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Tesla CEO Elon Musk testified this week in a shareholder lawsuit that he was serious when he tweeted in 2018 that he had "funding secured" to take the pioneering electric-car company private, said Patrick McGee and Hannah Murphy in the Financial Times. In response to the accusation he'd "artificially boosted Tesla's stock price" with that public statement, Musk told a federal jury that he had "what he considered a 'handshake' agreement" with Saudi Arabia's sovereign wealth fund to help finance a stock buyout. "Looking solemn in a dark suit with a dark tie," the billionaire denied the suggestion that the $420 stock price he floated was "a joke" based on "a commonly used term for cannabis." However, he added, there was "some karma around 420" - he just wasn't sure if it was "good or bad karma." Tesla's shares rose well above $420 but are now at only about a third of that level.
Even for Tesla, "the last three months have been a whirlwind," said Ian Sherr at CNET. With the resale value of its cars "dropping along with the company's stock," Musk has continued "to burn goodwill across the tech industry and the wider public" since his $44 billion acquisition of Twitter. Tesla's problems have raised "a crucial question" over the timing of his sale of nearly $3.6 billion of Tesla stock in December last year, said Jonathan Weil in The Wall Street Journal. A few weeks later, Tesla announced fourth-quarter vehicle deliveries "significantly below the company's most recent forecast." Did Musk "know that business had slowed when he sold his shares?" The question "should be of great interest to the SEC," said one expert on insider trading.
Meanwhile, Tesla's recent price cuts "are reverberating through the car business," said Nora Eckert and Mike Colias, also in the Journal. Tesla remains profitable, reporting a record $3.7 billion in earnings for the last quarter and shipments of 1.3 million vehicles in 2022. But some analysts see the 20-percent price cuts as a "response to waning demand" and potentially the start of a "price war" with competitors. After "a decade of being the only game in town," Tesla is entering a new era of competition with legacy automakers, said Jesus Diaz in Fast Company. That has exposed the failings in its design - ultimately a more central problem for Tesla than its "tanking stock price," slowing sales growth, or Musk's "Twitter train wreck." The "coup de grâce is Tesla's broken promise of full autonomous driving."
"Musk's embrace of risk has produced true breakthroughs," said Christopher Cox in The New York Times Magazine. Now, though, Musk may be forced to spend as much time in litigation as on the job, facing not just the securities lawsuits but a "wave of lawsuits" about the self-driving technology on which he's said he is staking the future of Tesla. After years of work, that technology has shown itself still "all too capable of catastrophic failure." Even if Tesla's problems with autopilot are fixable, its problems with the CEO may be less so. As the poet Robert Lowell once observed, "No rocket goes as far astray as man."
This article was first published in the latest issue of The Week magazine. If you want to read more like it, you can try six risk-free issues of the magazine here.
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