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HIS TO LOSE

Now is not the time to underestimate Elon Musk

CEO of Tesla Motors Elon Musk speaks at an environmental conference at Astrup Fearnley Museum in Oslo, Norway April 21, 2016.
Reuters/Scanpix/Heiko Junge
Preaching to the choir.
This article is more than 2 years old.

Elon Musk has wowed the world with sleek, high-tech, desirable automotive design, but he knows the proving ground has shifted. Now he needs to start making reliable cars—and a lot of them.

On May 4, Musk said Tesla would produce half a million cars in 2018—two years ahead of the already-sonic schedule—and would double that volume in 2020. ”We are hell-bent on being the best manufacturer on Earth,” Musk said.

The response from Wall Street? Tough. Tesla is “a cash-hungry, start-up unicorn,” Barclays’ Brian Johnson sniffed, forecasting a 25% plunge in its share price. Indeed, there’s no good reason why Tesla, with $4 billion in 2015 revenue, should have a market capitalization of $27 billion. That’s half the market value of Ford, which had sales of $149 billion last year.

But if Musk can get Tesla’s manufacturing right, he stands a serious chance of truly shaking up the gasoline-propelled transportation world and replacing it with electric drive. And his best opportunity for that is the Model 3, the $35,000 sedan that has fetched almost 400,000 pre-orders since its March 31 unveiling.

It’s true that Musk is unlikely to meet his own late 2017 deadline for delivering the Model 3. His earlier models have come one, two, and almost four years past deadline; there’s little reason to believe his timing on the Model 3—or on any of the stretch goals he announced this week—will be much better.

Yet, though Musk has been late, he has also eventually met every major goal he has set for Tesla. In focusing now on Tesla’s manufacturing, he sends a clear message: No one knows better than he that the electric car race is now his to lose.

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