Entrepreneur Elon Musk
Introduction
Elon Musk’s figure is a reference for many entrepreneurs. He is a leader, a visionary. It cannot be said that he would raise his empire from nothing, but his companies (Tesla, Spacex or Solarcity) have built under a totally innovative point of view in many of its aspects. In the economic too. The traditional strategy of any company, quoted or not, consists in getting net benefits. That is, generate income, deduce the exploitation costs, then the operations, and finally other types of costs not associated as purely to the business as amortizations or financial costs.
Developing
After all these items we obtain a net benefit that is what our shareholders look (because the dividends are distributed) and for which we are valued in the market. Obviously Tesla, being a quoted company, has the same structure, but with some peculiarities … if we look at the Tesla income structure is a spectacular company in pure growth phase. From 2016 to 2017 sales increased by 2.950 million, mainly for the sales of Model X and Model S. The increase in storage and solar energy systems is also incredible, 515% and is due in large part to the integration that was made of SolarCity in the company.
When analyzing the evolution of costs, the thing changes. While the company manages to have a good gross margin, 23%, this is decreasing year after year. The thing is even more complicated when we start considering how much Musk’s structure costs. General and administrative costs suppose 2.$ 500 million and spend $ 470 million in debt interest payments. R&D expenses amount to 1.378 million, 12% of income. BMW spent $ 6 billion, while it had $ 98 billion revenue. That is, its R&D spending meant 6% of its income, half.
As a result of the above, in its operational part Tesla lost almost 750 million dollars in 2016 and 2.220 million dollars in 2017. BMW, despite having a minor gross margin (BMW 20.2% vs. tesla 23%), they manage to have a much more efficient general and investment structure ending their fiscal exercises with positive results. Continuing with the comparison, BMW finished its exercise with net benefits of 8.700 million euros, 8.8%. The big difference between Tesla and BMW is its great innovative spirit. Far from a traditional structure, Musk seeks to innovate in all its ways of managing, having in many cases succeeds, but also many errors.
Musk has revolutionized the market, has put pressure on producers creating a demand for electric cars that before its arrival did not exist. His contribution to the sector is undoubted. The doubt now is whether to arrive before will give you enough advantage to take the market and gain competitive advantage. BMW already sell electric cars in more than 70 countries and enjoy a structure that Tesla cannot access. In addition, these companies rely on their traditional business income to invest in new technologies without having too much their own company.
conclusion
Tesla does not have those resources. Musk enjoys the advantage of the first, risk of risk and being a tireless worker, but he has to achieve long -term sustainable results. With their current numbers their stay in the stock market is in danger and investors begin to look at him suspicious. It also begins to weigh about him the doubt of the great leader. In a world where industries are leaded by expert executives in forms of management, the arrival of a profile like Musk’s can be revolutionary, but sometimes it is not sustainable in the long term.
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