In early April, Tesla surpassed both Ford and General Motors to become the most valuable American car company, valued at around $53 billion. Over the last decade, the market has seen dozens of “green” car companies rise and fall, so why has Tesla been able to withstand the test of time?
One reason is Tesla’s new Model S sedan, which earned a score of 99 out of 100 from Consumer Reports. The magazine said Model S is “brimming with innovation” and has “impressive attention to detail.” In the first two days of availability, Tesla had 276,000 people sign up to buy Model S. To put in perspective, Honda sells 300,000 Accords per year.
While the company’s cars are innovative and forward-thinking, the real secret to Tesla’s success is Elon Musk. Most car companies were founded by experienced car makers, but Musk’s background is in physics and business. In 2002, he sold his former company PayPal to ebay for $1.5 billion, and he runs American aerospace manufacturer and space transport company, SpaceX.
Musk knew Tesla wouldn’t survive only selling electric cars — so, over the years he’s teamed up with other automakers to develop new vehicles and the company sells battery packs to other automakers like Toyota. The Japanese automaker worked with Musk to develop the new plug-in Rav4, and has invested over $50 million into Tesla.
Musk is business savvy, which is appealing to investors who are always thinking about the next step. His real strength, however, is his unwavering positivity.
He continually convinces investors and the public to look at the future when judging Tesla’s success rather than looking at its past performance. The idea might seem crazy, but so far it’s working. Tesla lost millions last year, but saw a 40 percent increase in value after the Consumer Reports review of Model S.
In August 2016, Musk told 60 Minutes his goal is to make an electric or solar powered vehicle for under $30,000 by 2025, which is huge. Right now the least expensive options are around $35,000 but the industry mean is closer to $50,000. Musk wants “green” vehicles to be an option for every potential car owner.
“I would guess it had as much to do with relaunching the rocket as it does Tesla’s business,” Sam Abuelsamid, a senior research analyst at Navigant told The Verge. “Since you can’t buy SpaceX stock, Tesla is the only way for people to invest in the Musk cult of personality.”
Musk’s success with SpaceX and Tesla is a product of his ability to think about fixing problems he may have in the future and his incredibly forward-thinking business model. He completely devalues any past performance and solely focuses on the next task at hand.
As graduation day looms for many University students, Musk’s model of positive, forward-thinking business could be a tool for inspiration. Often, students are young and inexperienced, but the ability to see where a business should go is a compelling trait that young people should be able to use.
Musk’s approach to business and life should be the new way of thinking. A lot of business talk in the last year has been about saving industries that are dying. Instead, Musk looks to develop ways to change old industries in order to fit a more forward-thinking business model.
Abbie Shull is a 23-year-old mass communication junior from St. Louis, Missouri.