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No holding back entrepreneur Elon Musk of electric-car firm Tesla

Mr Musk has lost close to $1 billion over the past couple of months, but the SpaceX and Tesla boss has a reputation for tackling the impossible with ease as well as a famously high tolerance for risk.
Mr Musk has lost close to $1 billion over the past couple of months, but the SpaceX and Tesla boss has a reputation for tackling the impossible with ease as well as a famously high tolerance for risk. PHOTO: REUTERS

Analysts question Elon Musk's dogged resolve in the face of mounting woes

It has been a bad couple of months for billionaire Elon Musk.

Tesla Motors, his electric-car maker firm, fared poorly in the second quarter, with earnings falling short of expectations. A controversial plan to sell his other firm, SolarCity, to Tesla has been met with scepticism.

Adding to his mounting woes last Thursday was a spectacular explosion of a rocket and its satellite payload belonging to his SpaceX firm.

The events culminated in a nearly US$779 million (S$1 billion) wipe-off from Mr Musk's US$8.3 billion fortune, at least on paper, according to the Bloomberg Billionaires Index.

Mr Musk may see the events as minor setbacks in his ambitious targets, but analysts are wondering if the grand visions of this bold entrepreneur may one day cause him to implode.

PUSHING THE LIMITS

He's got guts, I'll give him that. He really pushes it out on his companies, but Elon could implode.

MR ROSS GERBER, chief executive officer of Gerber Kawasaki Wealth & Investment Management, on Mr Musks' ambitious targets.

"He's got guts, I'll give him that," said Mr Ross Gerber, chief executive officer of Gerber Kawasaki Wealth & Investment Management, which has a US$5 million position in Tesla. "He really pushes it out on his companies, but Elon could implode."

With a reputation for tackling the impossible with ease, the 45-year-old Mr Musk is a mini deity in Silicon Valley - serving as the chief executive officer of Space Exploration Technologies (SpaceX) and Tesla, as well as chairing the board of his low-cost solar panel maker firm SolarCity.

If Tesla aims to rule the earth with zero-emission cars, SpaceX has long-term goals of colonising the universe with multi-planetary species. Any one of these would be an audacious ambition for a corporate leader. All three at once may be a bit too much for any one human being, Time magazine said in a report. But Mr Musk has a famously high tolerance for risk.

Back in 2002, the co-founder of PayPal had reportedly poured the US$180 million fortune he made from the sale of his payment firm into Tesla and SpaceX. The companies had nothing to show in the first six years of their inception. In fact, SpaceX rockets failed to reach orbit in the first three attempts, while Tesla was running out of money with no product to flaunt.

It was only in December 2008 that the National Aeronautics and Space Administration (Nasa) awarded a US$1.6 billion contract to SpaceX to carry cargo, and soon after, Tesla closed a critical funding round hours before it would have gone bankrupt. SpaceX has since successfully landed rockets returning from space on drone ships in the Atlantic, while Tesla is aiming to reach a sales figure of 500,000 cars by 2020.

"There is no level of risk that is too high for Elon Musk," Mr Mike Ramsey, an analyst at Gartner told Bloomberg. "That's absolutely clear. His skin is completely in the game."

But his companies have hit major stumbling blocks in recent times. Competition is growing in the electric car market for Tesla. The death of a Tesla owner using its autopilot software has added to woes like production target misses.

SolarCity, on the other hand, is getting closer to defaulting on its US$3 billion in debt, according to regulatory filings.

Tesla's proposed acquisition of SolarCity saw shares of both firms plunge, and the SpaceX mishap has intensified questions about whether Mr Musk is moving too quickly in his headlong investment in some of the biggest and most complex industries.

Mr Trip Chowdry, analyst at Global Equities Research, said: "When things work out well, people believe Musk to be a superstar. When things go wrong, like an explosion at a separate company, Tesla investors tend to make more general inferences, too."

But no one doubt's Mr Musk's dogged resolve to carry on. The man who does not accept the US$37,584 minimum-wage salary Tesla is required to pay him has said his money will be the last out of his companies.

As Robert W. Baird analyst Ben Kallo said: "A lot of the longer-term investors... still stand by Elon and what he's trying to achieve."

A version of this article appeared in the print edition of The Straits Times on September 05, 2016, with the headline 'No holding back this audacious entrepreneur'. Print Edition | Subscribe