On Tuesday, Dec. 9, local time, Tesla CEO Elon Musk said he has moved to Texas to focus on his company’s two main priorities, SpaceX’s new Starship spacecraft and Tesla’s electric car superfactory (GigaFactory) being built in Austin.
In an interview with the Wall Street Journal, Musk said, “I’ve moved to Texas.”
In addition, Musk criticized the poor economic climate in California and claimed that it was another factor in his move to Texas. “If a team has been winning for too long, they tend to get complacent,” Musk said, “and California has been winning for a long time, and I think that’s exactly where they are.”
According to Musk, Silicon Valley is home to some of the largest and most influential companies in the world, but is now becoming less attractive.
In Musk’s mind, the idea of leaving California seems to have been brewing for a long time. Previously, CNBC reported last week that Musk was considering a move to Texas. On May 1 of this year, he posted a tweet stating, “I will not be keeping any house (in California).” He has since reportedly sold all four of his California homes for $62.5 million.
The move, in addition to being able to focus more closely on SpaceX’s new Starship spacecraft and Tesla’s Austin construction project, will allow him to save a significant amount of money on his income tax bill. Musk is expected to receive more than $50 billion in stock options, which he would have had to pay income taxes on the amount of profit he would have made had he stayed in California. However, there is no such personal income tax in Texas.
Recently, Musk surpassed Bill Gates to become the second richest man in the world. Currently, Musk’s net worth is approximately $128 billion. This year, Musk’s personal net worth has increased by $100 billion.
On Tuesday, local time, as Tesla shares rose 1.27 percent to close at $649.88, Musk’s personal wealth increased by another $10 billion. On the same day, the company’s stock rose largely on news of its second financing in three months. Tesla announced on Wednesday that it would raise $5 billion. He gained another $10 billion on Dec. 8 as Tesla’s stock suddenly rose on news that the company plans to raise a second $5 billion capital raise in the past three months.
The 49-year-old Musk has lived in the Los Angeles area, where SpaceX is headquartered, for 20 years. Tesla is headquartered in Palo Alto, California, and its main factory is located in the San Francisco Bay Area in Fremont, California.
Tesla is expanding its global operations, with its Shanghai electric car super plant opening last year and another one under construction in a Berlin, Germany, suburb. Musk regularly travels to and from its factories on his private jet, the Gulfstream. (Tianmenshan)
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The Myth of Electric Car Riches by 2020: Musk’s Assets Soar Beyond $100 Billion
Electric vehicles are now one of the hottest technology trends with an increasingly promising future, and so far in 2020, the wealth of entrepreneurs in the electric vehicle sector has increased dramatically, led by Tesla CEO Elon Musk and followed by the founders of companies such as Celeste and Xiaopeng.
Musk’s net worth has risen the most this year, according to the Bloomberg Billionaires Index, thanks to a 580% surge in Tesla’s stock price, which made him the world’s second richest man a few days ago with $139 billion. The second richest person among electric car makers, behind Musk, is BYD founder Wang Chuanfu, whose net worth more than tripled this year to $14 billion.
Photo: Tesla CEO Elon Musk attends the Axel Springer Award ceremony in Berlin, Germany, on Dec. 1, 2020.
Li Bin, the founder of Celeste, has increased his wealth 11-fold by 2020 through his stake in the U.S.-listed automaker, making him the fastest-growing of the world’s 500 richest people. Xiaopeng Chairman He Xiaopeng’s net worth has jumped by more than 600%. Overall, several executives in the electric car industry tracked by Bloomberg Index have increased their wealth by more than $140 billion, with Musk’s net worth alone soaring by $111 billion.
That doesn’t include companies that make the ancillary components needed for electric vehicles. For example, battery maker Ningde Times’ majority shareholder has total assets of $40 billion, up about $23 billion this year. Henrik Fisker, co-founder of electric car maker Fisker, said in a recent webcast, “The most important technology for the car of the future is software and chips, not hardware anymore.”
Traditional automakers and parts makers are also catching up, but their stock prices have fallen or risen only slightly. Established companies such as Ford, Volkswagen, Continental, and Toyota are all looking to shift operations to comply with stricter emissions regulations. The exception is GM, which is aiming to launch 30 new electric vehicles by 2025, which has helped its stock price rise to its highest level in three years.
