Tesla has made a record loss, and Elon Musk, surely the world’s lowest-paid entrepreneur, claims that the car industry production process is like a grandma with a walker.
Ask entrepreneurs who their hero is, and the name Elon Musk comes up time and again. On Tuesday, wearing his SpaceX hat, he sent a Tesla Roadstar into orbit, on Wednesday he was talking about the latest results at Tesla.
At the moment, the CEO’s salary is a grand total of zero.
But if he can achieve certain targets, his remuneration will come in at $78 billion. It is just that the targets are somewhat high – to get the full package, Tesla must achieve a market cap of $650 billion. To put that in context, as these words are written, the only companies in the world worth more than that are Apple, Alphabet, Microsoft and Amazon – and in the case of the latter two, only just.
And while a $78 billion pay check may seem a bit high, don’t forget Mr Musk has a 22 per cent stake in Tesla, so if the Tesla market cap does reach that level, his shares will be worth $143 billion – so that $78 billion payment would be like a nice little bonus in comparison.
But first, Musk must help Tesla’s market cap rise ten-fold or so from the current $58 billion.
In short, Tesla share price must rise so high it will be as if it has gone into orbit.
Yet the company revealed a $675 million loss in the last three months of 2017. We already knew the company had been to hell and back – Musk’s words – last year, with its production, so the loss was no surprise.
In order to justify the current share price – let alone the ten-fold increase – Tesla has got to first hit its 5,000 cars a week production target and then probably increase production at least ten times over.
And yet the real problem with production lies with the traditional car industry. “Really, they are quite good at manufacturing” said Musk, practicing his backhand while complementing his rivals “but they just don’t realise how much potential there is in production.”
He followed up with a smash, their current production line is like a “grandma with a walker.”
Well, if he is right, and Tesla’s production, which at the moment is more like a grandma asleep in bed, and get production to something akin to a grandma being driven by Lewis Hamilton in a Merc, then maybe the Tesla share price can get there – after all, stranger things have happened, and there ain’t many stranger things than a Tesla, with a starman playing Life on Mars heading out to the asteroid belt.
Musk dazzles – and maybe investors can’t see the balance sheet for the starman, but only time will tell if Musk can pull this one off.