Tesla Inc TSLA has a market capitalization of more than $650 billion and CEO Elon Musk owns more than 13% of the company. Based on this, some people might be surprised that Musk has reportedly said he would be okay with the electric vehicle giant going bankrupt. Here’s the catch.
What Happened: Tesla has been a huge success story in the electric vehicle and overall automotive sector. The EV leader is one of the most valuable companies in the world and a leader in electric vehicle production.
Despite the success and huge valuation for Tesla, Musk has said he would be okay with the company going bankrupt, according to Tesla board member Hiromichi Mizuno.
“I disagree whenever Elon says I don’t mind Tesla getting into bankruptcy if somebody else comes up with a better car,” Mizuno said at the World Government Summit, as reported by CNBC.
The comment from Mizuno implies that Musk has said he is okay with Tesla being bankrupt if another electric vehicle rival can create a better car, something most Tesla fans would likely say will never happen.
“I think that’s his philosophy and Tesla’s philosophy. We really wanted to shift the whole system of transportation into a sustainable energy system.”
Along with the comments about supporting a Tesla bankruptcy under this difficult circumstance, Mizuno joked that he’s not sure if Musk is “human or alien.” The comments came in reference to the huge workload of Musk and how he manages to stay the CEO of three companies and compete at a high level.
“He seems to have incredible bandwidth over his work.”
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Why It’s Important: Many would say that Tesla is far from going bankrupt now, with record production and deliveries and a market capitalization valuation of more than $650 billion.
Tesla passed the $1 trillion market capitalization for the first time in 2021, becoming just the sixth U.S. company to do so. Tesla has also traded at a significant value that often times is worth more than its next five or more rivals combined.
In 2018, Tesla was close to going bankrupt, according to Musk's recollection. The Tesla CEO has referred to the period of time as “production hell.” Musk recalls that Tesla was working on the production of the Model 3 vehicle, and the company was “about a month” away from bankruptcy.
Musk also said that Tesla struggled to get financing in the earlier days of the company, during an interview.
“That’s when bankruptcy was knocking at the door, 2008 through 2012,” Musk said.
Musk had $40 million remaining from his sale of PayPal Holdings, and he had to decide whether to put the money into Tesla or SpaceX. Instead, he split the money between the two companies.
The comments by Musk could also come as the billionaire believes that no one will be able to catch up to Tesla, and it could just be his way of keeping himself and Tesla on track to continue their success.
Comments made by Musk in the past have suggested that electric vehicle companies like Rivian Automotive RIVN and Lucid Group Inc LCID will eventually go bankrupt.
Traditional automakers including Ford Motor Company F and General Motors Company GM have their sites set on disrupting the electric vehicle space and perhaps taking over Tesla as the market leader.
General Motors CEO Mary Barra has previously said that her company would pass Tesla as the leader in the EV space, something she may have walked back on in August 2022.
“We’ve said that by 2025, we’ll have a million units in North America alone,” Barra said.
The comment came when asked about beating Tesla in market share in the future. Barra danced around the question and didn’t provide a direct response to the comparison with Tesla.
Barra had previously said GM would beat Tesla in market share and also beat the EV giant in the race to bring affordable high-range electric vehicles to market.
When and if other automotive companies can get close to Tesla's production and delivery numbers in the electric vehicle space, Musk may change his mind or be more careful with his words. Until then, his statements about bankruptcy don't seem to be drawing a reaction from Tesla investors.
Read Next: Here's How Much Tesla Stock Elon Musk Owns After Latest Sale
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