Tesla CEO Elon Musk’s Privatization Plan Follows Henry Ford’s Model

AUG 20 2018 BY EVANNEX 26

ELON MUSK’S PRIVATIZATION PLAN FOLLOWS HENRY FORD’S MODEL

Pundits are calling Elon Musk crazy (What else is new?) for his plan to take Tesla private – apparently forgetting that this is the guy who did crazy things like launching rockets into space and creating the electric vehicle industry.

*This article comes to us courtesy of EVANNEX (which also makes aftermarket Tesla accessories). Authored by Charles Morris. The opinions expressed in these articles are not necessarily our own at InsideEVs.

Above: Elon Musk and Henry Ford (Image: Inverse)

Crazy or not, the privatization plan is not unprecedented. As Gary S. Vasilash writes in Autoblog, a similar drama played out 100 years ago.

“Henry Ford, who was to cantankerousness what Musk is to showmanship, was annoyed with minority shareholders who wanted things such as higher dividends to be paid out during the 1910s,” Vasilash writes. “The way they thought this could be accomplished was through raising the price of the Model T. Henry was completely outraged by having anyone tell him how to run his business.”

Sounds familiar so far, but the parallels actually go even deeper. Two shareholders, John and Horace Dodge, who had been associated with Ford since 1903, and owned 10 percent of the company, sued Henry Ford in 1917. They won their case, and Ford was ordered to dole out the dividends demanded by the Dodges.

In 1919, the furious Ford announced that he would establish his own car company to compete with the existing Ford Motor Company. He already owned 58 percent of Ford stock, the “crisis” made shareholders eager to sell, and Henry was happy to buy. He, his wife Clara, and their son Edsel ended up buying the company for around $106 million. The Fords had to borrow most of the funds, but now the family was firmly in control (and remains so to this day, despite the fact that the company returned to public ownership in 1956).

Above: A look at the Tesla Model S alongside a Ford Model T (Source: Digital Trends)

Ford’s rationale for taking his company private is strikingly similar to the reasons Musk offered in a recent message to Tesla employees: “The reason for doing this is all about creating the environment for Tesla to operate best. As a public company, we are subject to wild swings in our stock price… Being public also subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long term.”

“Basically, I’m trying to accomplish an outcome where Tesla can operate at its best, free from as much distraction and short-term thinking as possible, and where there is as little change for all of our investors, including all of our employees, as possible,” Musk wrote.

Freeing the company to take a more long-term view is arguably a sound financial move. However, Mr. Vasilash suggests that something deeper is at work here. Elon Musk isn’t a typical CEO – he’s passionate about his company and its mission. “Some people own and look at spreadsheets,” Vasilash writes. “Some people own and put their offices – or beds – in their factories as they create something.”

Above: Elon Musk and his views on – and similarities with – the iconic Henry Ford (Youtube: ImagE Native)

A wise person once said that accomplishing any truly revolutionary thing requires a level of commitment that appears to most people as insanity. Vasilash points out that Henry Ford was also a man who was “committed to the point of the extreme,” and believes that Elon Musk is of the same mold. “In the cases of Ford Motor way back when and Tesla right now, the leaders thought or seem to be thinking about more than earnings. Passion is something this industry can use more of.”

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Written by: Charles Morris; Source: Autoblog

*Editor’s Note: EVANNEX, which also sells aftermarket gear for Teslas, has kindly allowed us to share some of its content with our readers, free of charge. Our thanks go out to EVANNEX. Check out the site here.

Categories: Ford, Tesla

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26 Comments on "Tesla CEO Elon Musk’s Privatization Plan Follows Henry Ford’s Model"

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Bruce Sanders
Bloomberg News was speaking about Mr. Musk this morning. He is now clearly hurting the public image of his company and now possibly without a doubt; public sales of its products. Who in their right mind would be rushing to a Tesla dealership right now with all of the current turmoil and confusion? His video interview last week in which he spoke of a $25,000 vehicle just adds fuel to the fire. His twitter post at 2:30am Sunday morning stating “he just got home from the office” is yet another negative – he is constantly giving the world the impression that Tesla is a troubled company, but he will fix it if we give him enough time and investment. Enough! Mr. Musk is gold, no doubt – not enough praise can be directed towards him; however he is now in way over his head. It’s time to bring in a professional CEO with extreme manufacturing knowledge. For example, he should try and hire Mary Barra away from GM or Allen Mually the former CEO at Ford. The problem with the potential new CEO is basic however: Will Mr. Musk give up operational control of his company?
dan

