiles for the mission before deciding he should probably start his own company. Musk also serves as chairman of Solar City, an outgrowth of an enduring fascination with solar power, and, in keeping with his Midas touch in 2013, its shares have surged this year, too. Like shares of Tesla, however, they’ve pulled back in recent weeks. If electric cars, solar panels and space travel can’t fully hold his interest, Musk has another project in the pipeline. This summer, he laid out in some detail his idea for a so-called Hyperloop transport system that, he said, could be built at a far lower cost than California’s planned $69 billion high-speed-rail system. Musk said a version of the system could moved passengers from Los Angeles to San Francisco in half an hour. A one-way ticket would go for $20. Sounds too good to be true, and it might be — if only because, as even MarketWatch’s CEO of the Year concedes, he has his hands too full at present to actively pursue development of the Hyperloop himself. marketwatch/story/electric-personality-tesla-ceo-elon-musk-2013-11-14?pagenumber=2
Posted on: Mon, 18 Nov 2013 02:59:54 +0000
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