Chastened, but still in the driver’s seat
“That was quick,” said Peter Henning in Tesla chief Elon Musk last week faced the possibility of being banned for life from running a public company, after the Securities and Exchange Commission accused him of misleading investors. His crime? An August tweet in which he falsely claimed to have “funding secured” for a buyout of Tesla at $420 a share. But just two days after he was sued by the SEC, the mercurial entrepreneur agreed to a settlement that will see him pay a $20 million fine and step down as Tesla’s chairman for three years. That’s a year longer, and $10 million more, than a deal Musk had arrogantly turned down earlier in the week. Critics accused the SEC of “letting him off easy,” said David Gelles, also in the Times. But regulators decided to balance the penalty for violating securities law with investors’ fervor for Musk, who is Tesla’s “animating force.” Within hours of the settlement, Musk was firmly back in the driver’s seat, sending workers exhortations to keep “going super hard-core”—at 1:08 a.m. The CEO’s behavior “remains a wild card,” and Tesla’s board must now “babysit Musk to make sure he doesn’t say anything that could get him or the company in trouble.”
The SEC’s deal with Musk is sensible and correct, said Matt Levine in Bloomberg.com. But man, it would have been something to see Musk and the government slug it out in court. His claim that he’d secured funding to take Tesla private was an “obvious and stupid” fraud. Still, though his statements were clearly false, Musk wasn’t really trying to deceive investors. He was just being himself: “a character, a dreamer, an unfiltered Twitter addict, and a guy with a long history of promising a lot of wildly ambitious nonsense and delivering half of it.” Yes, the SEC’s job is to make sure shareholders can rely on what CEOs say. But if you looked over Musk’s Twitter feed—full of tweets about flamethrowers and flights to Mars—and “you took it too seriously,” that’s “80 percent on you.”
Even without the latest controversy, Tesla “has been driving along the edge,” said Tim Higgins in The Wall Street Journal. The company has faced “production hell” trying to sharply ramp up deliveries of the Model 3, its first mainstream sedan. Settling with the SEC may let Musk focus on those promises. Between latenight tweets and fights with regulators, Musk has been working furiously to meet his promise of increased production. “From pulling all-nighters to micromanaging engineering tasks, Musk has acted more like the head of a startup than CEO of an automaker with a market value that rivals General Motors’.” That frantic pace may be paying off, said Dana Hull in Bloomberg .com. After two years of struggles, Tesla production is surging— a “big step toward Musk’s profit goals.” The company delivered more than 83,500 vehicles in the third quarter, twice the total for the previous three months. Despite all the costly distractions generated by Musk’s Twitter account, this could be a “watershed moment” for Tesla’s business.