Why would Mary Barry leave GM to run Tesla? The reason Tesla is having a hard time attracting executive talent is that the board is completely subservient to Musk. Everybody on the board is his friend or depends on him in some way. They will never overrule him on any leadership decision and don’t expect the tweeting to end. Effective leaders don’t usually walk into places that are leadership cults like that. For what it is worth, Tesla’s current structure leaves them with Musk at the helm, whether they like it or not. If a different CEO comes on board, that would be after a complete buyout, which in this scenario might be a hostile takeover.

Bruce Sanders

I’m not saying Ms. Barra would leave GM – the problem as we have both stated, is who would put their career on the line to work for/with/against Mr. Musk. The answer, I think we both agree – is almost no one. A big problem for sure.

REXisKing

Why would we want Ms. Barra’s Bolt “leadership” when we can Have Musk: Model S, Model X, Model 3, Tesla Semi, and now a new Roadster.

LOL. Mary Barra. LOL.

Bruce Sanders

Apparently you are sleeping under a rock. Forget the current news, you forgot the latest from Mr. Musk, not to mention the “Y” CUV.

“Speaking to YouTube host Marques Brownlee, Tesla chief Elon Musk said that he expects the company to bring a $25,000 vehicle to market in around three years.”

William

Whatever possible scenario that you may be considering, the board of directors is going to have to get someone to help “Musk at the helm”. This additional leadership is needed, as Tesla is entering new uncharted territory. This only benefits Tesla operations, as it becomes a manufacturing company on three continents, instead of just only one.

CDAVIS

@Bruce Sanders said: “…Who in their right mind would be rushing to a Tesla dealership right now with all of the current turmoil and confusion? …”
————-

Lol….. is that you Jim Chanos?… the anti-Tesla FUD campaign keeps rolling on. Approaching comical… as if Black Knight was a TSLA shorter.

In the mean time… Tesla is selling more EVs in North America and Western Europe than any other car maker by a wide margin.

Yesterday rolled past 50K miles on my 2015 Tesla Model S… love the car! Also love our more recently acquired Model 3… amazing car! Three Model 3 now in my neighborhood.

Where can I find those Tesla dealerships?

Lou Grinzo

There’s one next to every GM company store, or didn’t you notice?

Lou Grinzo
Again: Musk has done a truly astonishing job of taking Tesla from an idea to what we see today. He defied the odds and nearly 100% of the so-called business and automotive experts. That took vision and determination and guts and business smarts and gobs of technical intelligence. It’s hard to imagine anyone else pulling this off. But none of that means he’s the right guy to get them through production/delivery hell and then continue to grow the company. As desperately as I want to see Tesla succeed and push the entire worldwide car industry in the direction we clearly need, I think the only rational conclusion is that he is starting to become a drag on the company. I am NOT saying it’s a net drag, meaning the negative outweighs the positive. But the drag is there and becoming greater. Many people I talk to about EVs have concluded he’s unhinged and needs some serious time off or a COO or to sell the company and leave altogether. I think time off + a strong COO will fix everything. Oh, and a head of PR/comms who has the authority to slap Musk’s phone out of hands and give him… Read more »
REXisKing

Your comment proves exactly the opposite of what you think it proves. Yes, we want the CEO to be at the company at 2:30 AM if need be. We don’t want some bean-counter CEO to kill Tesla with ultra-slow growth, like Mary Barra at GM, with nothing after the Bolt and the Bolt with lots of unresolved issues, like a cheap suspension and a cheap interior for a $40,000 car.

ffbj

It’s sort of like asking the plague infected rats to go back to India.

