Elon Musk, co-founder and head of Tesla Motors, is not popular with his fellow Silicon Valley magnates. In contrast to other industries, America’s big tech companies have almost universally condemned Donald Trump’s executive order on immigration, and over the past few days, through crowdsourcing, have even solicited funds to take Mr Trump to court. Apple, Facebook, Airbnb and many others have all added their voices – or, rather, their tweets – to the growing tide of opposition and Google’s co-founder Sergey Brin was even spotted at a big demonstration at San Francisco International Airport.
One of their targets is Mr Musk, who has attracted a great deal of criticism for agreeing to sit on the new president’s strategic advisory council. He was one of the first senior executives called into the White House for discussions with Mr Trump within hours of the inauguration and has since happily tweeted his support for the president’s industrial strategy. This week, however, under ferocious pressure from his fellow techies, he began to row back, asking on Twitter for suggestions on how to change the immigration order. “Will seek advisory council consensus and present to president,” he tweeted on Monday.
During the election campaign, Mr Musk was a Trump critic but, in the eyes of his fellow valley-dwellers, went over to the dark side when Mr Trump won the election. Mr Trump has been very good for Tesla, whose shares have risen by 65 per cent in the past year and by a third since election day. Morgan Stanley recently upgraded Tesla’s shares based on the president’s pro-manufacturing initiatives, which are regarded as very good for the electric car company.
Mr Musk is by far the most high-profile of the businessmen Mr Trump has surrounded himself with. The fact that Mr Musk’s company poses a threat to the old rust-belt America, which Mr Trump is trying to revitalise, is outweighed by the glamour of his beautiful cars and space-age dreams.
Tesla, which began life only 15 years ago, now has a market value of more than US$40 billion, not far short of both GM and Ford, which are in the $50bn range. Financial forecasts by investors assume that it will grow revenues as fast as Google, Amazon and Apple did at the height of their success in the mid-2000s. It is America’s first successful new car company since Ford was founded in Dearborn in 1903 and the South African-born Musk has become one of the best known tycoons in America. Not only does he build revolutionary cars, he also launches rockets into space, has plans to populate Mars and is working on a project to create a “hyperloop” that would allow high-speed travel to locations including the UAE and America’s west coast.
Mr Musk is planning to increase production of the Model 3, Tesla's new and relatively cheap electric vehicle and has a goal of producing 500,000 cars, of all models, a year by 2018, compared with about 85,000 today – a hugely ambitious target that has caused one former fan, the hedge-fund manager Jim Chanos (the man who rumbled Enron), to suggest that the loss-making Tesla is in financial trouble. "Far from conquering planets, some fear that Mr Musk has become like Icarus, who flew too close to the sun," commented The Economist recently. His proposal to merge Tesla with SolarCity, his struggling energy company, has run into opposition on Wall Street, which worries that he will run out of money, despite the $5bn he has in the bank. His businesses eat money like there's no tomorrow and his debts now top $6bn.
The precarious position of his empire, poised on the knife-edge of either a giant leap forward or bankruptcy, seems scarcely the time to dive into politics, particularly as a Trump backer. And even he seems to be already distancing himself from Mr Trump’s most outrageous step yet. Mr Musk’s belated call for amendments has been greeted with derision by his fellow Silicon Valley chiefs this week, who say it not only violates American principles but, even more importantly, risks disrupting the country’s engine of innovation. “There is no possibility of retraction,” Mr Musk tweeted defensively. “But there is a possibility of modification.”
Tesla, probably more than any other corporation in America, represents all that Trump could hope for in his new industrial policy: a high-tech car manufacturer which imports nothing yet exports all over the world, with a chief executive who worships at his shrine. At the present value of Tesla shares, Mr Musk is worth about $15bn, of which $5bn can be put down to Mr Trump’s victory. Each man has a lot riding on the success of the other.
Ivan Fallon is a former business editor of The Sunday Times
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