Musk Holds Swagger in Check After Tesla’s Wild Ride in 2013
Elon Musk, co-founder of electric-car maker Tesla Motors Inc. (TSLA), is known for speaking out even on some of his most ambitious ideas. Now he says he’s trying to show restraint and let his company’s actions do the talking.
Over the years, Musk has proposed colonizing Mars and developing a fifth form of human transportation. More recently, he’s challenged the auto industry’s retail model and pushed to limit federal regulators’ oversight of Tesla’s chargers. He said in an interview it’s time to under-promise and over-deliver.
While China may become Tesla’s biggest market, Musk resisted predicting that would happen next year. Fourth-quarter Model S sales were probably 20 percent higher than Musk had forecast as recently as November. And while he still projects needing more capacity than the 500,000 cars his factory can make each year, he declines to predict when he’ll need a second one.
“I’d like to get into the habit of exceeding expectations,” said Musk, 42, in the phone interview last week. He envisions building a half million electric vehicles annually at Tesla’s Fremont, California, plant, without saying when that will happen. “We’re at a measly 30,000 unit a year run rate.”
Musk’s hallmark swagger and high-tech ambitions created a global market for Tesla’s premium Model S sedans and contributed to a quadrupling of the Palo Alto, California-based carmaker’s shares last year. The challenge is to keep investors happy and live up to expectations of steadily expanding sales that have given the young company a market value of more than $20 billion.
“It’s a natural and wise decision to begin to temper his statements,” said Ed Kim, an analyst at consultant AutoPacific Inc., in Tustin, California. “You can’t over-deliver on outlandish promises forever.”
Musk’s more unusual goals have included an ambition to land a spacecraft on Mars in 10 to 15 years, which he detailed in 2012, the same year Space Exploration Technologies Corp. became the first company to dock a commercial craft at the International Space Station.
He’s also championing a solar-powered system known as the Hyperloop that would consist of some form of tube carrying people from downtown San Francisco to Los Angeles in 30 minutes. Musk has said the idea could be a “fifth mode of transportation,” after trains, planes, automobiles and boats.
“The interesting thing about Elon’s claims over the years are that back in Tesla’s infancy, the claims seemed just as outlandish at the time as everyone else’s -- Fisker’s, other EV startups,” Kim said, referring to electric-vehicle companies.
Fisker Automotive Inc. is now in bankruptcy.
“The thing that stands out is that he and Tesla delivered on those outlandish claims,” Kim said. “He achieved building 20,000 units a year in the first full year of production of Model S. There was a lot of skepticism that would happen.”
Tesla’s Jerome Guillen, the carmaker’s head of global sales, caught analysts and shareholders off guard on Jan. 14 with news that Model S deliveries in 2013’s final quarter were 20 percent above the company’s forecast. The carmaker’s shares jumped 16 percent that day.
Model S deliveries were at least 22,450 last year, based on figures Guillen gave this month in Detroit.
“There’s an upside when the stock goes wild, as it did last year, but because it is so volatile there’s a need for some caution,” said Alan Baum, an industry analyst with Baum & Associates in West Bloomfield, Michigan. “The financial community is going to look at them closely and say are they making progress on the goals they’ve set?”
Those include a successful introduction of the Model S into China in March. If all goes well, sales there should be as high as 5,000 units this year and could match Tesla’s U.S. deliveries of the car in 2015, Musk said last week.
He stopped short of specific volume targets for the world’s largest auto market, where officials are eager to combat worsening air pollution with electric cars. “I don’t want to get overexcited about it,” Musk said.
Tesla rose 5.2 percent to $178.38 at the close in New York. The shares have gained 19 percent this year.
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