The outcome will probably save Tesla, in the short term anyway. But it speaks volumes about its CEO’s station, and how much it’s fallen. Yesterday, after the SEC lawsuit was filed, I said that Elon Musk is his own worst enemy. And not just because of the ill-advised tweets about a hypothetical leveraged buyout of Telsa. Musk’s troubles at Tesla started because his previous business successes, though substantial in financial terms, hadn’t brought him experience running and managing a public company, let alone one that had to design, manufacture, and distribute consumer goods at scale. He couldn’t control labor and production issues at his factories, sometimes casting his own management failures as treason on the part of his workers. Then he lashed out at the short sellers who took that news, partly accessible because Tesla had to make public filings, as reason to bet against the company. Musk’s war on the media, carried out in public in sometimes embarrassing ways, only produced more problems.
The negotiation with the SEC only further cements Musk’s status as self-saboteur. According to Reuters, Musk wouldn’t agree to the prior settlement offer because “he wouldn’t be truthful to himself,” and “wouldn’t have been able to live with” a compromise.
But when Musk called the SEC’s bluff, they acted quickly and decisively, filing a lawsuit with a far more serious set of demands than either settlement offered, among them the ouster of Musk as CEO. When you call someone’s bluff, and you’re right, then you look shrewd indeed. But that was not the case here. The SEC brought the hammer down immediately, revealing the strength of its hand. The market spoke too, punishing Musk and Tesla for their foolhardiness. Settlement notwithstanding, nobody looks good here, except maybe the Securities and Exchange Commission.
The settlement is likely sufficient to stabilize the stock price, which sits at about $264 per share, more than $100 less than its value when Musk tweeted about taking the company private last month. Eventually, given changes to the company’s fundamentals, it might rise to the levels when Musk promised a marijuana-laced target of $420 per share. And the Tesla board probably won’t seek to remove Musk, because despite it all the company depends on him as a figurehead.
That was enough in 2010, when Tesla went public, but now the vultures are circling. Mercedes, Ford, Volkswagen, and other manufacturers are aggressively pursuing electric vehicles, drafting behind the lead that Musk and Tesla piloted. No ordinary person knows who the CEO of Ford or VW is, but they probably don’t care, either. The proof is in the pudding: Whether the cars ship and sell, and how quickly.
It feels like the end of an era for Elon Musk as indefatigable inventor-industrialist, no matter how Tesla or SpaceX or any of his other ventures perform. Musk’s reputation was predicated on cunning and audacity: His willingness to try things that had failed before, and to press hard on them until they succeeded. Electric cars. Reusable rockets. But many of them haven’t yet succeeded, not really. Tesla is a proof of concept for an industry, and risks being overtaken. SpaceX has made a technological promise about space commerce and travel, but it remains an overblown government and commercial contractor. The Boring Company has ambition for a new kind of urban transit, and claims to have deals to realize it, but enormous uncertainty still faces it.