After Settling With SEC, Musk Tries to Answer Other Question
Ignore all distractions, says Musk in an email to employees.
(Bloomberg) -- Priority number one for the embattled Elon Musk going into the weekend was striking a deal with federal regulators -- a task he achieved Saturday by agreeing to pay a hefty fine and step down as Tesla Inc.’s chairman.
Priority number two was to push as many electric cars out the door as possible before midnight Sunday, when the end of the third quarter would trigger more scrutiny than ever of his frantic bid to start earning money.
An army of Tesla-owning volunteers swooped in to help deliver cars to new buyers while Musk cheered on his employees, telling them in emails to “ignore all distractions” and that they were on the cusp of “an epic victory beyond all expectations.”
An initial verdict of feat or failure could land as soon as Monday, in the form of Tesla’s latest production and deliveries release. Investors cheered the SEC settlement, pushing Tesla shares up 14 percent to $301.01 in trading before U.S. exchanges opened.
The Musk faithful put their full support behind the quarter-end push. In the Chicago suburb of Highland Park, more than 75 people crammed into Tesla’s service center and another 50 or so waited outside. In the Los Angeles community of Marina del Rey, a steady stream of customers arrived while tractor trailers pulled in to unload vehicles that had been stored in Burbank. In Coral Gables, Florida, a showroom attendant who declined to be named said deliveries were scheduled hour-by-hour to avoid congestion.
It wasn’t immediately clear how many outlets across the U.S. were doing record volume. The one in Brooklyn, for example, was quiet Saturday morning. Tesla’s showroom in Paramus, New Jersey, was closed by 8 p.m. local time Sunday.
Others were so busy that volunteers showed up to help staff out. Andrew Doane, who has a Model S sedan, Model X crossover and Model 3 car and is president of the Tesla Owners Club of the Mid-Atlantic region, mustered club members to pull shifts at delivery hubs in Virginia and Maryland, and worked one himself.
“This weekend is the pivot point,” he said, describing it as watershed moment not just for the company but for the shift away from the internal combustion engine.
Vinod Kothapa was eager to leave the gas pump behind. He picked up a new black Model X SUV on Saturday at the delivery center in Fremont, California, just down the road from the company’s lone auto plant.
“Fossil fuels are polluting the planet and increasing global temperatures,” Kothapa said. “I want oil to be worthless.”
Rumor Mill
The rumor mill was cranking during the weekend, with speculation that Tesla locations were aiming to hand over cars to new owners at a rate of at least 120 per day. One volunteer in Austin, Texas, said on Twitter that his group was getting ready to push 240 vehicles out the door before midnight Sunday.
Cathie Wood, the founder of Ark Investments and a Tesla shareholder, tweeted that she learned of the Saturday settlement with the SEC while she was waiting to get her Model 3 in a jam-packed store in Westchester County, New York.
“That one store was scheduled to deliver 250 cars today, and no one minded the wait,” Wood wrote. “The Model 3 is from another world!”
Musk and Tesla each agreed to pay $20 million to resolve charges related to his problematic tweets about taking the company private. The company also will have to add two new independent directors and implement controls to oversee Musk’s tweeting and other communications.
Tesla delivered 18,449 Model 3 sedans in the second quarter, according to the company’s last shareholder letter. Goldman Sachs analyst David Tamberrino, who has a sell rating on the stock, estimates third-quarter deliveries of about 52,000 -- a nearly three-fold increase.
If that’s the number, Tesla could be on the verge of closing the books on its long era of losses. It’s likely to do that against long odds, said Bob Jorth of Kalamazoo, Michigan, who ordered his Model 3 in February 2017 and picked it up on Saturday.
“Big auto and big oil want him to fail. There’s a lot of corporate interest in him not succeeding,” Jorth said. He gave up his gas-electric hybrid to trade up to an all-electric Tesla. “It’s a natural progression away from the internal combustion engine, and I’m very excited.”
Cutting Some Slack
In Tysons, Virginia, Tesla employees lined up by the door, greeting customers. Rodney Tanner, a Model 3 owner from nearby Bethesda, Maryland, was among the volunteers helping out.
“What Tesla’s trying to do in terms of becoming a profitable, successful automaker is such a tough challenge,” Tanner said. “I’m here to help give them a little bit of slack and let other owners know that the end-result is amazing.”
In Bellevue, Washington, Janet Beach finally got behind the wheel of the Model 3 she ordered 18 months ago.
“I bought it without driving it, that’s how much confidence I have,” Beach said. She hasn’t lost faith in the company that made it, or in Musk. Controversy is to be expected. “There’s to be a little bit of negative commentary as he pursues his dream of changing the world.”
--With assistance from Anousha Sakoui, Laura Yin, Claire Ballentine, Sarah Foster, John Lippert, Jonathan Levin, Josh Eidelson and Bob Brennan.
To contact the reporter on this story: Dana Hull in San Francisco at dhull12@bloomberg.net
To contact the editors responsible for this story: Craig Trudell at ctrudell1@bloomberg.net, ;David Papadopoulos at papadopoulos@bloomberg.net, Anne Reifenberg
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