Monday, December 30, 2019

Elon Musk proves there is no such thing as bad publicity

As Elon Musk is fond of pointing out, Tesla has never spent a cent on advertising. But then again, he provides the sort of publicity money can't buy.

Earlier this month, Musk – a man who runs four companies and whose net worth is calculated at over $US26 billion  ($37 billion) – spent two days in a Los Angeles courtroom defending himself in a libel lawsuit after a wholly unnecessary Twitter row with a British cave expert.

Elon Musk has never shied away from the cameras.Credit:Bloomberg

A few weeks earlier, the launch of Tesla's latest vehicle, the hulking Cybertruck, had descended into slapstick when a botched demonstration of the vehicle's durability actually resulted in two broken windows.

And in the same month, Musk had stoked controversy by blaming Brexit for Tesla’s decision to build its giant European “gigafactory” in Germany rather than Britain (in all likelihood, Brexit had almost nothing to do with it).

It says a lot that this was an improvement on the previous year, in which Musk smoked marijuana on a live internet stream, attempted to save a group of trapped children from a Thai cave with an improvised submarine and caused stock market chaos with the claim that he had “funding secured” for an $US82 billion deal to take Tesla private (he did not).

On the face of it, one might wonder why a man as clearly gifted as Musk manages to wander from catastrophe to ever-more entertaining catastrophe – or indeed, how he has the time.

Another way of looking at it might be to interpret Musk's actions as a variation of Donald Trump's playbook of internet theatre: attention is a valuable asset, regardless of its quality.

Musk would probably not embrace the comparison, but there are certainly parallels: both have hordes of dedicated fans who are willing to proselytise on their behalf, for example.

Perhaps this is overly cynical. Musk's knack for attention may be by accident rather than premeditated. And in a world of practiced and polished tech bosses such as Mark Zuckerberg and Google's Sundar Pichai, one with a little rough around the edges at least keeps things interesting.

Still, it is hard to imagine Tesla receiving the publicity, and the sales that inevitably follow, if it were to put a run-of-the-mill car industry executive in charge. But a real-life Tony Stark who drives an armoured truck around and wants to turn us into cyborgs? Who wouldn't want to buy a car from him?

And yet, in 2019 Musk demonstrated a different side. After years of selling a vision of a battery-powered revolution, Tesla is now well on its way to making it a reality – and not just in eco-conscious pockets of society but globally.



In the first nine months of this year, Tesla sold some 255,500 cars, up from 154,500 in the same period a year earlier. Analysts expect it to reveal quarterly sales of above 100,000 for the first time when the company reveals fourth-quarter numbers next week. The figure is still a fraction of what its bigger rivals are selling, but unlike many of them, Tesla's figures are going in the right direction.

The company is now swiftly boosting production capacity. After an arduous process of building its first "gigafactory" in Nevada, it has taken less than a year to do the same in China, the world's largest electric vehicle market, and one that will be crucial to Tesla's future. The European gigafactory near Berlin will reportedly have capacity for up to 750,000 cars a year.

The bear case for Tesla, however, has always had less to do with what the company itself does, and more to do with its rivals.

On the face of it, one might wonder why a man as clearly gifted as Musk manages to wander from catastrophe to ever-more entertaining catastrophe – or indeed, how he has the time.

The thinking was that as soon as people actually started to want electric cars, major manufacturers would start to take them seriously, and take advantage of their much more advanced supply chains and dealership networks to eliminate Tesla's advantage.

But while it is still early days, that seems far from inevitable. Sales of Jaguar's I-Pace and Audi's e-tron have been less than stellar, and Mercedes recently delayed the US launch of its first electric vehicle.

Tesla's head start, meanwhile, seems to be paying dividends. Early production of its mass-market Model 3 was characterised by delays and widespread reports of sub-par workmanship, but the company now seems to have put that behind it.

It is becoming harder to be cynical about the company's prospects. Analysts at Credit Suisse, who have been long-time sceptics, recently admitted that Tesla was well ahead of its rivals in battery technology. Earlier this month shares hit an all-time high, and short-sellers betting against the company have thinned out in recent months as they lose millions.

There are still questions about the future. The space-age Cybertruck, a steel monster that is pegged to go on sale in 2021, will probably not generate the sales to match the attention it has received. Musk's claim that its cars will be fully self-driving at some point in the coming year, to the extent that they can act as robot taxis, is ambitious to put it kindly.

But while we can scoff at its chief executive's antics, his achievements with Tesla no longer seem in doubt.

Telegraph, London

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