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Elon Musk sells three quarters of a billion. Result: Nothing

Andrew Saks, Thursday, 25 November 2021

Is Tesla really as robust as we all have come to think?

It has been a remarkable story of disruption and domination, and all from an unlikely beginning.

Something of an eccentric scientist to say the least, Elon Musk suddenly entered the motor industry from what appeared to be out of nowhere just at the beginning of the 2010s.

The motor industry is utterly conservative, and extremely long established. Car companies do not engage in follies, they are considered and corporate. They do not sponsor fly-by-night media, they do not resort to bluster and they certainly do not attempt to disrupt their own industry.

Indeed, so conservative are certain parts of the automotive industry that even competitors are dealt with politely and viewed favorably by each other, something that is evident in the similar designs of certain cars made by different manufacturers, as though they almost worked together on the development of each other's product.

For over 100 years, the corporate towers of the major automobile manufacturers toed the same corporate line, until Elon Musk came and threw a giant electrically-powered spanner in the works.

To most automotive industry executives, Elon Musk was an unknown quantity. A radical, a troublemaker and an overtly outspoken bastion of bizarreness, but to those in the software engineering business, he was a figurehead. He had founded many companies that are now huge and that dominate Silicon Valley, such as PayPal, as well as has interests in restaurant chains and space follies...er, I mean projects.

Suddenly he is the world's richest man by far, with a personal fortune of approximately $172 billion, way ahead of long-term leaders such as Warren Buffett or Bill Gates. It took them decades to amass such wealth, whereas it took Elon Musk no time at all. He went from being almost bankrupt to being the world's richest man by far in a heartbeat.

That's what disruptors do. They go for make or break, and that is what his automobile company Tesla did. Tesla came into the conservative and established world of car manufacturing, where the industry doesn't welcome newcomers, where marques have 'pedigree' and where brand and history is important to customers.

Tesla had none of these. No doubt giants who never make mistakes such as Ford and Toyota sat carefully, thinking they would see what he does and if it works, copy it, if it doesn't then let this chancer lose his money rather than the shareholders of Ford or Toyota.

It did not only work, it blew the lid off the entire industry and has caused a sudden revolution in car design and engineering. Whereas a car from the mid 1990s is not so different from one of five years ago apart from a few LCD screens, cars of today are radically different from those of five years ago.

Tesla fascinated the market, and focused investors and managed to rise to a market capitalization of $1.1 trillion which is quite staggering. That is over ten times the market cap of Ford Motor Company!

How can this even be? Surely the Tesla models are niche market follies, and Ford knows better. That may well have been the case until recently, but it is not the car itself that is the interesting investment vehicle behind Tesla's success, it is the ethos. People are buying into the ethos and the disruption, which is clearly working.

It is the same as why people bought iPhones when they already had a mobile phone that worked. In Steve Jobs' own words a decade ago, "People buy into things because of why they are made".

Now Today, Tesla has demonstrated that it is not just Elon Musk's mouthpiece and that it is sustainable in its own right.

Elon Musk just sold $750 million in Tesla stock that he had held, and absolutely no effect whatsoever was had on the share price.

This clearly demonstrates that the company can now forge ahead whether Elon Musk is at the helm or not.

It is no longer a disruptor, or a means for Elon Musk to promote himself and his disruptive views which have gained him an absolute fortune.

It is now a genuine publicly listed giant with market forces, customer opinion and product reliability as factors in share price, rather than the latest diatribe to come from Elon Musk's eccentric thought processes.

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