All or nothing for Elon Musk at Tesla

[Leongsam]

All or nothing for Elon Musk at Tesla
24 Jan, 2018 1:16pm


The pay still needs the approval of Tesla shareholders, who will vote on it at a special meeting in late March. Elon and Kimbal Musk, Elon's brother, will recuse themselves from the vote.

If the goals are reached, Tesla would be one of the biggest companies in America, and Musk's wealth would grow exponentially.

The US$650b benchmark would make Tesla the fourth-most valuable US company, behind only Apple, Alphabet, and Amazon.com based on current valuations. It would be larger than Microsoft, and would exceed the current combined valuation of the world's top eight publicly-traded auto companies.

Tesla's plan to meet those goals was laid out in 2016 in a document Musk called "Master Plan, Part Deux".

Tesla will expand from electric cars and SUVs to trucks — including a semi tractor-trailer that's due out in 2019 — and buses. It will continue to work on autonomous vehicle technology and plans to enter the car-sharing business, letting owners share their cars when they're not using them and running Tesla-owned fleets in cities.

The company, which bought solar panel maker SolarCity in 2016, also plans to expand its solar panel and energy storage businesses.


In order to vest shares when milestones are reached, Musk must stay on as CEO or serve as both executive chairman and chief product officer. That would give Tesla the option of hiring a different CEO in the future.

Tesla, which turns 15 this year, has never earned a full-year profit. It has reported only two profitable quarters since it went public in 2010.


Tesla said while it doesn't currently intend for Musk to step away from the CEO role, the terms allow Musk to potentially focus more of his attention on key product and strategic matters.

Musk is also the founder and CEO of rocket maker SpaceX and the co-founder and chairman of OpenAI, a nonprofit that researches artificial intelligence. He was also the founder of the online payment service PayPal.

Musk has worked under similar all-or-nothing conditions before.

Under a 2012 agreement, Musk's stock options vested only if the Tesla's market cap continued to rise in US$4b increments. The company also had to hit matching operational milestones, including vehicle production targets and developmental milestones tied to the Model X and Model 3 programs. Tesla wound up reaching all of the market cap milestones and nine of the 10 operational milestones.

When that pay package was created, the company was worth just US$3.2b. Its market cap at the end of last year was 17 times that amount.

Tesla — which turns 15 this year — has never earned a full-year profit. It has reported only two profitable quarters since it went public in 2010.

Each of the four vehicles it has made has faced significant delays and production problems. Its newest vehicle, the lower-cost Model 3 sedan, is no exception.

Musk said last summer that Tesla would be making 20,000 Model 3s per month by the end of last year, but Tesla made just 2,425 Model 3s in the fourth quarter. Musk now says Tesla will make 20,000 Model 3s per month at the end of the second quarter.

But that hasn't dimmed investors' appetite for Tesla's stock. Tesla shares were up 1 per cent to US$355 in trading. They've risen 39 per cent over the last year.

 

[eatshitndie]

nothing to lose. he will still be a billionaire if kpi's are not met. that's the best position to be in. it's either he becums a mucho multi-billionaire or just a billionaire.

 

[maxsanic]

Notice that Elon is proposing an incentive that rewards big mainly for talking up share price, there is nothing to even remotely suggest he is interested in any real business metrics like revenue, profitability, cashflow, market share etc. It is a sure win proposition for Elon personally as he will just continue to do his PR gig to encourage speculators to rig up share prices until it cannot be done at which point his options will simply lapse, but he would have pocketed billions in exercising earlier options.

I have always maintained that Tesla is no more than a get rich quick seminar conducted by a motivational guru named Elon Musk, always enticing you about the pot of gold at the end of the rainbow but never delivering when the time comes. While there is surely money to be made for speculators who are trading and timing the markets correctly/luckily, nobody smart is really putting money there because they sincerely believe it has an economically feasible product or business model.

The real market leader in electric vehicles is BYD which sells far more electric vehicles in both quantity and variety, and yes it is actually a profitable business not sustained by stock speculators.

 

[Leongsam]

Notice that Elon is proposing an incentive that rewards big mainly for talking up share price, there is nothing to even remotely suggest he is interested in any real business metrics like revenue, profitability, cashflow, market share etc. It is a sure win proposition for Elon personally as he will just continue to do his PR gig to encourage speculators to rig up share prices until it cannot be done at which point his options will simply lapse, but he would have pocketed billions in exercising earlier options.

I have always maintained that Tesla is no more than a get rich quick seminar conducted by a motivational guru named Elon Musk, always enticing you about the pot of gold at the end of the rainbow but never delivering when the time comes. While there is surely money to be made for speculators who are trading and timing the markets correctly/luckily, nobody smart is really putting money there because they sincerely believe it has an economically feasible product or business model.

The real market leader in electric vehicles is BYD which sells far more electric vehicles in both quantity and variety, and yes it is actually a profitable business not sustained by stock speculators.

BYD does not have a vehicle that appeals to the consumer. Its market is commercial vehicles and taxi fleets. The e6 is butt ugly and I doubt it would be a success in USA/Europe.

The company will have to hire a European design team and and automate its production in order to produce a car that stylish, reliable and safe enough to appeal the discerning consumer. That is what Korean car manufacturers like Kia and Hyundai had to do in order to gain a foothold in the American and European market.

 

[maxsanic]

BYD does not have a vehicle that appeals to the consumer. Its market is commercial vehicles and taxi fleets. The e6 is butt ugly and I doubt it would be a success in USA/Europe.

The company will have to hire a European design team and and automate its production in order to produce a car that stylish, reliable and safe enough to appeal the discerning consumer. That is what Korean car manufacturers like Kia and Hyundai had to do in order to gain a foothold in the American and European market.

That is true, the European and US consumer markets generally have higher aesthetics standard then the rest of the world, it will be a while before BYD can come up with something that appeals to these countries (if they ever). My main point though is BYD has products and volumes that actually work in its targeted markets, not Tesla which is mainly fancy nice models good for a press release coupled with a charismatic cheerleader who just waves the pong pong at the sidelines.

Tesla is a good money generator for Elon & associates (kudos to them for achieving what is essentially risk free monster profits) and could potentially be profitable for certain traders/speculators, but I always cringe when some people do the Tesla/Elon worshiping making it sound like Tesla is the next Google or Elon is the great visionary/businessman/tech-guru of the century. He's basically a highly successful salesman/marketer who has made a lot of money, nothing more nothing less.