Elon Musk is a name known to conjure up myriad emotions amongst people. From inspiring awe, to admiration and even a sense of envy in some cases, Musk is a man that manages to get everybody talking. Musk’s latest project is Tesla – an electric vehicle and energy storage company – whose success story has also been strongly associated with his name.
Indeed, it is widely believed that Musk is the majority shareholder in Tesla, and that his heavy involvement in the company is inextricably linked to its success. However, the reality is that it is not as simple as that.
Tesla’s SEC filing from 2019 suggests that Musk holds 33.8 million shares in Tesla; however, the company certainly has more than 33.8 million shares out there. Thus, Musk being the majority shareholder in Tesla is technically not true.
That said, the stock that Musk does hold is actually worth a vast amount of money. SEC filings also show that Musk also holds $4 billion in Tesla options. This indeed puts him in a position to control not only around 20% of Tesla’s voting power, but also to be able to rake in big bucks should he choose to sell his shares.
There really is no denying that Musk has had a large part to play in Tesla’s successes. After all, he is regarded as the company’s visionary, having helped it move away from its traditional roots as an automaker, and develop into one of the most well known technology firms in the world.
An indication of Musk’s leadership when it comes his role at Tesla can be seen with the recent launch of its Autopilot software. Musk has long dreamt of creating a fully autonomous may well be the case that the Autopilot will come to fruition sooner than many thought. There are now more than 20 million cars in circulation that are running the Autopilot software, with Musk’s prediction that Tesla will be the first to offer fully autonomous driving by 2021.
Musk and Tesla’s Financial Performance
The financial performance of Tesla is often linked to Musk as well. Despite experiencing financial hardships in the early years, Tesla is now one of the most valuable automakers in the world; however, the company has still lost money in every single year of its two-decade history.
Still, despite all that, Tesla is the most valuable auto company in the world. Tesla’s market capitalization has risen to $600 billion, and over the last five years it has managed to increase by 743%. This remarkable success has been credited to Musk’s ability to not only to deliver the product he promised, but also to capture headlines with his larger-than-life persona.
It is clear, then, that Musk’s influence on Tesla’s financial performance and operations has been significant, and more often than not, it has been positive. This is also due to his passionate support of the company and his ability to recognize long-term potential as well as potential pitfalls.
The Impact of Musk’s Heavy Involvement
Amongst Tesla investors there is a range of opinions as to what Musk’s heavy involvement in the company means for its future. Some argue that the presence of Musk within the company is necessary to maintain the momentum the company has been able to deliver.
However, some argue that Musk’s handpicking of his executive team, advisors and board of directors create a significant conflict of interest. In fact, Musk has a close relationship with several of Tesla’s top executives and advisors, which could be seen as a sign of nepotism.
Moreover, some argue that Musk’s outsized influence has led to a culture at Tesla of cutting corners and pushing the limits, which could hurt the company in the long run. For example, Musk has been known to make wild claims about the capabilities and capacities of Tesla’s vehicles in order to drum up interest. This can have a negative effect on those investing in the company, and has led to sharp criticism from crucial stakeholders.
On the other hand, one might argue that Musk’s dynamic leadership style provides Tesla with a genuine competitive edge. Through his ambitious goals and creative approaches, Musk imparts an energetic and creative environment which often propels Tesla (and its staff) to go beyond what they thought was possible. His ‘Tesla way’ of working has certainly been beneficial in pushing boundaries, giving potential investors confidence in the company’s products and delivery.
The Aftermath of the Tesla – Dogecoin saga
When Musk tweeted about Tesla investing in cryptocurrency Dogecoin, it sparked a frenzied response in cryptocurrency markets. The market values of Tesla and Dogecoin both surged, with some seeing this as confirmation of Musk’s influence in the markets.
However, the Tesla Dogecoin incident raised several questions about Musk’s role as CEO and his influence in the markets. For example, fears were raised about Musk having too much influence over the markets, and the unequal power that Musk holds as the face of both Tesla and SpaceX.
The incident also raised some questions regarding Musk’s position at a publicly traded company. Although his tweets are seen as having some effect on the markets, legally speaking, he is not permitted to use his CEO position or ownership of a publicly traded company to manipulate the markets.
