elon musk

My 2008 Interview With Elon Musk

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2008 Tesla Roadster Validation Prototype

It’s coming up on 10 years since I first interviewed Elon Musk, CEO of Tesla Inc. and SpaceX. At the time he was still chairman of the board, not yet having ditched his third CEO in a year. This interview was originally published on AutoblogGreen in June 2008 when I was a writer there. Musk contacted me after I wrote a story questioning his involvement in the development of the Roadster following a Fox News story where he was referred to as the company founder. We had a nearly hour-long conversation and I interspersed that transcript with some responses from Martin Eberhard that I had solicited by email.

As I re-read this, I noted the words I wrote in the final paragraph of the epilogue and realized that sadly, little of what I wrote has come to pass.

Having met several members of the Tesla team when I visited there in January to drive the Roadster, it’s clear to me that they have tremendous skills and expertise and they are recruiting more people with those qualities. Hopefully, the management team now in place at Tesla has the strength of character to take the knowledge of the engineers and apply the necessary review process to design decisions going forward. That is an absolute must in order to get cars built right, on time and on budget. Certainly the work of the TEAM at Tesla Motors has lit a fire under many other manufacturers to accelerate their own electric car projects.

I’m republishing it here for posterity. Given Musk’s recent tirades against the media, I wanted to have this in more than one place.

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Who Stands To Benefit From Tesla’s Stock Price?

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As I read this Bloomberg story this morning about Elon Musk closing in on the goals required to get 5.27 million stock options granted to him in 2012, a thought occurred to me. We all know the financial system is absolutely rigged. That much is no secret. 
 
At the current share price of Tesla stock those options are worth about $1.4 billion. Despite many on Wall St acknowledging that the value of the company has nothing to do with its current business fundamentals, they keep pushing the price up based on “future potential.”
What rarely gets talked about is that every time Tesla goes back to the markets to sell shares in order to keep the lights on, Elon himself buys up a big chunk of those shares. There’s absolutely nothing wrong with that and demonstrates Musk’s own confidence in his company while also ensuring that his own substantial stake in the company (currently at more than 22 percent of outstanding shares) isn’t diluted. Again nothing wrong with any of this.
However, keep in mind that relatively little  Musk’s net worth which is well over $10 billion is in cash. Like most billionaires that don’t want to give up their stakes in companies he borrows money against those investments. When he wants to buy more Tesla shares, he goes to his bankers, including Morgan Stanley for a loan. As of March 2017, Elon owes more than $624 million. 
The banks that are owed money by Elon Musk have a financial incentive to maximize the value of the company and help it reach the lofty goals set by the board of directors when they granted those options in 2012. If Tesla fails to reach those goals, especially the market capitalization, Musk won’t get those shares and may not be able to pay back those loans. On top of that, many of the same banks also own a lot of Tesla shares directly, including Morgan Stanley with 3.7 million shares.
To the best of my knowledge (I’m neither a lawyer or financial expert) none of this is illegal. But it’s worth having some context when listening to any arguments pro or against the value of a company, including my own. For the record, I don’t own any stocks in any company directly aside from funds in my retirement accounts.