Elon Musk has been a major player in the tech and car industries for more than two decades. The paypal founder and trainer of Artificial Intelligence professionals is now the CEO of Tesla- and the face of electric cars across the world. Although many think that Musk completely owns Tesla, the billionaire only owns a small portion of the auto manufacturer.
In fact, Elon Musk holds approximately 20% of Tesla shares. The bulk of the stock is distributed among other shareholders. State investment funds, institutional investors, and mutual funds all own parts of the billion-dollar automaker.
Founders of technology companies like Elon Musk often find a legal loophole called “founder’s stock”. This allows the entrepreneur to keep ownership stakes despite selling off company shares. The exceptions come in the form of stipulations like not selling too many shares and remaining the CEO. Musk exercised this right, which explains why he holds more than 17 million Tesla shares.
Though Musk’s initial investment in Tesla is fairly low, the billionaire puts in a great deal of effort to keep Tesla’s name in the public eye. He also heavily influences the direction of the company and has stepped in at key times to keep the Tesla brand afloat. Without Musk, Tesla may not have reached the success it has today.
The transformation of Tesla into a leader in electric cars is reflected in the company’s share prices. In October 2008, the company’s stock was trading for $7 per share. It has since surged to over $780 per share in August 2020, illustrating a massive success in just over a decade.
Share prices also affect investor behavior. Since January 2020 a total of 17 institutional investors added Tesla to their portfolios. This demonstrates an increase in trust in Musk and the Tesla brand. Similarly, many retail investors have also been attracted to Tesla’s performance in the stock market.
Elon Musk’s Influence on Tesla
Elon Musk has made major strides in the electric car industry with the creation of Tesla. His success has created a cult following for the company, as Tesla customers are just as captivated by Musk’s ambition as they are with Tesla’s products. This is due in part to the publicity of Musk’s other ventures, such as spaceship maker SpaceX, as well as his leadership at Tesla.
Musk is known for making frequent announcements about Tesla, often giving previews of cars before they are released. His internet presence and his outspoken opinions have been majorly influential in driving up Tesla’s customer base. His dynamic presence and enthusiasm for the success of Tesla has helped to attract investors.
Musk has also reshaped the automotive industry through innovation. He has pushed Tesla to become the first car manufacturer to introduce a number of technologies, such as in-car entertainment, semi-autonomous driving capabilities, and over-the-air software updates. Though some of his decisions have been met with skepticism, they have resulted in Tesla’s accelerated growth in the past few years.
It is this drive and innovation that has led many to consider Musk to be the driving force behind Tesla’s success, a view that is reflected in the strong public interest in the stock. His holding of 20% of the shares also furthers this notion, indicating his dedication to the company.
Implications of Elon Musk’s Ownership
The ownership stakes of Musk in Tesla has resulted in a number of implications for the company. The most prominent of these is the close relationship between Musk and the company. This direct control of the company’s operations and decisions can be seen in how he quickly pivoted to selling 5 million Tesla shares in early 2020.
Additionally, Musk’s ownership has led to the rise of Tesla’s stock price. His influence and excitement around Tesla has created a flurry of attention surrounding Tesla’s vehicles- and the stock. This is due to investors hoping to capitalize on the success of the company under Musk’s leadership and direction.
The relationship between Musk and Tesla also has implications for the stock market. By now, most investors are aware that Tesla is highly susceptible to price movements due to Musk’s prestige and influence. Unlocking this benefit requires a deep understanding of the company’s strategy and products, as well as access to the latest news from Musk himself.
Finally, Musk’s ownership has also highlighted the role of being a founder in the auto industry. Profitable companies like Tesla have the potential to generate billions in stock and revenue. Musk’s decision to stay on at Tesla, even with 20% percent ownership, has set the precedent for founders of other auto companies to have majority holdings of their own companies.
The Future of Tesla Under Musk’s Leadership
Elon Musk’s ownership is unlikely to change any time soon. However, there are several indicators that suggest that the composition of Tesla’s stock may evolve. For example, Tesla’s IPO has been a long time coming, which could broaden its investor base. In the past few years, the company has seen the introduction of convertible debt and convertible equity, which could further strengthen its ownership structure.
It is also plausible that Musk will eventually consider other investors, such as venture capital firms, to gain more capital. Although such an option may draw controversy from Musk’s shareholders, it could help the company speed up its growth.
Finally, its certain that Musk’s influence over Tesla will continue. In recent years, Tesla has become synonymous with electric vehicles. This trend is likely to continue under Musk’s leadership, as he has often expressed his admiration for the company and its products.
Tesla is also in a great position to benefit from the impending shift towards electrified transportation. With Musk at its helm, the company is likely to remain at the forefront of the industry, while the 20% shares owned by Elon Musk are likely to remain steady or even increase in the future.
Political Environment of Tesla Under Elon Musk’s Rule
It is also important to consider the political environment of Tesla as well as the changes it goes through under Musk’s rule. He has used the political environment to secure support for his company. This includes forming alliances with prominent governmental figures, lobbying for subsidies, and creating programs to incentivize electric car ownership.
Particularly, he has been able to influence the opinion of elected officials and national governments in a number of countries. He has also been successful in pushing governments to adopt legislation that favors electric vehicles. Recently, Tesla has been able to leverage its political relationships to secure vehicle tax credits in a number of states.
It is also likely that this political strategy is likely to continue in the future. As electric cars become more popular, Musk is likely to capitalize on his political connections to secure more support for the company. Musk is also likely to use political tools to launch more initiatives that further the development and adoption of electric vehicles.
Tesla’s Future Without Elon Musk
Elon Musk’s current ownership of 20% of Tesla’s total stock gives him high influence over the company, but it is uncertain what his influence would be in the future if he divested from the company. Although Musk may not remain the head of Tesla, his influence cannot be fully removed from the company.
Tesla would likely lose some of its momentum without Musk’s presence on the board. The strength of Tesla’s brand also depends heavily on its association with Musk, as he is responsible for driving up its customer base and creating a public enthusiasm for its products. Additionally, Tesla may also lose its competitive advantages in the electric vehicle market without Musk’s innovation and intelligence.
Tesla may be able to attract other investors to its board and operations, but it is uncertain whether or not it can fill the shoes that Elon Musk has left. Without Musk, the company would need to rebuild itself from the ground up and attract new talent who could continue Tesla’s success. It is certain that Tesla would become a much different company, as the spirit of Musk’s influence is ever-present in the auto giant.
Conclusion
Elon Musk’s presence and ownership in Tesla cannot be ignored. Although he holds less than 25% of Tesla’s shares, the influence that the entrepreneur has had over the company has been widely publicized. He has used the political environment to help launch initiatives and bolster Tesla’s customer base. He has also pushed for innovation within the company to keep it at the forefront of the electric vehicle industry.
As of August 2020, Musk owns approximately 20% of Tesla’s shares. This smaller portion of the shares provides Musk with a great deal of influence, without compromising on the success of Tesla. If Musk divested from the company, it would undoubtedly affect the success of Tesla in the future. Therefore, it is certain that Elon Musk’s presence in Tesla will remain significant in the years to come.