For example, the piece of legislation known as the ‘Investment Company Act of 1940’ prohibits Tesla from purchasing cryptocurrency to invest in directly because it is an asset. As a result, some argued that Tesla should appoint a Chief Governance Officer to ensure Musk is not allowed to take any action which is detrimental to the company’s interests.
Analysis of Musk’s Role at Tesla
In order to get a better understanding of Musk’s role at Tesla, it is was important to look into the company’s operating agreement. According to the SEC filing, Musk has agreed to certain restrictions as far as his actions as a director or officer of the company. He shall, among other things, consult with Tesla’s independent members of the compensation committee and observe its procedures.
Additionally, while Musk holds majority control over Tesla, the company is required to act subject to the instruction of the board of directors. This means that, ultimately, it is up to the board of directors to determine the fate of the company, rather than Musk.
The fact that Tesla has managed to remain one of the most valuable auto companies in the world despite Musk’s controversial behavior seems to suggest that he is in a very unique position – and that the good outweighs the bad.
One of the most important considerations for investors is the role of shareholders in the company. In Tesla’s SEC filing it has detailed the various rights and responsibilities of shareholders. However, when it comes to transitioning the company successfully, Musk’s vast majority shareholding does in fact play a key role.
Tesla is unique in the sense that it is able to direct resources and decisions towards the future goals of the company, which Musk is able to drive and carry out. If and when Musk passes, his significant shareholding will become critical in transferring company control. This means that at that time, Tesla’s board of directors must make a decision as to who will take Musk’s place.
If Tesla is to remain true to its goal of leading the way with cutting-edge technology and remain one of the most valued auto companies in the world, it is essential that the board of directors make a decision that is in the company’s best interests. The few shareholders that have a significant stake in the company may have to face difficult decisions, but ultimately it is the board of directors that will need to serve the long-term interests of the company.
Musk’s Plans for Tesla After His Departure
Given Musk’s current position at Tesla, there is some speculation as to what his plans are for the future of the company. While Musk has not made any solid commitment in this area, he has, on occasion, hinted at his future plans.
On the surface, Musk has said that he plans to continue to drive Tesla’s mission and vision, and while it’s true that he will remain involved with the company in the future, his involvement in more specific decisions will be scaled back.
That said, Musk has made it clear that he wants to make Tesla into a global powerhouse of innovation, and to be the leader in the autonomous vehicle industry. However, it remains to be seen what Tesla will look like after Musk departs the company.
Tesla Board’s Plans to Continue Musk’s Legacy
The question of who will fill Musk’s shoes at Tesla is a complex one. As the majority shareholder, it is clear that Musk’s departure poses a significant challenge for Tesla’s board.
But that’s not to say that the board doesn’t have ambitious plans in place to continue what Musk has started. In a recent statement, the board indicated that they plan to carry out Musk’s mission of making Tesla into a global powerhouse of innovation.
The board has also highlighted a need to create a succession plan that will ensure that the company will continue to thrive even after Musk leaves. By handing over the reins to a team of qualified individuals, they are confident that the company will continue to make progress and maintain its strong financial performance.
Financial Outlook for Tesla’s Future
So, what does the future financial outlook for Tesla look like? Well, despite the uncertainty surrounding Musk’s departure, the consensus amongst analysts is that Tesla’s future looks bright.
The company has demonstrated its ability to churn out innovations consistently, thus proving that it is adept at keeping up with the pace of technological advances. This, coupled with Tesla’s success in the electric vehicle sector, suggests that the company will continue to remain resilient despite any changes made to the management structure.
Moreover, the fact that Tesla has managed to sustain its high stock prices despite recent tumultuous periods shows that the company certainly has staying power. As such, there is a strong belief that the company will remain a valuable asset in the years to come.
In conclusion, while strictly speaking it is not accurate to refer to Elon Musk as the majority shareholder of Tesla, his influence in the company certainly goes beyond the number of shares he holds.
From helping move the company away from its traditional roots as an automaker to controlling around 20% of Tesla’s voting power, Musk has had a profound effect on the trajectory of the company. The launch of Tesla’s Autopilot software and the aftermath of the Tesla – Dogecoin saga provide strong evidence of his influence.
Furthermore, Musk has stated his intention to carve out a legacy for Tesla, and the company’s board has plans to ensure that it will remain a powerful force in the tech industry even after Musk’s departure. The financial outlook for Tesla also seems to be bright and analyst’s consensus is that the company will remain a valuable asset in the future.
