Why you should care
The enigmatic tech billionaire attempts to resolve Tesla’s mounting disasters.
“Holy flying fuck, that thing took off!” Elon Musk shouts as he watches the first launch of the SpaceX Falcon Heavy, two streams of fiery jet fuel propelling the rocket ship into the ether. Musk, and clad in a tight black T-shirt, jumps up and down in excitement. The 47 year old runs outside into the warm Florida sunshine at Cape Canaveral, beaming with pride as he gazes upward at his creation. As an added bonus, the rocket’s side boosters soon return safely to Earth, demonstrating SpaceX’s mission to make reusable rockets.
Musk’s excitement has dwindled considerably since that day six months ago, as he’s found himself at the center of a bad PR cyclone time and again. Tesla has repeatedly missed production deadlines for its Model 3 — the most affordable car in its line — burning through cash and raising concerns about the need to sell shares to fund an expansion. On Tuesday, Musk offered his vision for a different path forward. “Am considering taking Tesla private at $420. Funding secured,” he tweeted.
If the company were to go private at $420 per share, it would be worth more than $80 billion, making it one of the largest such transactions in history. And it could mean a huge payout for stockholders, whose day began with a publicly traded stock worth $344 per share. In an email to his staff Tuesday, the tech billionaire outlined what a private Tesla would look like. Stockholders would have the choice to be bought out at $420 per share — a 20 percent premium over stock price as of the company’s second quarter earnings call. If Tesla CTO Jeffrey Straubel sold his 634,129 shares, for example, he would get over $266 million. It also would be a boon for Saudi Arabia’s state investment fund, which recently bought a $2 billion chunk of the company.
Musk’s far-reaching, grandiose ambition and eccentric personality — often on vivid display on Twitter — have both made him a legend and gotten him in trouble.
Musk’s nine-word Twitter missive sent the markets haywire, with Tesla’s price spiking before the company suspended trading and issued a formal statement. The CEO highlighted several positives for going private, including the ability to dodge his many critics. “[A]s the most shorted stock in the history of the stock market, being public means that there are large numbers of people who have the incentive to attack the company,” Musk wrote. Between March and April, the value of Tesla’s shorted shares rose by 28 percent to $10.7 billion, according to a report from S3 Partners. Around the same time, Goldman Sachs urged its clients to sell their Tesla stock, provoking a disgruntled Musk to tweet: “Place your bets.”
Growing up in Pretoria, South Africa, Musk taught himself how to program. By age 12, he’d sold a video game code to a tech magazine for $500. Musk earned bachelor’s degrees in physics and economics at the University of Pennsylvania and began his entrepreneurial career shortly after. At age 24, he co-founded web software company Zip2, which later sold to Compaq for $340 million. He then founded online payment company X.com, which became PayPal and sold to eBay for $1.5 billion in 2002.
Musk moved onto preserving planet Earth and outpacing human extinction. Tesla, SolarCity, Hyperloop and infrastructure firm the Boring Company are designed to reduce our reliance on fossil fuels and stave off climate change. SpaceX could allow us to colonize Mars. Musk’s far-reaching, grandiose ambition and eccentric personality — often on vivid display on Twitter — have both made him a legend and gotten him in trouble. Repeatedly.
Last month, when 12 boys and their soccer coach were trapped in a cave in Thailand, Musk flew to the country with a submarine to provide rescue assistance. But when the British cave diver heading the mission turned down the offer to help, Musk’s accused the man of being a “pedo.” He later deleted the tweets.
From my Mom: every time I use irony, I lose a friend— Elon Musk (@elonmusk) March 27, 2018
In June, Musk was embattled in a copyright dispute over a flatulent unicorn mug. Colorado artist Tom Edwards was excited to see that Musk had tweeted a photo of his mug featuring a unicorn farting electricity — until he discovered the artwork was also featured on the Tesla touchscreen. Edwards’ lawyer sent a letter requesting payment for the copyrighted art, to which Tesla has yet to respond. When the artist’s daughter tweeted about the incident, Musk replied, “If anything, this attention increased his mug sales.”
More damaging than farting unicorns and Twitter rants, Musk this year has faced workplace safety violations, mass layoffs and self-driving car crashes. Tesla recorded 722 injuries in 2017, and its rate of serious injuries was 30 percent worse than the industry average for the year prior. In April, the Center for Investigative Reporting (CIR) found that some serious injuries at Tesla’s factory in Fremont, California, had failed to be reported. Workers have been crushed by forklifts, burned by electrical equipment and sliced by machinery, all in an effort to meet increasingly aggressive production goals set by their leader.
Some employees put the lack of regulations directly on Musk. When Justine White, who worked as Tesla’s safety lead from September 2016 to January 2017, asked her boss why hazardous areas were not clearly marked with yellow — the standard color for advising caution — her boss replied, “Elon does not like the color yellow,” White told CIR.
Taking Tesla private could reduce the pressure to produce cars quickly and shelter Musk from some of the criticism that comes with opening up company financials and staging quarterly investor calls. But it probably wouldn’t produce a wholesale personality change. The man who wants to build a thriving city on Mars and yet believes humanity is living in a computer simulation will remain a public lightning rod, even if his flagship company is private.