“There are many people that thought Tesla would fail. Many of them unwisely chose to short our stock,” Tesla chief executive Elon Musk, 42, said at a June 4 annual shareholders’ meeting. He added, with a laugh, “I presume those people are not here today.”
Since then, the stock has marched steadily higher, hitting an all-time high of more than $183 a share Friday. It has risen fivefold this year, pushing the market value of Tesla above $22 billion, almost a third as much as Ford Motor. Some other comparisons: In the first half of the year, Ford sold 1.29 million vehicles in the United States and more than 400,000 in China, while Tesla sold a total of about 10,500. Ford earned $2.8 billion in profits in six months, while Tesla lost $19 million.
Tesla’s $70,000-plus Model S isn’t your grandfather’s Oldsmobile (or Rambler). The luxury sedan goes from zero to 60 mph in 5.4 seconds, it has retractable door handles, a 17-inch touch-screen display and a liquid-cooled lithium-ion battery that lies beneath the car’s body.
The company isn’t much like any other car company, either. Its stock has behaved like a 1990s-vintage tech company, a firm whose disruptive potential and promise shares more with Silicon Valley than Detroit. South African-born chief executive Musk, who made a fortune on PayPal, the money-transfer service, is a salesman and a brand unto himself. He has turned his Model S into a product like a pricey watch, stylish handbag or nifty gadget rather than simply a way to get to work.
With great hoopla, Musk has unveiled plans for stations that would offer free high-speed recharging or, borrowing an idea from a now-bankrupt rival, a battery swap in 90 seconds. (Musk declined to be interviewed for this article.)
Musk’s cachet has been enhanced by his other futuristic visions, such as his commercial SpaceX company and his outline for a solar-powered, 600-mph “Hyperloop” to carry people in pods from Los Angeles to San Francisco in half an hour. (The details haven’t been worked out yet.) On Wednesday, Musk announced on Twitter that within three years Tesla would build an autopilot car that would drive itself over 90 percent of miles traveled; he also posted a call for engineers to work on the project. “Intense effort underway at Tesla to develop a practical autopilot system for Model S,” he said.
“The expectations are sky-high,” said Craig Pirrong, a University of Houston finance professor. “He has an almost cultlike following among a lot of people. All those things create a risk of a very big fall.”
Yet Musk has been able to build Tesla by relying on big-name financial firms, which have played multiple roles — and given him time to lose money while striving to turn a profit. It is the sort of financial breathing room that few start-ups enjoy.