Much to the surprise (and dismay) of investors, car owners, and industry experts, Elon Musk expressed interest in making Tesla private. The company is currently publicly traded. With speculation for accomplishing the buy-out flying around, his stakeholders demand a plan. Creating a private Tesla company allows Musk more freedom. He can take more risks without answering to investors. Faced with skepticism and challenges, Tesla’s low-cost Model 3 is a “gamble.” Musk would no longer need investor approval to keep production flowing for the Model 3 and other projects – despite sales reports.
“Going private could…encourage [Tesla] to ramp up production of those low-cost electric vehicles. It gives Tesla the ability to invest money in expanded facilities “without having the same kind of pressure for return on investments as public stockholders,” said Michelle Krebs, an executive analyst for Autotrader.” – MarketWatch
Model 3 success
The Model 3 outsold luxury brands like BMW, Mercedes-Benz, Audi, Volvo, and Jaguar in July in the United States, leaving critics shocked (Forbes). However, its worth noting these sales cover all Model 3’s – not just the $35,000 USD model. When discussing profit margins, the low-cost Model 3 becomes a bit tricky. High-production demand isn’t yet there to lower production costs. Still, industry experts are finding they need to eat their words when it comes to projections. Detroit’s Munro & Associates did just that when doubting profitability.
“…founder Sandy Munro has reversed course. Upon further analysis, his firm has found that the sedan can be profitable. It may even have the potential to make a 30 percent margin, which would be unmatched by any other battery-powered vehicle.” – Seattle Times
Private Tesla company & Musk’s legacy
It’s no secret Musk wants to get the most amount of Tesla’s sold. He values brand saturation above all else. Tesla is a risky business model when up against increased challenges. Still, he’s managed to continually amaze everyone and created one of the most prolific technology and car companies in a short amount of time. Mass-producing the low-cost Model 3 is a lofty goal, but Musk seems determined to succeed. With a private Tesla company, Musk could follow his instincts with more efficiency.