Elon Musk is quite the business magnate. Long time readers will know that he’s the CEO of SpaceX the current darling of the private space industry which has done as much innovation in a decade as others have done in half a century. However that’s not Musk’s only endeavor having started out by working in the payments industry, famously being PayPal’s largest stock holder when it was eventually acquired by eBay for $1.5 billion. That allowed him to create 2 companies of his own: SpaceX and Tesla Motors whilst being heavily involved in a third, SolarCity. The success of all these companies can’t be denied but it wasn’t always all roses for all these companies, especially Tesla, and indeed Musk himself.
Building a car manufacturer, especially one that eschews the traditional internal combustion engine for full electric, is fraught with risk and requires massive amounts of capital to pull off. Whilst Tesla’s end goal has been affordable electric cars for everyone it didn’t start off trying to service this market, instead focusing on building a high performance electric roadster that had a very limited production run. Of course this also drew skepticism from potential investors as they couldn’t be sure that Tesla would be anything more than a niche sports car producer and so many steered clear. However Musk was undeterred and in 2008 announced the Model S and hinted towards further models that would use the same power train, effectively creating a platform for the rest of Tesla’s fleet.
To say that the rest of the world was skeptical that they could pull this off would be putting it lightly. Indeed even though they managed to secure a $451.8 million dollar loan from the Department of Energy to help set them up investors still continued to short their stock heavily, to the point where it was one of the most shorted stocks on the NASDAQ. Some went as far as to say that Tesla was only profitable due to the American tax payers, words which would soon be served right back to them with a serve of humble pie when Tesla paid the loan back in full at the start of this year, 9 years before it was due. Since then Tesla’s stocks have continued to climb and it’s not just because people are looking for a pump ‘n’ dump.
The Tesla Model S won car of the year from Motor Trends and Automobile Magazine last year rocketing it from being a toy for the technical/green crowd to being a well known brand. Whilst it’s still not in the realm of the everyman with the base model still being some $65,000 it has still proved to be quite a popular car snagging 8% of the luxury car market in the USA. To put that into perspective that means the Model S has beaten the sales of both the BMW 7 series and the Audi A8, cars which have a pretty loyal following and have been around for decades. They’re only just beginning to ramp up production as well with the current 400 or so produced per week expected to double by years end making them one of the largest producers of purely electric vehicles.
Tesla has not only shown that fully electrical vehicles are possible today they’re also, in fact, great business too. Whilst the investors might be skeptical other car companies aren’t with the number of EVs available exploding as each manufacturer tries to carve out their own section of this market. Most of them are focusing on the low end now however and it’s highly likely that Tesla will eat their lunch when the eventual $30,000 model debuts sometime in the future. Still the more competition in this space the better as it means the products we get as consumers get that much better and, of course, cheaper.
Now all we have to do is hope that the Australia Tax doesn’t hit the Model S as that’d put the kibosh on my enthusiasm a little bit.