Background
Elon Musk is known as the founder, CEO, and lead designer at Tesla, Inc., the world’s leading electric car company. He is a prominent figure in the technology world and his various business projects have made him rather wealthy. Musk first invested in Tesla in 2004, and the company has since become immensely successful, but many people wonder – how much of Tesla does Elon Musk actually own?
The quick and simplified answer is, he owns about 20 percent of Tesla. However, a more detailed look reveals a much more complicated situation.Understanding the exact specifics of his Tesla equity can be confusing, so this article will look at the nuances and answer the question, how much of Tesla does Elon Musk own in 2020?
Musk’s Early Investment and Potential Equity
In 2002, Tesla Motors was first founded by Martin Eberhard and Marc Tarpenning.Elon Musk became involved with the company in 2004, when he led his first round of funding and bought a significant stake.With his involvement and influence, the company eventually went public in July of 2010.
When Tesla Motors first went public, Elon Musk was issued 11,861,846 shares, which equated to about 27 percent of the company’s equity.At this point, Musk was the biggest individual shareholder of Tesla and potentially owned an additional 14 million unexercised options, bringing his total potential equity up to 21 percent of the company.
Musk’s Equity since Going Public
Since Tesla Motors went public, Musk’s stake in the company has actually fallen slightly.In 2016, Musk sold some of his Tesla shares in order to pay the taxes associated with exercising his stock options.As a result, his total equity in Tesla Motors fell to about 20 percent.
In 2019, Musk ended up exercising around 4.9 million options to purchase additional shares, bringing his governance stake up to 20.8 percent.However, he quickly sold a portion of these shares in March of 2019 and November of 2019, bringing his total equity back to around 20 percent.
Relationship Between Tesla and SpaceX
Elon Musk does not only own 20 percent of Tesla, he also owns 54 percent of a separate company, Space Exploration Technologies Corporation (SpaceX). This company is a private aerospace manufacturer that Musk founded in 2002, and it has grown immensely since.
Other than owning significantly more equity in SpaceX than he does in Tesla, there is an even more unique link between the two companies. In October 2015, Musk announced that Tesla Motors would buy SolarCity Corporation, a leading provider of solar power systems.SolarCity was actually founded by 2 of Musk’s cousins. Ultimately, Tesla purchasing SolarCity was seen as a conflict of interest since Musk was a major stakeholder in both companies, but Tesla shareholders approved the merger in 2016.
Musk’s Future Potentiall Equity
The exact future of Musk’s role in Tesla is still uncertain, but the decisions he makes going forward could have major impacts on his total equity.Specifically, it is important to understand his current stock options.Now, Musk holds about 8.2 million stock options that could allow him to purchase another 3.5 percent of Tesla’s equity.It is unknown when Musk may exercise these options, but it could lead to an increase in his total equity in the company.
Furthermore, he announced in February of 2020 that he may take a “significant” salary at Tesla for the next ten years, but no specifics have been decided yet.Ultimately, whatever mission, salary, or options he decides to take could lead to significantly more or less equity in Tesla at the end of the decade.
Musk’s Current Summary
At the moment, Elon Musk owns around 20 percent of Tesla’s equity, but that could change in the future.He currently has stock options that could bring his total equity up 3.5 percent, but since they haven’t been exercised yet, his exact influence at the company remains undetermined.At the end of the day, Musk has been and likely will remain the single most influential individual in the growth of Tesla in the years to come.
Analysis
In order to understand Elon Musk’s current stake in Tesla, it is important to consider a variety of factors.From Musk’s initial investment in 2004 to the recent announcement regarding his potential salary for the next decade, there have been numerous decisions that have impacted the current equity structure of the company.Beyond his equity, it is also worth reflecting on Musk’s wider influence in the electric vehicle industry.For many in the technology industry, Musk is seen as the figure that effectively ushered in an era of enthusiasm and acceptance for electric vehicles.
Important Role in Tesla
It is impossible to deny Musk’s unique influence in Tesla, as he played a key role in the company’s formation in 2004 and its subsequent public offering, which has ensured its long-term success.Additionally, his role at Tesla has meant that he has able to make sound investment decisions that have led to favorable outcomes for the company.For example, Tesla’s partnership with SolarCity was seen as controversial at the time but it has since paved the way for more efficient uses of solar energy in the automotive sector.Overall, Musk has been a major force in Tesla and his actions will likely continue to shape the company for many years to come.
Influence on the Automotive Industry
Ultimately, Musk has been a transformative figure in the automotive industry. As the leader of Tesla, he has provided a unique vision for how electric vehicles can be used to benefit humanity. Through his investments, strategic partnerships and innovative product offerings, Musk has managed to bring electric vehicles into the mainstream. Granted, there is still work to be done in terms of building out the infrastructure to fully support electric cars, but Musk’s efforts have already made a major impact.
Ethical Implications
With great power comes great responsibility and the same holds true for Elon Musk’s current role at Tesla. In addition to making sure that the company runs as efficiently and ethically as possible, Musk must also consider the potential ethical implications of his decisions.For instance, when it comes to Tesla’s potential partnerships and investments, it is important to make sure that the company is investing in ethical companies.This can be a difficult balancing act and requires thorough deliberation, but it is necessary in order to ensure that the company and its investors maintain a positive reputation.
