Ryk van Niekerk
3 minute read
7 Apr 2017
7:24 am

ANC would do well to look at Elon Musk

Ryk van Niekerk

Tesla CEO has built an empire mostly on belief in his ability. This is the type of leadership SA needs.

In one of the most explosive political weeks in South Africa since 1994, an industrial fairytale played itself out in the United States.

South African-born Elon Musk’s 15-year-old motoring company Tesla became more valuable in terms of market cap than the iconic carmaker founded by Henry Ford in 1903.

This is an incredible feat as the valuation is not based on Tesla’s earnings or expectations of short-term profits. The valuation follows a belief that Tesla’s electric technology will one day become the international motoring standard, which will define the future of electric cars around the world.

This drove Tesla’s market value on Monday to $48.7 billion (R650 billion) and surpassed Ford’s value of $45.6 billion. Tesla’s market cap is also moving in on that of General Motors ($51 billion), the largest carmaker in the US.

Compared to JSE-listed companies, Tesla would be the fifth-largest company on the JSE in terms of market cap pipped only by the international giants AB InBev, BAT, Naspers and Glencore. It is therefore more valuable than Richemont (R560 billion), BHP Billiton (R467 billion) and Anglo American (R300 billion).

Realistic or unrealistic?

Many analysts are, however, dumbfounded. Tesla has not reported a profit since it opened shop in 2003.

In fact, besides its market cap, Ford absolutely dwarfs Tesla in every single production and earnings metric (apart from its P/E ratio).

According to Bloomberg, Ford’s net income over the last five years totalled $26 billion, while Tesla reported losses of $2.3 billion. Ford’s revenue last year was R151.8 billion and in return Tesla’s top line showed $7 billion.

The David and Goliath scenario is even more pronounced when it comes to the actual production of vehicles. Tesla manufactured about 75 000 vehicles –  a fraction of the 6.65 million that rolled off Ford’s production lines. Put differently, Ford produces 90 vehicles for every single Tesla completed.

The question is how Tesla and Musk inspired investors in such a way that they continued to buy the share. They seem to follow the views of some analysts that Tesla is a technology company and therefore demands tech valuations. Many believe in the leadership of Musk. Others feel Tesla is one of several innovative emerging carmakers and that the rally will be short lived. Only the future will tell.

Lost to SA

Unfortunately, Musk is not a proud South African and from his book it is clear that he did not shed a tear when he stepped on a plane destined for the USA.

Musk is an active Twitter CEO, and frequently comments on political and economic news, but he does not comment on his home country.

Since the political nonsense started two weeks ago many South Africans have tweeted to ask him what he thinks about the political situation, but he has not responded to one. Not even a retweet.

Leadership is the key

This makes the current political mess even more frustrating. It is indicative of how South Africa continues to shoot itself in the foot. Our country has such immense potential – ranging from its people, natural beauty and resources – but somehow we cannot seem to live up to its potential. This is not only the case for the period since 1994, but from decades earlier.

It is strange that South Africa has produced so many poor leaders over decades. I can think of only one, maybe two.

Looking at the current unfolding events with the ANC, this trends is bound to continue. It is fueling distrust and a negativity among the population which perpetuates South Africa’s inability to shine.

While the Tesla CEO appears to have left South Africa behind, he has built an empire mostly on belief in his ability. This is the kind of inspirational leadership we urgently need.

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