Early Years
In 2002, Elon Musk became the majority shareholder in Tesla after investing heavily in the electric car maker. Musk was a major advocate for Tesla’s vision at the time, but he didn’t always own the majority of the company’s stock. In fact, it wasn’t until 2010 that Musk’s stake reached 50.3%, earning him the title of Chairman and CEO. By 2013, his stake had risen to 28.9%, with many of the early investors cashing out during the company’s recent success.
When Tesla launched its initial public offering in June of 2010, Musk famously chose not to sell any of his own shares, opting instead to reinvest partially in the company while using the rest to buy out the U.S. Department of Energy loan given to Tesla in 2009. These early investments paid off, as Tesla’s stock jumped up in the early days after the public offering.
Cashing Out
In late 2014, Musk began to sell off a portion of his Tesla stock in order to lower his risk exposure by diversifying his investments. He sold just over 600,000 shares, reducing his stake to 25.4%, and pocketing nearly $200 million in the process. It was the first time he had cashed out any of his shares in Tesla, which caused a great deal of controversy in the investing community.
After that, there were numerous rumors that Musk was planning to sell more of his stock, but the rumors proved to be false. Instead, Musk chose to hang onto his shares, slowly increasing his stake in the company.
Tesla’s Rise to Prominence
By the beginning of 2017, Tesla had become a billion-dollar company. As part of its IPO filing, the company had promised to keep Musk as CEO through at least August 2021. This meant he was able to keep his substantial stake in the company. However, by the end of 2017, Tesla’s pricing had skyrocketed, up 600% since its IPO in 2010.
This rapid rise triggered a “lock-up period” which prohibited executives, directors, and major investors from selling the company’s stock until August 2021. This meant Musk was unable to lower his risk exposure by selling his shares. In spite of this, however, he opted to hang onto his shares due to his commitment to the company.
The 2019 Sell Off
In 2019, Tesla’s prices continued to rise, reaching nearly $150 per share. This prompted Musk to once again trigger a sell off of some of his shares; in June, he sold just over 1 million shares, reducing his stake from 20.9% to 16.2%. He pocketed around $1.4 billion from this sale.
It was a controversial move, as critics argued that Musk should not be cashing out in such a manner while still serving as the company’s CEO. But Musk insisted that the sale was done to reduce his risk exposure and diversify his investments. He also promised not to do any further sell offs until at least August 2021 (when the lock-up period expires).
The 2020 Sell Offs
In 2020, the Coronavirus pandemic caused many investors to panic. Tesla share prices dipped as much as 30% during the first week of March, triggering yet another sell off by Musk. By April, he had sold about $7 billion in Tesla stock, reducing his stake to 11%.
This time, many analysts agreed that Musk had done the right thing. The pandemic had caused a massive economic downturn, and selling his stocks was a prudent way for Musk to ensure that his investments were not too heavily exposed to the risk. He went on to pledge that he would not sell any more Tesla stock before the end of 2020, stating that he still believed in the company’s vision despite the uncertainty brought about by the pandemic.
Musk’s Continued Commitment
Since the beginning of 2021, Tesla stock has recovered, hitting all-time highs in February. Still, Musk continues to keep his commitment to the company, refusing to sell any more stock prior to August 2021. He has also shown his continued commitment to the company’s mission, such as investing his own money into Tesla’s solar roof shingle and battery projects.
It remains to be seen whether Musk will continue to hold onto his Tesla shares or if he will use the opportunity to further diversify his investments and reduce risk exposure. Either way, investors are likely to keep a close eye on the situation.
Tesla’s Impact on Innovation
Tesla’s rise to prominence has marked a milestone in the auto industry, helping to spur a new wave of innovation in the sector. Other car manufacturers have become more cognizant of the need to produce electric and hybrid vehicles, while the industry has also seen the widespread adoption of new energy-saving technologies like automation and artificial intelligence.
Furthermore, Tesla’s success has not just impacted the auto industry. It has also helped fuel the growth of the broader green energy sector. Tesla’s rise has served as a catalyst for investors to put money into clean energy and electric vehicle companies, spurring a new wave of cleantech start-ups.
Tesla’s Impact on the Auto Market
Tesla’s presence continues to have an outsized impact on the auto market, as other car makers have been forced to respond to its presence by investing in their own electric vehicle programs. This has helped create opportunities for smaller start-ups to join the fray and make a name for themselves in the industry.
In addition, Tesla has raised the bar for car manufacturers across the board, pushing them to produce more efficient and innovative vehicles in order to remain competitive. This has opened up the market to new companies and technologies, while also helping to make car ownership more affordable.
The Future of Tesla
Although the future of Tesla remains uncertain, the company’s spectacular rise has left a lasting mark on the industry. Musk’s commitment to Tesla has not only fostered innovation and creativity, but it has helped lay the foundation for a new era of green energy investment and technological advancement. The company’s success has also helped to destigmatize electric vehicles, with many buyers now more willing to invest in models such as the Tesla S and Model X.
Looking ahead, Tesla has set the stage for a new era of electric vehicle development, and its success will continue to have a long-lasting effect on the auto industry. There is no doubt that Musk’s commitment and vision for Tesla will continue to shape the industry for years to come.
