Elon Musk’s focus on Tesla has come under fire this week. Unless you’ve been off the grid — say, lounging under a palm tree on a secluded sandy beach — you know Musk and Twitter’s board are vying for control of one of Twitter’s top sites. social media in the world. Musk’s rant on free speech rights seems a distraction to many Tesla shareholders, who have seen Tesla’s portfolio valuation of late look more like a roller coaster than a gentle but upward slope. preferred regular.
An article this week in the Guardian explores whether to focus on Twitter or focus more on Tesla. Is Elon Musk overwhelmed? Should Musk’s focus on Tesla and his other established companies (SpaceX, Neuralink, The Boring Company) be exclusive? When Musk turns his attention away from Tesla, is he undermining the potential of the all-electric car business, whose future viability “is by no means guaranteed?” While analysts expect sales to double to $34 billion by the end of 2023 as new factories in Berlin and Texas produce at full capacity, many still insist that the valuation of Tesla is “exuberant”.
Should Tesla CEO Elon Musk focus much more on Tesla? Let’s engage in a tip | counterpoint discussion and see what we can determine.
[Full disclosure: I own some Tesla stock. Nothing in this article is investment advice of any kind.]
How quickly a week changes everything
Counterpoint: Tesla investors are concerned that Musk’s recent laser focus on the Twitter takeover could “pull him too far from his day job”, according to the Guardian. A week ago, Tesla shares fell 3%. Yet today, with Q1 2022 results, Tesla’s stock value rose 8% overnight. Yes, Tesla includes one of the most ambitious manufacturing expansions in company history with rapidly growing capacity. the Guardian acknowledged last week that this was “a hugely impressive feat, given that the company was basically to invent the production of electric vehicles”.
Tesla just released its first quarter results for 2022 and beat analysts’ expectations on the top and bottom results. Here are the key figures.
- Earnings per share: $3.22 vs. $2.26 expected
- Revenue: $18.76 billion vs $17.80 billion expected
No detailed guidance on upcoming deliveries has been offered, but CFO Zachary Kirkhorn and Musk said they believe the business will see 50% annual growth on a multi-year basis. New factories in Berlin and Texas will be added to existing factories in Fremont, California and Shanghai, China.
Musk’s recent bid to acquire Twitter was not discussed in yesterday’s earnings call. A follow-up article in the Guardian praised Tesla’s record in the first quarter of 2022, while laying out the assertion with a side note saying the successes occurred “despite a tumultuous few months for its CEO, Elon Musk.”
Indicate: During the earnings call, Musk and Kirkhorn variously discussed the obstacles that needed to be overcome in order to generate positive earnings in the first quarter: inflationary pressures, shortages of parts and semiconductor chips, the ongoing pandemic and devastating invasion of Ukraine by Russia. They urged their audience to be aware that supply chain constraints are expected to continue into 2022 and inflation is worse than reported. Tesla’s solar deployments fell nearly in half to 48 MW in the first quarter of 2022 compared to the same period last year, which was reportedly caused by import delays beyond the company’s control.
“Recent Covid-19 outbreaks have strained our supply chain and factory operations,” they explained. “In addition, the prices of certain raw materials have increased several times in recent months. The inflationary impact on our cost structure contributed to adjustments in our product pricing. »
What had been an 8-day global inventory of Tesla vehicles in the first quarter of 2021 fell to a 3-day supply a year later. The Full Self Driving (FSD) program achieved more “false auroras” than any technology development Musk had previously participated in, he acknowledged. In January, Musk announced that Tesla would not produce a new vehicle model this year. Instead, it will focus on its existing production and address supply chain constraints. Tesla, however, is reportedly turning its attention to improving its production and what it sees as a revolutionary bet on FSD, which aims to perform everyday driving tasks with an attentive driver behind the wheel.
These barriers have a significant influence on the overall stability and performance of Tesla shares.
