Elon Musk likes a challenge. He recently (and narrowly) won a Twitter bet that he could build the world’s biggest battery array in the Australian outback in 100 days or else foot the bill. The praise was lavish, as ever. ‘This is history in the making,’ said South Australian state premier Jay Weatherill at the launch in November.
Musk wouldn’t have it any other way. The reputed inspiration for Robert Downey Jr’s Tony Stark, he’s built his brand on disruption at its largest possible scale. Self driving cars not enough? Well, try self-flying cars. Space tourism doesn’t float your boat? OK, let’s colonise Mars.
But as the entrepreneur’s ambitions get grander, more and more questions will be asked about his ability to deliver. Here are three of them.
1. Can you meet your promises?
There have been 550,000 pre-orders for Tesla’s latest vehicle, the Model 3. In its first quarter this year, the company delivered 22. In fact, Tesla has only ever produced 250,000 cars in its lifetime -a volume VW and Toyota each churn out every ten days. This is a microcosm of Tesla’s existential predicament.
Musk keeps making bold promises, fails to meet them in time, then ups the ante with an ever bolder promise. He had said the company would produce 5,000 cars a week at the beginning of next year; now it’s March. But don’t worry, once the factory’s robots start working well together, production will rise to 10,000 a week…
In any case, this year’s $1.4bn loss has taken Tesla’s cash reserves down to $3.5bn, so the company is likely to need more capital next year, if it’s to finance the new electric lorry and sports car that will ‘blow your mind clear out of your skull and into an alternate dimension’.
2. Can you keep shareholders happy?
Tesla may be among the most valuable car companies in the world (it’s valued at $51bn, more than Ford) but in scale terms it’s still a minnow - and the big fish are starting to pay attention to the electric mass market.
Deliveries of General Motors’s fully electric Chevrolet Bolt, for example, have reached 17,000, plus 16,000 for the Bolt plug-in hybrid. There was a promise of 20 new models by 2023, and the company's invested about $500m in ride-hailer Lyft: a bet that looks better every passing day.
Can Tesla compete? ‘Tesla stock is an extreme bet on the future,’ said Nord LB analyst Frank Schwope, who gave Tesla a sell rating. ‘The share development depends on the transformation of the company from a small premium manufacturer with five-digit sales figures to a mass manufacturer with figures in the six-digit or millions range.'
Calling the $50bn market cap overvalued, he continued. ‘We don't see Tesla as a tough competitor of the established automakers, but rather as a trailblazer that will push long-established companies to boost their performance.’
Tesla is the most shorted stock by dollar volume according to S3 partners, and its shares have dropped 20% from their September high. Tesla might claim that it is more than a car manufacturer, with Musk’s master plan moving to create a ‘sustainable energy economy’, but to achieve its world changing ambitions - and profit from them - it will need to keep convincing its investors.
3. How much more can you squeeze into one day?
Aside from trying to colonise Mars as part of SpaceX’s plan to make life multi-planetary by 2024 (as you do), there’s a whole raft of projects and ideas occupying Musk's time. If he’s not planning a 700mph hyperloop train in Chicago (he wants it done by 2030), he’s chairing the OpenAI development project and working on ‘brain augmentation’ company Neuralink while planning another gigafactory in China and trying to put solar panels on your roof.
Lesser visionaries would happily settle for just one of these projects. Musk famously claims to work 100 hours a week, but even so there are limits. As his activities and ambitions expand, he’ll need to convince his investors that he’s the one to handle all of them, or else learn how to delegate. Either that or one of Neuralink's 'thinking caps'...
Image Credit: JD Lasica/ Flickr