
Elon Musk's finances - sajid
http://www.economist.com/news/business/21709061-entrepreneurs-finances-are-jaw-dropping-inventive-and-combustible-his-space
======
nabla9
I have no problem whatsoever if Elon Musk destroys investor money to build new
technological future. In fact, I fully encourage and support his endeavor as
long as it's not my money.

Here is epic piece from Warren Buffet from November 22, 1999. Just five months
before internet bubble collapsed he explained why he didn't invest in internet
technology when everyone said that he was being stupid old fool.
[http://archive.fortune.com/magazines/fortune/fortune_archive...](http://archive.fortune.com/magazines/fortune/fortune_archive/1999/11/22/269071/index.htm)

> The key to investing is not assessing how much an industry is going to
> affect society, or how much it will grow, but rather determining the
> competitive advantage of any given company and, above all, the durability of
> that advantage.

~~~
samfisher83
A 2010 decision, for example, eBay Domestic Holdings Inc. v. Newmark, held
that corporate directors are bound by "fiduciary duties and standards" which
include "acting to promote the value of the corporation for the benefit of its
stockholders."

[http://www.nytimes.com/roomfordebate/2015/04/16/what-are-
cor...](http://www.nytimes.com/roomfordebate/2015/04/16/what-are-corporations-
obligations-to-shareholders/a-duty-to-shareholder-value)

Under US law there would be a problem if he did that.

~~~
mrfusion
If a CEO genuinely believed climate change was an existential threat wouldnt
actions to mitigate it be acting in the interest of the shareholders even if
the company loses money?

~~~
firethief
I don't think that follows. It would be in the interest of the shareholders
for _someone_ to address the problem, but it would not be in their interest to
volunteer to foot the bill.

~~~
avmich
It's not clear. If nobody else addresses the problem, or if someone else does
it only with condition that this company also participates, or if not enough
of others is working on it - in all these cases, and others, footing the bill
could be beneficial for shareholders.

------
codeulike
_a business empire with a financial structure that works only if risky
companies perform perfectly on ambitious plans_

Everyone talks about the wonders of capitalism and how risk is rewarded, but
then someone comes along who is actually taking risks to achieve big
objectives and the industry watchers collectively shit their pants.

~~~
radiorental
> Everyone talks about the wonders of capitalism and how risk is rewarded

Yes, when that risk is spread across the system and the fundamentals are
stable ventures.

Point being when all you do is take large risks, that's a problem.

(fwiw: long on tsla)

~~~
codeulike
Musk is basically undertaking a moon shot: either a huge success or crash and
burn. There's not much point keeping reserves.

~~~
jacques_chester
> _Musk is basically undertaking a moon shot: either a huge success or crash
> and burn._

I wish people would stop using the Apollo program as an example of an
expensive gamble.

There was no market uncertainty. The problem was complex but the physics
showed it could be done.

The overall plan was tested in multiple stages (which is why the first landing
was by Apollo _11_ ) undertaken with _massive_ armies of bright folk
overengineering the living daylights out of everything in view.

Meanwhile people call any old MVP a "moonshot" or a speculative research
program a "moonshot" and it's just ... a poor analogy.

~~~
codeulike
There are plenty of ways the moonshot could have failed. It just didn't fail
so that's how it's remembered. Going from 'physics showed it could be done' to
actually doing it is very hard and armies of bright people is not necessarily
enough.

~~~
jacques_chester
> _There are plenty of ways the moonshot could have failed._

Yes, and they were explored extremely thoroughly by Apollo missions 1 through
10.

~~~
codeulike
Even well tested rockets still explode sometimes. Rockets are risky, complex,
explosive machines. Ask an insurance company about it.

~~~
jacques_chester
Taking us back to my original point: comparing an MVP or a pure research
project to the Apollo program is silly.

------
xiphias
The whole article is failing to point out the biggest risks that the clean-
tech companies are fighting against: global warming and lung cancer. Even
though all older car companies have the ability right now to take a huge
financial and PR risk, they're still not talking about the damage car
emissions cause.

Tesla is the first company that convinced me to buy a new car instead of an 8
year old one, as I didn't see enough difference between the new and old cars
before (except the price).