William

Henry Ford as a person was far from perfect, as history has proven. Ford Motor Co. seems to have many newly emerging flaws as of late, as well. Still, American capitalism, with her tarnished legacy intact, is the benchmark that many nations still strive for, in becoming a success in world markets.

Ford Trucks kind of just speak for themselves in their own success.

EVen if Ford is probably still years away from having a PHEV F-150, with mediocre Prius Prime EV type range, Ford tough is just plain hard to beat. Just ask GM.

Basementman

Sounds eerily similar to what they said about Steve Jobs before replacing him with John Scully. How did that work out for Apple?

ffbj

Ford was probably able to buy Ford outright due to the financial panic of 1919.

Bunny

I stopped reading when this article stated Elon created the electric vehicle industry. Seriously? These articles by far hurt your site more than help it.

John

To be fair, I think the statement was speaking to Musk starting the first battery only EV company, which in turn kick-started the whole legitimate EV revolution. If I’m wrong in my view of Musk and Tesla’s impact, please share your point of view.

Bunny
I’d say Thomas Parker was the one person who actually CREATED the electric vehicle industry back in the 1800’s when France and the UK were actually leading in electrical vehicles. By 1900 EV’s had 38% market share in North America. I understand how everyone likes to rewrite history on others successes but on electrical vehicles as an industry, Tesla hardly created anything, I mean even the fact they lost their lawsuit against Fisker back at the beginning of the design of the model S, they didn’t even create their own design let alone the whole industry. I’m not anti Tesla, even if you ignore EVERYTHING that was done EV wise from the 1800’s thru 2010 (Which covers a lot of cars, trucks, companies, concepts, ideas, successes and failures, don’t forget the war years) Just use inside EVs sales charts yearly both domestic and worldwide when available, if Tesla created the industry, then their sales vs their competitors historically are truly lacking. I wish Tesla the best, but they didn’t create this industry by any stretch of the imagination! They just didn’t. They will go down in history for advancing this industry in the li-on battery era. Maybe more, but never… Read more »
ekutter

There would be no real electric car industry today without Tesla. Do you believe otherwise? Most manufacturers (especially the European luxury brands) are only getting involved because Tesla is eating into their market share. The american, Japanese, Korean brands are only half ass efforts, although hopefully gaining steam. I should be picking up my new Bolt next week, but you’re kidding yourself if you think it would have even been developed without Tesla leading the way. Even for that I have to drive over 100miles to get mine because the local Chevy dealer here in central Oregon isn’t a “Bolt dealer”.

CDAVIS

@Bunny said: “I stopped reading when this article stated Elon created the electric vehicle industry…”
———-

Even Bob Lutz credits Tesla for kicking off the Electric Car Revolution… which in turn is transforming the ICE car industry into the electric car industry.

There would not have been a Chevy Volt or Bolt if not for Tesla… according to Bob Lutz.

Bunny

Are you saying EVs are new? Ev’s got replaced by ICE which now is going to get replaced by EVs again because battery technology got better. Nothing more , nothing less.

So what did Tesla actually create industry wise? , not “ revolution”
But actual industry? They didn’t, they weren’t even around back at the actual creation of the EV industry. You can’t rewrite factual history.

antrik

Factual history is that the EV industry you are talking about was dead by the 1920s. It has as much to do with today’s EV industry as the ancient Romans have with today’s concrete industry.

Brandon

As always, great journalism and great article Charles Morris!

Will

Ford was not a good Apple and it was his son that saved the company

angelo festa

Little Red Riding Musk was walking to Grandmother Tesla’s house in the woods. He was totally unaware that he was being followed by the big bad wolf. When he arrived at his destination, also known as the House of Saud, he innocently entered with his basket full of investors. The wolf, was the notorious blaggard Petroleum, famous for wreaking havoc on the world’s climate. Petroleum quickly put Musk at ease with offerings of piles of money in exchange for the basket of investors. Musk put aside all that his mother taught him about the depth of evil of this character Petroleum.
Anyone care to finish this? Consorting with the enemy is not my cup of tea.

TomArt

“who did crazy things like launching rockets into space [and landing them on a pitching drone ship in the middle of the ocean], and creating the electric vehicle industry” – there, fixed it for you. 🙂