Elon Musk is the man who built PayPal, sold it on, and then moved on to an array of new groundbreaking technologies. Currently his attention is taken by Tesla the luxury electric car manufacturer which has taken the US market by storm. When we say “luxury electric car manufacturer” the company is actually looking to attack the mass market with the forthcoming delivery of its much heralded Tesla Model 3. So, will Elon Musk benefit from his presidential connections?
Big egos, different opinions
Many saw the proposal for Donald Trump and Elon Musk to work together as the incoming president’s first compromise. Pres Trump is not a believer in global warming which you might assume would impact the introduction of electric vehicles. However, it does seem as though Donald Trump has recognised the entrepreneurial skills and ability to “think outside the box” of the Tesla CEO?
The major concern is that these two very big egos will go head-to-head and there will be fallouts from time to time. In reality this happens with any government but such is the influence of both parties that there is some apprehension about a long-term relationship. They both like the limelight, they both like to grab the headlines and they have a single-mindedness which has done both of them well in the world of business.
Tesla and technology
Donald Trump has already confirmed that he will look to increase investment in the US technology market which will obviously benefit electric car manufacturers such as Tesla. Despite the fact that Tesla has disappointed analysts on numerous occasions in the recent past, it has always tended to come up with a more bullish statement for the future. A number of fundraisings have not always gone down as well as they could have, the company is still burning significant cash and regular profitability would seem to be some way off.
However, Elon Musk has the ear of the president and recently analysts upgraded their forecasts with many now turning more positive. Leading research analyst Morgan Stanley believes the shares will rise in excess of 25% over the next 12 months with a target price of $305. Analysts also believe previous shipment forecasts for the Model 3 Sedan will be beaten with figures upgraded from 114,000 up to 183,000 in 2018. It will also be interesting to see whether technology companies receive any additional tax breaks from the incoming government and whether he is good to his word about investing in the sector.
Fighting the Chinese dragon
Tesla is just one of many companies fighting a monumental challenge from its Chinese competitors many of whom are directly or indirectly funded by the Chinese government. This may be one reason why Donald Trump has taken a great interest in Elon Musk and his Tesla operation which has already broken into the Chinese market. While there have been a number of false dawns for the electric car market we have now gone past the point of no return.
Governments, investors and institutions have invested heavily in Tesla and supported numerous fundraising issues. Despite constant criticism of the ever-changing business model and forecast profitability in the future there does seem to be a renewed interest in Tesla and Elon Musk.