Tesla board member says Musk doesn’t mind bankruptcy if a rival builds a better car: ‘That’s his philosophy’
Elon Musk remarked that he wouldn’t mind Tesla going bankrupt if it means a rival company builds a better car, according to a member of the firm’s board.
“I disagree whenever Elon says I don’t mind Tesla getting into bankruptcy if somebody else comes up with a better car,” Hiromichi Mizuno, chief investment officer of the Japan Government Pension Investment Fund, told CNBC’s Dan Murphy at the World Government Summit on Tuesday.
“I think that’s his philosophy and Tesla’s philosophy,” said Mizuno, who was chosen to join the company’s board in April 2020.
Tesla did not immediately respond to a CNBC request for comment.
Musk has previously said that the automaker could have gone bankrupt multiple times in its almost 20-year history. In November 2020, Musk said the company was “about a month” away from falling into bankruptcy in the run-up to the production of its Model 3 car, from mid-2017 to mid-2019.
In a separate interview with a Tesla owners club, Musk said that keeping the company out of bankruptcy was “overwhelmingly” his concern, as the firm faced production disruptions because of lockdowns in China. He also remarked that automakers generally “desperately want to go bankrupt.”
Adding to his many other ventures, including space exploration firm SpaceX, Musk last year purchased Twitter and has been pursuing drastic strategic changes — from mass layoffs to an aggressive drive toward profitability. Investors question whether Musk is getting distracted, at a time when Tesla faces increased competition, macroeconomic uncertainty and regulatory scrutiny.
Reflecting on Musk’s mounting workload, Mizuno joked that he was unsure whether the enigmatic billionaire is a “human or alien.”
Nevertheless, Mizuno backed Musk and suggested that he admired the tech magnate’s tenacity. “He seems to have incredible bandwidth over his work.”
He’s not the only Tesla backer throwing their weight behind the firm’s CEO. Last month, David Wallerstein, chief “eXploration” officer at Tencent, said that he still counts on Tesla “to keep blowing our minds with what they do with technology,” despite Musk’s distractions. The Chinese tech giant has owned a 5% stake in Tesla since 2017.
Although Tesla has made progress in reaching production and sales in the hundreds of thousands — last year, the company delivered 1.31 million vehicles — over 80% of industry sales still come from cars that aren’t fully electric, Mizuno added.
According to a Tesla Semi customer, the electric truck program is suffering more delays and a price increase that is described as “dramatic.”
Tesla Semi has seen many delays, more than any other vehicle program at Tesla.
It was initially unveiled in 2017, and CEO Elon Musk claimed that it would go into production in 2019.
In late 2022, Tesla held an event where it unveiled the “production version” of the Tesla Semi and delivered the first few units to a “customer-partner”: PepsiCo.
More than 3 years later, the vehicle never went into volume production. Instead, Tesla only ran a very low volume pilot production at a factory in Nevada and only delivered a few dozen trucks to customers as part of test programs.
But Tesla promised that things would finally happen for the Tesla Semi this year.
Tesla has been building a new high-volume production factory specifically for the Tesla Semi program in a new building next to Gigafactory Nevada.
The goal was to start production in 2025, start customer deliveries, and ramp up to 50,000 trucks yearly.
Now, Ryder, a large transportation company and early customer-partner in Tesla’s semi truck program, is talking about further delays. The company also refers to a significant price increase.
California’s Mobile Source Air Pollution Reduction Review Committee (MSRC) awarded Ryder funding for a project to deploy Tesla Semi trucks and Megachargers at two of its facilities in the state.
Ryder had previously asked for extensions amid the delays in the Tesla Semi program.
In a new letter sent to MSRC last week and obtained by Electrek, Ryder asked the agency for another 28-month delay. The letter references delays in “Tesla product design, vehicle production” and it mentions “dramatic changes to the Tesla product economics”:
This extension is needed due to delays in Tesla product design, vehicle production and dramatic changes to the Tesla product economics. These delays have caused us to reevaluate the current Ryder fleet in the area.
The logistics company now says it plans to “deploy 18 Tesla Semi vehicles by June 2026.”
The reference to “dramatic changes to the Tesla product economics” points to a significant price increase for the Tesla Semi, which further communication with MSRC confirms.
In the agenda of a meeting to discuss the extension and changes to the project yesterday, MSRC confirms that the project went from 42 to 18 Tesla Semi trucks while the project commitment is not changing:
Ryder has indicated that their electric tractor manufacturer partner, Tesla, has experienced continued delays in product design and production. There have also been dramatic changes to the product economics. Ryder requests to reduce the number of vehicles from 42 to 18, stating that this would maintain their $7.5 million private match commitment.
In addition to the electric trucks, the project originally involved installing two integrated power centers and four Tesla Megachargers, split between two locations. Ryder is also looking to now install 3 Megachargers per location for a total of 6 instead of 4.
The project changes also mention that “Ryder states that Tesla now requires 600kW chargers rather than the 750kW units originally engineered.”
Tesla Semi Price
When originally unveiling the Tesla Semi in 2017, the automaker mentioned prices of $150,000 for a 300-mile range truck and $180,000 for the 500-mile version. Tesla also took orders for a “Founder’s Series Semi” at $200,000.
However, Tesla didn’t update the prices when launching the “production version” of the truck in late 2023. Price increases have been speculated, but the company has never confirmed them.
New diesel-powered Class 8 semi trucks in the US today often range between $150,000 and $220,000.
The combination of a reasonable purchase price and low operation costs, thanks to cheaper electric rates than diesel, made the Tesla Semi a potentially revolutionary product to reduce the overall costs of operation in trucking while reducing emissions.
However, Ryder now points to a “dramatic” price increase for the Tesla Semi.
What is the cost of a Tesla Semi electric truck now?
Electrek’s Take
As I have often stated, Tesla Semi is the vehicle program I am most excited about at Tesla right now.
If Tesla can produce class 8 trucks capable of moving cargo of similar weight as diesel trucks over 500 miles on a single charge in high volume at a reasonable price point, they have a revolutionary product on their hands.
But the reasonable price part is now being questioned.
After reading the communications between Ryder and MSRC, while not clear, it looks like the program could be interpreted as MSRC covering the costs of installing the charging stations while Ryder committed $7.5 million to buying the trucks.
The math makes sense for the original funding request since $7.5 million divided by 42 trucks results in around $180,000 per truck — what Tesla first quoted for the 500-mile Tesla Semi truck.
Now, with just 18 trucks, it would point to a price of $415,000 per Tesla Semi truck. It’s possible that some of Ryder’s commitment could also go to an increase in Megacharger prices – either per charger or due to the two additional chargers. MSRC said that they don’t give more money when prices go up after an extension.
I wouldn’t be surprised if the 500-mile Tesla Semi ends up costing $350,000 to $400,000.
If that’s the case, Tesla Semi is impressive, but it won’t be the revolutionary product that will change the trucking industry.
It will need to be closer to $250,000-$300,000 to have a significant impact, which is not impossible with higher-volume production but would be difficult.
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