While many electric car companies have yet to report earnings and some market watchers are questioning the existence of a bubble in the industry, the neo-coronary pneumonia outbreak has increased interest in the future of transportation, and experts believe electric vehicles will dominate the global auto market. In addition, Joe Biden’s victory in the U.S. presidential election and China’s recently announced plans to continue supporting the industry have raised expectations.
Andy Wong, a fund manager at LW Asset Management in Hong Kong, said, “Major countries around the world have been encouraging the development of electric vehicles as a major measure to reduce carbon emissions, especially in the wake of the outbreak of the epidemic. Tesla, Celeste and Xiaopeng have recently made improvements in autonomous driving, which also helps increase their value.”
In addition to Tesla and its major competitors, investors are also betting on emerging companies in the industry that have the potential for rapid growth, allowing more people to become wealthy from scratch. Both Fisker and Lordstown Motors founder Steve Burns have become billionaires after completing public offerings of the companies through special-purpose acquisitions this year, according to data compiled by Bloomberg. Both companies’ U.S.-listed shares jumped more than 85 percent last month, boosted by news that Tesla has joined the S&P 500 index.
Bloomberg Intelligence analyst Steve Man said, “The electric car market appears to have gotten bigger, creating more opportunities for newer, smaller players to get a piece of the pie.” (Little)
[Musk: Make Tesla affordable to more people We have to be smart about our spending]
Musk recently warned in an internal email that the company’s rising stock price could take a “big hit” if investors begin to worry about Tesla’s ability to meet earnings expectations.
Musk urged all employees to remain focused on cutting operating costs to prevent a reversal of Tesla’s surging stock price. Tesla is struggling to meet its goal of delivering 500,000 vehicles this year.
Musk wrote in an email, “In terms of actual profitability, last year’s margins were very low at about 1%. Investors have placed a lot of confidence in our future profitability. But as soon as they conclude that won’t happen, our stock will be as vulnerable as a soufflé under a hammer!”
Tesla did not respond to a request for comment.
Tesla shares have soared nearly 600 percent this year, in part because of the wait this year for the company to become a component of the Standard & Poor’s 500 Index, and because Tesla posted its fifth straight profitable quarter ending in October of this year. Musk and Chief Financial Officer Zachary Kirkhorn have been focused on reducing costs for several quarters. At the same time, Tesla has begun investing billions of dollars in new factories near Austin and Berlin, Texas, in order to expand its global production capacity and sales.
“At a time like this, when our stock is hitting new highs, some might think that being lean and careful doesn’t seem that important. This is absolutely not true!” Musk emphasized in an email.
As Tesla car sales grow, affordability for consumers has become a growing concern for Musk. Musk has said he is willing to sacrifice profits in order to sell more and cheaper electric cars. It has also pledged to launch a $25,000 model by 2023. Tesla’s current cheapest model is the Model 3, which starts at $37,990.
“More importantly, in order to make our cars affordable to more people, we have to be more economical,” Musk wrote, “It’s a tough game that requires countless innovative ideas to reduce parts costs, simplify factory processes or product design, while also improving quality and performance.” “A good idea would be to be able to save $5 straight away, but most of the time it’s $0.50 here and $0.20 there.”
In Berlin, Musk also received an innovation award from German publisher Axel Springer SE. The award has been presented to other U.S. billionaire entrepreneurs such as Amazon.com CEO Jeff Bezos and Facebook CEO Mark Zuckerberg.
Asked at the awards ceremony if Tesla would consider buying another automaker, Musk outright ruled out the possibility of that happening now, but said any future deal would have to be mutually agreed upon. “We would never initiate a hostile takeover,” he said. “If someone said, hey, we think a merger with Tesla is a good idea, we would definitely have a conversation.”
Tesla is building its first European superfactory near the German capital, Berlin, in a major blow to the local auto industry. Musk, who is trying to get the Berlin Super Factory project up and running by July next year, said he may spend the night in the conference room of the unfinished factory.
He said, “When the Berlin Superfactory opens, we will have a big celebration.”
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