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Jul 11, 2019

Top Tesla investor tries again to get Elon Musk to fine-tune strategy

Tesla's Top Investor Urges Musk to Fine-Tune Market Communication


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For the third time in the past year, Tesla Inc.’s (TSLA.O) largest outside shareholder is openly advocating for Elon Musk to fine-tune his approach to communicating with the market.

There’s no need for Musk, an avid Twitter user, to be contained by a social-media blackout, James Anderson, a partner and portfolio manager at Baillie Gifford & Co., told Bloomberg Television. But there are ways the chief executive officer could change how he talks about Tesla that would be “fruitful,” Anderson said in an interview at Allen & Co.’s Sun Valley conference.

“One should, on the whole, try not to give too many targets that may not be attainable, with specific dates at establishment,” Anderson said Wednesday. “And I don’t think one wants sudden reversals of policy. I hope that’s not too much for a major shareholder to ask.”

Anderson, whose firm holds 13.2 million Tesla shares, said his comment about making goals applies to robotaxis. Musk, 48, said in April that by the middle of next year, 1 million Teslas will be on the road that are fully capable of driving themselves. Weeks later, Musk said autonomy could turn Tesla into a “half-trillion-dollar market cap company.”

Musk, who owns 34.1 million Tesla shares, has made several strategic U-turns in the past year. Ten days after blindsiding many employees with a plan to close all but a small number of the company’s stores, Musk backtracked. And within a span of less than three weeks last fall, he tweeted that he would try to take Tesla private, then abruptly abandoned the pursuit.


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James Anderson. (Patrick T. Fallon/Bloomberg)

Call for Peace

Less than a month before Musk’s take-private tweets, Anderson called for a period of “peace and execution” for Tesla, which was struggling at the time to ramp up production of the Model 3 sedan. In March of this year, Anderson said Musk should be “enabled to step back from having to feel so driven to comment” about Tesla, adding that the CEO “can be in the background.”

While Tesla shares have fallen 28 per cent this year, they’re outperforming Chinese electric-vehicle challenger NIO Inc., whose New York-listed stock has plummeted 42 per cent. Baillie Gifford is the Shanghai-based company’s top shareholder, with a 13 per cent stake, according to data compiled by Bloomberg.

“We believe in the process of exponential technologies over periods of 10 years and more,” Anderson said of Baillie Gifford’s investment case for both NIO and Tesla. “It’s frankly close to inevitable -- nothing’s ever inevitable, but close to inevitable -- that electric vehicles will be a dominant factor in 10 years’ time.”

Tesla slipped 0.3 per cent to US$238.25 as of 8 a.m. Thursday in New York, before the start of regular trading. NIO was unchanged at US$3.68.

Buffett’s View

Anderson isn’t alone in weighing in on Musk’s outspokenness. In April, fellow billionaire Warren Buffett questioned whether the Tesla CEO needed to tweet so much.

“He’s a remarkable guy. I just don’t see the necessity to communicate,” Buffett said in an interview with Yahoo Finance. He added that Musk had “room for improvement” in behaving like a CEO.

For all the suggestions he’s publicly made to Musk, Baillie Gifford’s Anderson is far from a critic.

“The last thing we want to do -- and I would be resilient about this -- is to in any way crimp the great gifts and extraordinary achievements that Mr. Musk does have,” he said.