Counterpoint: Musk has proven he can guide Tesla through manufacturing complications. “A lot of companies are confused,” Musk pointed out. “They spend money on things that don’t improve the product.” In 2018, he tried to appease a customer whose delivery date had been repeatedly pushed back. “Sorry, we’ve gone from production hell to delivery logistics hell, but this problem is much easier to solve,” Musk explained in a Tweet. “We are progressing rapidly. Should be resolved shortly.
And, indeed, he and the company have ironed out the hellish problems on the road to this week’s announcement of Tesla’s continued accomplishments.
The innovator, leader, genius, visionary and futurist said in a 2010 interview that entrepreneurs have to be “extremely tenacious and then work like hell. You only have to put in 80-100 hours a week. He explained: “If other people are doing 40 hour work weeks and you are doing 100 hour work weeks, then even if you are doing the same… you will achieve in 4 months what they need a year to complete.
In 2018, Musk slept on the floor of the company’s vehicle assembly plant because he wanted to suffer more than any other employee during the difficult ramp-up of the Model 3 sedan. This week, Tesla asked workers in Shanghai to similarly sleep on a factory floor as it plans to gradually resume production. During the “closed-loop” restart, workers were each given a sleeping bag and mattress.
Indicate: Tesla is just one of many companies under Musk’s control, all of which require him to spend time and energy that could otherwise be spent on Tesla.
- With Neuralink, micron-scale wires would be inserted into areas of the brain that control movement. Each wire contains many electrodes and connects them to an implant, the Link. This first neural implant could let you control a computer or mobile device wherever you go.
- SpaceX builds and launches the Falcon 9 and Falcon Heavy rockets, both of which have booster stages that return to Earth to be refurbished and save money. The Dragon is a space capsule that can transport crew and cargo to the International Space Station. A large rocket and spacecraft system, Starship, will be capable of carrying massive payloads into space. A massive constellation of small satellites called Starlink aims to provide global high-speed internet access. Cyber defense and resolving the jamming of signals from its Starlink internet satellites amid the Russian invasion of Ukraine has upended the company.
- The Boring Company creates safe, fast-to-dig, low-cost transportation, utility and freight tunnels to enable rapid point-to-point transportation.
CEO Elon Musk was already busy juggling executive roles at these big companies before launching an unsolicited takeover bid on Twitter. That’s a lot of distractions. And that may be one too many for Tesla investors, according to CNN.
Counterpoint: Unlike most of its automakers, Tesla has spent years focusing on how to secure its own nickel supplies. The efforts are part of CEO Elon Musk’s emphasis on vertical integration to retain control of Tesla’s supply chain. The company jointly operates a large battery cell factory outside of Reno, Nevada, with Panasonic. Tesla also buys cells from other top suppliers, but also manufactures its own supply. Nickel is a key component for electric vehicle battery cathodes, and Tesla is focusing on nickel-based chemicals for longer-range vehicles. It uses iron-phosphate batteries for short-range vehicles.
Indicate: Musk seems to have an inability to concentrate. He dismantled Tesla’s public relations department and instead kept the company in the media spotlight by posting on Twitter. There is a lot of misunderstanding of Tesla in the press and among the public, but there is no focused PR team to effectively correct these misunderstandings. Adding the hawkwing doors to the Model X was Elon’s last-minute idea, because Tech Crunch Remarks. He was adamant that the company could build an almost fully automated car factory, and that the move to automation was fraught with pitfalls at first. It also introduced the ability to pay with cryptocurrency, then removed the option, then reintroduced it for Tesla vehicles and services.
Final Thoughts
It seems that the points and the counterpoints are about equal here, which leads us to a dead end. What we can probably agree on, however, is that Elon Musk is a pretty rare bird who can accomplish more in one lifetime than dozens of others could together. With that intellect come flaws, of course, and, so, Musk’s need to self-actualize in as many different iterations as possible will likely always affect Tesla’s stock price.
This may be a side effect of tracking human blemishes and shine.
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