~~~
115100
Most of the environmental impact of a car is in its manufacturing, so global
warming is made worse by Tesla selling more cars instead of people buying
older ones.

~~~
anindha
Tesla aims to make their cars last 10 times longer than the average gasoline
car. There are less things that can go wrong with an electric car.

They are creating ways to increase utility on each car. Less people will need
their own car.

Edit: I should clarify. Tesla is aiming to make their drive trains last 1m
miles. Most car companies don't offer extended warranty past 100k miles.
Normal car companies want you to buy a new car at that point.

[https://electrek.co/2015/11/04/musk-we-want-drive-units-
that...](https://electrek.co/2015/11/04/musk-we-want-drive-units-that-just-
never-wear-out-tesla-targets-powertrains-lasting-1-million-miles/)

~~~
RealityVoid
Are you kidding me? 10 times longer lifespan is _huge_, if we assume the
average car lasts only 10 years that would mean you'd be able to use a Tesla
for 100 years. That is totally not happening, especially with Tesla's
reluctance to share maintenance manuals. It seems, on the contrary, that the
Tesla cars have lower life-span than classic combustion engine cars.

~~~
toomuchtodo
Elon has specifically said he's targeted a million miles of reliabiiity on the
drivetrain. Maybe not 10 times longer, but still far more service life than a
traditional ICE.

Tesla doesn't need to share the repair manuals. You're not touching the
battery pack internals or the electric motors; if they fail, they are swapped
out entirely and sent to the Gigafactory refurbishment line.

~~~
RealityVoid
The Tesla is far more than a battery pack on wheels. There are plenty of
things that can fail and need to be repaired. Failing to facilitate that means
the lifespan of the car si significantly reduced.

~~~
toomuchtodo
Could you be specific what non-drivetrain components could fail that can't
easily be swapped out on site or at a service center?

~~~
makomk
You mean other than the chassis, body panels, doors, undercarriage... Not to
mention the question of repair costs and parts availability, both of which are
pretty bad. Where are you going to get (say) a replacement for the incredibly
complex and unreliable door handle mechanism for the Model S in a few years
time once the car's no longer in production? The model-specific battery pack?
All the electronics systems based around Nvidia chips that'll be long out of
production?

~~~
toomuchtodo
As long as Tesla is still in business, replacements will be available. They
still fully support the Roadster, even providing an updated battery pack at
cost to owners.

Model specific battery packs? You're aware the battery packs are all the same
form factor, correct? They have an 8 year battery/motor drivetrain warranty on
the S and X models, which means they'll produce compatible packs for at least
8 years from the last vehicle of a model rolling off the line.

------
RoboTeddy
> The proposed SolarCity acquisition illustrates this: by getting Tesla to buy
> the struggling SolarCity, Mr Musk can keep it alive and maintain control.

Why doesn't the author believe Musk's claim that Tesla<->Solar City are
merging in order to produce a superior product/service?

One company comes and installs both solar cells and batteries. The batteries
help you get more value out of your solar cells. You don't have to schedule
installations with separate companies, or use separate apps to manage them, or
worry about different versions of each product interoperating with the other.
If it's not working, there's one number to call, and one responsible party.
Sales and marketing can be unified. Looking from the outside, it makes
sense...

Am I missing something?

~~~
bkanber
Shame on HN for downvoting you. This was a reasonable and thoughtful comment.

What you're missing is the skepticism that is so rampant in the media and
especially on HN these days. It is certainly possible that they're merging to
produce a superior experience. It's certainly possible that they're merging
for financial reasons. It's certainly possible that the reality is some
combination of both.

------
anondon
> or invoke the poison-pill provisions Tesla has in its statutes

Anyone know the details?

------
qwrusz
Similar articles were written about Jeff Bezos and Amazon 20 years ago.

"no profit", "losing money every year", "unsustainable" etc...

I admire Musk. Not a huge fan of the way he is funding his goals but don't
really care, do what you gota do, it's caveat emptor in the stock market.

Musk's companies are not even close to the riskiest financial structures among
public companies.

Rooting for success of Tesla and SpaceX. But I don't own the stock.

Sometimes the financial press comes across like they don't want anything
important to happen ever. Reward requires risk.

------
vermontdevil
He's doing an AMA today on Reddit. Exclusively about SpaceX though.

~~~
comboy
[https://www.reddit.com/r/spacex/comments/58yc14/elon_musk_wi...](https://www.reddit.com/r/spacex/comments/58yc14/elon_musk_will_be_doing_an_ama_on_rspacex_at_3pm/)
22:00 UTC

------
anindha
The $400m cash flow from pre-orders is an example of it being easier to tackle
hard problems than easy ones.

A lot of people would rather risk money in Tesla then make money investing in
a bank or an oil company.

~~~
xiphias
The only problem here is that $1000/car is nothing compared to what they need
to deliver in return: a huge manufacturing plant

------
kryptiskt
Rescuing SolarCity seems like a waste to me. It's in a commodity business and
is performing awfully. Why not just fold that hand and not saddle the stronger
company with it?

~~~
grizzles
Solar City is basically a bundle of loans that will pay off over the next 20
years. The company has lost a ton of money loaning out other people's money
before govt solar subsidies expired. Now that it's at it's shittiest point,
Musk/Tesla is swooping in and buying it at a discounted price, without
spending a cent in the purchase. Musk is a genius.

------
tim333
I guess the whole thing hinges on Tesla producing and selling a lot of cars.
Succeed and they are good, fail and it collapses. Best of luck to them.

------
vidoc
I'm suffering from Advanced Elon Musk fatigue!

