Elon Musk’s Twitter deal could be a test of Tesla’s executive power

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SAN FRANCISCO — Elon Musk’s decision to buy Twitter for $44 billion has raised concerns about the depth of executive talent at his more valuable company, electric vehicle maker Tesla Inc, in case his attention is further divided by the social media platform.

In announcing the deal on Monday, Musk called Twitter the world’s “digital town square” and spoke of defending free speech, but he also rekindled fears that a man who once admitted to sleeping on the factory floor during the launch of the Model 3 sedan and last year, when he talked about “crazy hours” of work, he doesn’t have much energy.

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“Tesla is very much like a startup, despite being a trillion-dollar company,” said Tesla investor Ross Gerber, chief executive of asset management firm Gerber Kawasaki. “It’s as big or bigger than the largest companies in the world, but it doesn’t have the same management infrastructure as other companies.”

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On top of that, Tesla is looking to ramp up production at new plants in Texas and Berlin amid supply chain disruptions and higher raw material costs, and to restore operations at its largest plant in Shanghai during the COVID-19 surge. cases there. Musk said in January that Tesla had too many things to worry about and wouldn’t be releasing new models like the Cybertruck this year.

Tesla managed to get ahead of its problems, but stronger attention from Twitter worries investors.

“I’m afraid it’s a distraction,” said one fund manager in a senior position at Tesla, who asked not to be named. “He’s juggling supply chains, factory delays and the expansion of the energy storage business, and it’s completely out of line.”

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Tesla shares have fallen 8% since Musk first revealed his original stake on Twitter.

Tesla could not be contacted for comment, but a company insider, who asked not to be named, said investors’ concerns are “exaggerated” and Musk is still actively working with the automaker.

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

Tesla has already seen personnel changes with the departure of co-founder J. B. Strobel in 2019 and president Jerome Guillen last year.

Tesla, founded in 2003, has grown to become the most valuable automaker, but the company’s website lists only two executives with Musk, compared to 17 at General Motors and 11 at Volkswagen.

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Musk’s current senior leadership includes chief financial officer Zachary Kirkhorn and senior vice president Andrew Baglino, who is responsible for powertrain development. Both are known to investors through their appearances on Tesla’s quarterly conference calls.

Robert Pavlik, a senior portfolio manager at Dakota Wealth in Fairfield, Conn., who owns a limited amount of Tesla shares in the accounts he manages, wondered if Musk would simply appoint someone else to lead Twitter.

“That seems to be the most logical thing,” he said. “Looks like he’s got a lot to do with Tesla and SpaceX.”

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Gerber said maybe Musk needs a strong #2 executive like he’s at SpaceX with President Gwynn Shotwell.

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Ian Beavis, director of strategy for automotive consultancy AMCI, fears that Musk’s purchase of Twitter, with its political and social divisions, could even hurt the Tesla brand.

Some investors remain concerned about plans for Musk, who is worth $268 billion according to Forbes, to fund a deal with Twitter. Twitter said Musk received $25.5 billion in debt and margin debt financing, as well as $21 billion in equity. It’s not yet clear if Musk will sell Tesla shares to fund the deal.

Musk owns 172.6 million Tesla shares, and according to Tesla documents, he has already borrowed about half of his shares. If he pledges more shares to secure $12.5 billion in margin loans, Reuters estimates, he could be left with about 30 million shares outstanding.

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