By Matthew A. Winkler / Bloomberg Opinion
For all the histrionics, from the 2018 tweet “considering taking Tesla private” for which he incurred a $20 million fine from the U.S. Securities and Exchange Commission to smoking weed during a podcast and his latest foray offering to buy Twitter for about $43 billion, Elon Musk is a pretty good business manager. In fact, the chief executive officer of the world’s most valuable automaker has no equal.
Among the 10 largest publicly-traded companies, Musk’s Tesla is No. 1 in growth the past decade with revenue increasing more than 260-fold to $53.8 billion; No. 1 the past 12 months with sales surging 71 percent; No. 1 in share performance over five and 10 years with its stock appreciating 15- and 146-fold, respectively, to a recent $1,000; and No. 1 in employment by more than quintupling its workforce since 2016, according to data compiled by Bloomberg.
A world ravaged by climate change brought on in part by the overuse of fossil fuels makes electric-vehicle maker Tesla increasingly the choice of fleet operators because of the minimal fuel and maintenance costs of its zero-emission cars. That’s a big reason why Austin, Texas-based Tesla’s sales growth will be No. 1 next year (30 percent) and again in 2024 (18 percent), according to the median estimate of 33 analysts surveyed by Bloomberg.
Among the six companies with at least a $1 trillion market capitalization, none achieved the milestone as quickly — and stayed there — as Tesla, which did it 11 years after its initial public offering. It took Apple 38 years, Microsoft 33 years, Google parent Alphabet 16 years, and Amazon.com 23 years. Facebook parent Meta Platforms reached $1 trillion nine years after its IPO but has since dropped back to $600 billion, according to data compiled by Bloomberg. The stock market deems Tesla almost four times as valuable as the second-largest automaker, Toyota Motor, and worth about 57 percent of the 10 biggest combined. Looked at another way, Tesla accounts for 41 percent of the total value of the 184 publicly traded vehicle manufacturers worldwide.
Tesla, unlike its peers, persevered through the dislocations caused first by the pandemic and then war in Ukraine by spending years focused on shoring up its supply chain. That’s a big reason why Tesla was able to report record first-quarter deliveries earlier this month despite what it called “an exceptionally difficult” period marked by recurring disruptions, especially the shutdown of its Shanghai factory.
Its success in securing materials became evident when Tesla agreed in January to purchase 75,000 metric tons of nickel concentrate, an essential ingredient in electric-vehicle batteries, through a Minnesota project created by Talon Metals less than six months after a similar nickel-supply deal with Melbourne, Australia-based mining company BHP Group. Tesla also has a multiyear supply agreement for nickel with Rio De Janeiro-based Vale, Bloomberg News reported last month.
“Tesla’s vertical integration strategy has been critical,” Cathie Wood, founder, CEO and chief investment officer of Ark Investment Management, said in an interview earlier this month. Unlike its competitors, “Tesla is in control of its cars” and “can tweak and change” in contrast to rest of the auto industry whose “specs are put to bed, you know, three to four years or five years prior. And they’re not going to change.”
Wood, the little-known champion of Tesla when she launched her funds in 2014 and predicted a $1 trillion valuation when most analysts had sell recommendations at a minuscule fraction of its current price, said the company’s battery technology “is about three years ahead of any other auto manufacturer.” That’s not the only reason Wood raised her target for Tesla last week to $4,600 a share in 2026. Tesla’s “more than a million and a half cars on the road are effectively data collectors for Elon Musk,” she said. “No other auto manufacturer has cars equipped to send back this real-world driving data. In order to compete with Tesla, at let’s say a like-for-like price, they’ll either have to skimp on range or performance and rely on their brand, otherwise they’ll just lose money if they want to keep up with Tesla at the same price.”
Sure enough, Tesla’s 2021 revenue of $53.8 billion accounts for 20 percent of the entire EV market and 80 percent of the world’s six EV-only automakers, according to data compiled by Bloomberg. “Tesla is mostly maintaining their market share even as the overall EV market grows very rapidly,” said Colin McKerracher, head of transport analysis at BloombergNEF.
In addition to its incomparable real-world driving data and battery technology, Tesla has an artificial intelligence chip “that no one else has,” said Wood. “And we liken this barrier to entry to Apple’s barrier to entry when it created the chip for the smartphone.”
Tesla’s fourth advantage is that “Elon describes Tesla as a manufacturer of factories,” with plants in Freemont, Calif., Austin, Shanghai and Berlin. “With each factory, Tesla becomes more efficient and more productive,” said Wood. “It is from the bottom up, constructing these highly automated factories, more automated than anyone else’s in the world.”
Too often, Elon Musk makes the news for the wrong reasons, giving his detractors a steady stream of fodder to use against someone they say is little more than a self-absorbed corporate carnival barker. Musk’s success as a pre-eminent maximizer of shareholder value proves otherwise.
Matthew A. Winkler is co-founder of Bloomberg News (1990) and editor-in-chief emeritus; Bloomberg Opinion columnist since 2015; co-founder of Bloomberg Business Journalism Diversity Program in 2017.
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