In retrospect, it’s not clear if Tuesday evening’s event was a Tesla Motors Inc (TSLA) shareholder meeting or a press conference more akin to the kind Apple Inc. (AAPL) hosts when it unveils a new product.
One thing is for sure, though … Tesla stock holders in attendance certainly got more than their money’s worth.
During the meeting, CEO Elon Musk was more candid than ever, confessing some things that leave at least a few TSLA investors wondering how the company has managed to survive as long as it has. Perhaps most amazing of all: Musk himself never really thought the company would make it this far.
The Musk Miracle
Yours truly has often acted more as critic than as fan of Tesla Motors, but that nay-saying was never about the company.
I truly believe electric cars are not only viable, but are the inevitable future. And, I’m glad Musk and Tesla took the lead to build an electric vehicle that looks less like a toy and more like a work of art.
My criticism has mostly been aimed at investors who put Tesla stock on a pedestal, bellyaching whenever anyone dares suggest Tesla Motors isn’t absolutely perfect in every way. That’s a dangerous mindset, as other investors errantly buy into that shtick.
Not that it matters too much now, but I was relatively well vindicated last night when the company cataloged some of its more serious missteps. Musk & Co. are human after all.
The most significant jaw-dropper: Tesla’s meeting (which was more about a company history and less about taking care of shareholder business) saw Musk reveal that he had low hopes for Tesla to succeed, but wanted to try anyway, knowing it could change the world.
Love him or hate him, there’s no denying Musk has done that by virtue of proving an electric car can be sexy, mass marketable and functional.
Tesla stock owners were also blown back by Musk’s comment that the faulty principles he built the company on “turned out to be staggeringly dumb.”
The two premises in question were the use of an electric vehicle propulsion system already designed by a small company called AC Propulsion, and the use of auto bodies made by Lotus Cars. Musk compared the entire process to taking an existing home and remodeling everything but a single wall in the basement.
Musk added of the early Roadsters, “Frankly this car, although it passed all the regulatory requirements for a street legal car, was completely unsafe.”
A Good Thing for Tesla Stock
Looking back, a lot of things make at least a little more sense now.
While Musk has at times come across as a bit of a smarmy, oblivious jerk, he was operating under the assumption he had nothing to lose — Tesla Motors was likely already doomed. Better to act successful than act defeated, inspire the team and pray someone ends up catching the Hail Mary.
Someone did.
As for the future, while I can appreciate Musk a little more now than I did before, it’s still crucial to understand that a great product does not inherently make for a profitable business. Tesla Motors is something of a money pit for the time being, albeit a modestly shallow one.
That may change in time, but so far, Musk and Tesla have tended to overpromise and underdeliver … at least in terms of timeframes.
But that doesn’t matter. Thanks to last night’s shareholder meeting, Musk became a guy we can relate to. He even became a guy we can cheer for, as he acknowledges he’s had some luck to go along with his sweat-equity. He’s still a dreamer, but he’s tenaciously done whatever he can to achieve that dream.
Perhaps this is the point where Tesla is taken off the pedestal. Managing the expectations of TSLA shareholders can become a distracting exercise, especially when Musk is working on expanding Tesla Motors’ production capacity at the same time he wraps up the development of a massive battery factory.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
