Tesla’s Third-Largest Shareholder Willing To Provide Capital If Necessary

Elon Musk

NOV 20 2018 BY EVANNEX 7


Scottish investment firm Baillie Gifford is Tesla’s third largest shareholder, and the fund managers want everyone to know they are still bullish on the stock. Instead of obsessing about Elon Musk’s salty tweets, investors should focus on the vast opportunities that Tesla is poised to take advantage of, Baillie Gifford’s Iain McCombie told Morningstar.

*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 (Flickr: thaddeus cesari)

McCombie, Manager of the Baillie Gifford Managed fund, concedes that Musk’s antics are “a giant distraction,” but points out that the Tesla story is “partly about the genius of Musk.” McCombie says Musk’s combative statements are “an embarrassment and I wish he wouldn’t do it,” but goes on to speculate that, had the famously outspoken auto industry pioneer Henry Ford had something like Twitter to express himself with, Musk’s tweets “would be pretty mild in comparison.”

“You might not like Musk, and I’m not condoning what he did, but you can’t deny the fact that he’s done some pretty remarkable things,” says McCombie. “And that is often what a lot of entrepreneurs are like. They’re eccentric, they’re not everyone’s cup of tea and they challenge conventional wisdom.”

McCombie says Baillie Gifford is still excited about TSLA stock for several reasons. Despite short-term production problems, the California carmaker is now beginning to produce Model 3 in volume, and the new EV is already outselling comparable models from established auto brands. Tesla is now selling more cars in the US than Daimler, McCombie points out. “Daimler’s been in the market for 100-plus years, and here’s this upstart and they’re outselling them in the US. If you’d said that a few years ago, you’d probably have been locked up, but that’s happening.”

Above: Fighting the transition to digital photography led to the demise of Kodak (Source: Faisal Butt)

Legacy automakers are under pressure to catch up with Tesla, McCombie believes, and the nascent transition to electric vehicles could turn out to be their “Kodak moment.” “They spent hundreds of years building up their know-how in internal combustion engines and they do a great job with that, but what happens if all of us are suddenly saying ‘oh, I want an electric car?’ Suddenly, that know-how is useless,” says McCombie. “What happened with Kodak is they actually discovered the digital camera, but they buried it because it was too frightening for them. They thought it would kill their film business. But the fact that they didn’t innovate killed Kodak.”

“[Traditional automakers] have built wonderful businesses for themselves, but what happens when the business is changing? That’s why your Tesla is exciting, because they don’t have those legacy issues.”

As do most serious observers of the auto market, McCombie dismisses the idea that Big Auto’s so-called Tesla-killers pose an existential threat to the Silicon Valley startup. “We don’t think it’s all about Tesla owning the market,” he says. “We expect other people to come into the market. But what we’re thinking is that the market will expand dramatically.”

Above: Baillie Gifford is willing to commit more capital to Tesla if it turns out that Elon Musk needs it (Youtube: Wochit News)

Baillie Gifford is supporting its optimism about Tesla with more than just words. Nick Thomas, a Partner at the Edinburgh-based firm, recently told the Times of London (via Reuters) that it would be willing to invest more cash in the company if necessary. “If [Elon Musk] needs more capital we would be willing to back him,” said Thomas. Discussing Tesla, Stuart Dunbar, another Partner at Baillie Gifford adds (via Financial Times), “We’re long-term believers in it… the company is making fantastic operational progress.”


Written by: Charles Morris; Source: MorningstarReutersFinancial Times

*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.

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7 Comments on "Tesla’s Third-Largest Shareholder Willing To Provide Capital If Necessary"

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Makes sense. Considering the source of this article it’s worth taking with a grain of salt. But regarding Musk- it boils down to whether you choose to look at his exceptions or instead his norms. The guy is a savant. Many at his intellectual level don’t do well socially and have emotional issues. But what’s the ROI? And what’s the alternative?

Pump pump pump pump pump

Stick to looking at the product, the rate of expansion, and the impact on the EV and LICE markets. Then you know this company is doing things no one else can, and thus the decision to buy in, or buy more, becomes obvious.

“….the company is making fantastic operational progress.”

Yes, yes and yes. 2018 was very extreme in terms of FUD against Tesla. And I bet 2019 is going to be more extreme. Good to know that Tesla has also very very heavy people/organizations as backup.

Maybe. There’s also a lot of reasonable doubt concerning the company. It certainly doesn’t look to me like the company’s operations is now generating cash at a rate sufficient to do everything that is on the roadmap — new factories in China and Europe, megacharger network, launch the semi, double capacity in supercharger network, develop and launch Model Y, the semi, Roadster 2, a pickup truck — to name a few capital-intensive points ahead. IIRC they’ve got just over 3 billion in cash, with a bit over 2 billion of debt coming due over the next 18 months or so. Elon still says they don’t need to raise capital. That makes little sense to me. I’m glad to see a major investor say they’re willing to inject more, because to my mind, it seems clear their chances of success are reduced quite a lot if they are limited to invest only what they generate. Until Tesla is able to generate enough cash to not just go round, but keep growing and innovating, I think it’s quite legit to ask some critical questions. Model 3 was always said to be the car that would make or break Tesla. To my mind,… Read more »

I sure hope Elon’s tweets aren’t anything like what Henry Ford’s would have looked like, had he had access to the technology! Ford is almost as famous for being a Nazi and a bit of a psychopath as he is for being a genius.

Hitler was a fan:

Hitler writes “Every year makes them [American Jews] more and more the controlling masters of the producers in a nation of one hundred and twenty millions; only a single great man, Ford, to their fury still maintains full independence.”


> Tesla’s third-largest shareholder believes in Elon Musk and thinks people should stop dwelling > on trivial negatives and look at big picture successes. People dwell on the trivial negatives because they’re fixated on Musk. There are also plenty of people fixating on trivial positives for the same reason. Underneath it all is a man with a phenomenal amount of drive and vision, a good helping of luck, and a bad twitter habit. It’s a shame that a lot of people can’t see beyond the twitter account. Musk is frequently promising the impossible and then being taken to task when he achieves it later than he promised. The things he’s achieved are not small beans, and they have been absolutely declared to be impossible by experts in the fields. They’re world-changing achievements. Multiple world-changing achievements. And yet he gets criticized. The real story shouldn’t be Musk, it should be the company. If you’re shorting Tesla because you hate Musk or think he’s a fraud, or whatever, then you need to re-evaluate, because trading stocks based on emotion is always a bad idea, and shorting is a risky game at the best of times. Likewise, if you’re long on Tesla because… Read more »