Good-Bye to Elon Musk

Cars and Drivers

Published: June 4, 2014 6:35 am

Elon Musk, the CEO of Tesla Motors Inc. (NASDAQ: TSLA), began the victory lap of his final season as chief, although that season is four to five years away. The much-adored founder, who has awarded shareholders with a stock price that has risen 635% in the past two years, found it necessary to disclose his future plans at the Tesla shareholder meeting. Five years is a long time, but Musk is a master of disruption, even if that disruption includes news of his own, eventual retirement.

Musk wants the public to believe he is the inventor of the electric-powered car. That is not true. However, he did make the electric engine in autos popular, and nearly mainstream, at least for people who can pay over $60,000 for the Tesla S. Musk’s next act, almost certain to happen before he leaves, will be the launch of a less expensive car. And less expensive in his mind is closer to $40,000 than to $70,000.

The world is also waiting for Tesla to build one or more “gigafactories.” These manufacturing operations will cost as much as $5 billion to complete. Musk says they will be large enough to make batteries that will allow Tesla to sell hundreds of thousands of cars instead of the tens of thousands it can make and sell now. Musk may as well remain as CEO until those facilities are complete and he can prove the next stage of Tesla’s development is finished.

Musk takes a risk by remaining, which is that he will be seen as the man who first created Tesla and then watched it be flanked and damaged by other car companies. Tesla may never be a huge success in terms of sales, but the world’s largest car companies believe they have to build Tesla S killers. These manufacturers include powerful luxury makers BMW and Mercedes-Benz, which already have R&D capacity, production facilities, marketing dollars, dealer networks and cash-rich balance sheets. And, perhaps most important of all, each has a wildly regarded brand that has been built over decades.

The key to Musk’s success will be whether he can outrun companies like BMW just as much as whether he can “out-innovate” them. He might be better to leave Tesla now while he is still ahead.

ALSO READ: Why Tesla Won’t Build Driverless Car

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