Musk’s Twitter purchase could test Tesla’s executive bench

Elon Musk’s $ 44 billion acquisition of Twitter has raised concerns about the depth of executive talent at his more valuable company, electric car maker Tesla Inc, in the event that his attention is further shared by the social media platform.

When Musk announced the deal on Monday, Musk called Twitter the world’s “digital city square” and spoke of protecting freedom of expression, but he also revived fears that a man who once admitted to sleeping on the factory floor during the launch of the Model 3 sedan and last year. years talked about working “crazy hours” have only so much energy left over.

“Tesla feels a lot like a startup despite being a trillion-dollar company,” said Tesla investor Ross Gerber, CEO of asset management firm Gerber Kawasaki. “It’s as big or bigger than the largest companies in the world, but it does not have the management infrastructure like other companies.”

On top of that, Tesla is driving to increase production at new factories in Texas and Berlin in the middle of the supply chain and higher raw material costs, as well as get work at its largest factory in Shanghai back on track during an increase in COVID-19 cases there. Musk said in January that Tesla had too much on its plate and would not introduce new models like the Cybertruck this year.

Tesla has managed to overcome its problems, but a heavier pull of his focus from Twitter worries investors.

“I fear this will be a distraction,” said a fund manager with a significant position at Tesla, who asked not to be identified. “He’s juggling supply chains and factory delays and the expansion of the energy storage business, and this does not fit at all.”

Shares in Tesla have fallen 8% since Musk first revealed its original stake in Twitter.

Tesla could not be reached for comment, but an insider at the company, who asked not to be identified, said investors’ concerns were “exaggerated” and Musk was still strongly committed to the automaker.

Musk also heads the rocket company SpaceX, as well as brain-chip startup Neuralink and tunneling venture Boring Company.

Tesla has experienced CEO turnover before with the departure of co-founder JB Straubel in 2019 and President Jerome Guillen last year.

Founded in 2003, Tesla has grown into the most valuable automaker, but there are only two executives listed along with Musk in the management team on the company’s website, compared to 17 at General Motors (GM.N) and 11 at Volkswagen.

Tesla’s current high-profile management outside Musk includes CFO Zachary Kirkhorn and Senior Vice President Andrew Baglino, who oversee the development of the powertrain. Both are known by investors from their appearances at Tesla’s quarterly earnings conferences.

Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut, which owns a limited number of Tesla shares in accounts he manages, wondered if Musk would just install someone else to lead Twitter.

“It seems like that would be the most logical thing to do,” he said. “It looks like he has his hands full with Tesla and SpaceX.”

Gerber said Musk may need a strong No. 2 director that he has at SpaceX with President Gwynne Shotwell.

Ian Beavis, Chief Strategy Officer at car consulting firm AMCI, worries Musk’s purchase of Twitter, with its controversy over political and social issues, could even hurt the Tesla brand.

Some investors remain concerned about plans by Musk, which according to Forbes is worth $ 268 billion, to fund the Twitter deal. Twitter said Musk secured $ 25.5 billion in debt and margin loan financing and provides a $ 21 billion equity commitment. It is unclear whether Musk will sell Tesla shares to help fund the deal.

Musk owns 172.6 million shares in Tesla, and he has already borrowed against about half of his share, according to Tesla archives. If he pledges more shares as collateral to secure $ 12.5 billion in marginal loans, he could be left with about 30 million unsecured shares, according to a Reuters estimate.

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