SAGA | How Elon Musk became the richest man in the world?

At the start of 2021, the CEO of Tesla and rocket company SpaceX had an estimated fortune of around $155 billion. Now, nearly a year later, his fortune has reached astronomical heights. As of December 17, his fortune reached $245.1 billion, a gain of $90 billion since December January 2021.

In two years, Elon Musk’s fortune has jumped by 200 billion dollars. In the year 2020, he earned more than $110 billion, setting the record for the biggest one-year earner of any billionaire listed by Forbes.

The main reason: Tesla’s stock price, criticized by some as already too high, continued to climb. Shares are up 32% year-to-date through Dec. 17. In early November, Musk crossed the $300 billion mark for the first time, making him the richest person on the planet. Since then, the stock has fallen nearly 24% from its Nov. 4 high.

“It was a tough year for Tesla, with competition from all walks of life, a shortage of chips and stock coming off a historic year,” said Dan Ives, managing director and principal equity analyst at Wedbush. “Despite everything, Tesla managed to pull it off with flying colors. »

The year was also historic for SpaceX. This fall, the aerospace company launched the world’s first civilian crew into orbit; shares of the private company also traded on the secondary market at a value of more than $100 billion, down from $74 billion in February. (Musk’s stake in SpaceX is estimated at $32 million.) And then there’s everything else, from the sale of six California mansions to the alleged breakup with his popstar partner Grimes, to trolling the markets. with quirky tweets.

Here are the events that marked Elon Musk in 2021:

Regulatory issues with China

Tensions between Musk and Chinese regulators weighed on Tesla shares in the first half of the year, Ives said. China, where Tesla has a factory, is a lucrative market for the company, accounting for about a quarter of total revenue for the first nine months of 2021, according to the company’s third-quarter earnings report. However, while Beijing has cracked down on domestic tech players this year, it has enacted strict regulations on the collection of automotive data and the ability to transfer that data out of the country. This has threatened to hamper Tesla’s R&D efforts, since the automaker collects a lot of user data from the cameras and sensors installed on its vehicles in order to fine-tune its self-driving systems. Tesla also came under scrutiny after a protester at the Shanghai auto show in April rode a Model3 and criticized a problem with the vehicles braking.

A turning point came in September, when Musk spoke at the annual Global Internet Conference in China, reassuring government leaders of Tesla’s commitment to growing in the country. “We are working with regulators to find the best solution for data security,” Musk told the conference, pointing to a new data center Tesla has set up in China to store “personally identifiable information” locally. without transferring them across the border.

Shortage of fleas

Semiconductors are a key part of new cars, powering things like infotainment systems, engine management, power braking and steering. Supply chain issues led to a shortage of these chips in 2021, hitting automakers like General Motors and Ford hard, but, according to Ives, Tesla escaped largely unscathed. Indeed, Tesla has been producing its chips in-house for years, using a new material technology called silicon carbide that reduces reliance on pure silicon. As a result, the shortage hasn’t hampered Tesla’s vehicle production goals, although the company’s factory in Fremont, California halted production for two days in February due to what Musk vaguely said. identified as “parts shortages”.

Tesla Surpasses $1 Trillion Valuation

Tesla stock received a boost in October, when car rental giant Hertz announced it was buying 100,000 Tesla vehicles to add to its rental fleet – it reportedly agreed to spend around $4.2 billion to do this. Following the announcement, Tesla’s market capitalization crossed the $1 trillion mark for the first time, and Elon Musk’s net worth surpassed $300 billion, making him the richest person of all time.

As of December 17, the value of his fortune is estimated at $245.1 billion and he remains the richest person in the world, ahead of Amazon founder Jeff Bezos, French fashion magnate Bernard Arnault and the founder of Microsoft Bill Gates.

SpaceX makes history

As Musk’s fortune soars to new heights, so do his intergalactic projects. In mid-September, SpaceX launched the world’s first all-civilian crew into orbit, opening the door to the nascent space tourism industry. The crew of four, including fintech billionaire Jared Isaacson, spent three days circumnavigating the planet. It was a key milestone in the space race between billionaires Musk, Jeff Bezos and British billionaire Richard Branson. Although Musk hasn’t personally flown into space this year, his rivals have. Jeff Bezos was aboard a BlueOrigin rocket that launched into orbit in July, about a week after Richard Branson took part in a similar trip organized by his space tourism company Virgin Galactic. (Musk has also booked a spot on a future Virgin Galactic space excursion, but it’s not yet clear when exactly he’ll take off).

Mass stock sale

On Nov. 6, Musk sent shockwaves through the business world when he launched a Twitter poll in which he casually asked his followers if he should sell 10% of his Tesla shares. Musk had previously only sold Tesla shares on two occasions, in 2010 and 2016. Two days later, Musk began selling shares and exercising stock options due to expire in August 2022. By December 13, he had sold nearly $13 billion worth of Tesla stock; Forbes estimates that he could pay $8.3 billion in taxes as a result of these sales, which could make him the biggest taxpayer in the United States (Musk claimed on Twitter that he “will pay more than ‘taxes than any American in history this year’).

“It was also, of course, a PR move,” Ives says of Musk’s Twitter poll.

According to Forbes calculations, Musk has accrued about $4.4 billion in cash (after tax) from stock sales through Dec. 13.

Moving to Texas

Musk bet on the Lone Star State in 2021. By June, he had sold six of his seven California mansions, and his last home was on the market. His main place of residence today? An approximately 37 square meter, studio-sized “collapsible, prefabricated” housing set up in Boca Chica, Texas, where SpaceX produces its Starship rockets.

After some tussle with California lawmakers over Covid-19 safety rules at Tesla’s Fremont factory from 2020, the billionaire announced plans to move Tesla’s headquarters from Palo Alto to Austin, Texas, during of the annual shareholders’ meeting in October 2021. Musk took a more diplomatic approach at the meeting, citing sky-high California housing costs and long commutes as the main reasons for the move. The move was completed in early December, but it’s not yet known how many Tesla employees will move to Austin or how many new jobs could be created.

A break

Musk’s personal life has also taken a few turns. In late September, he split from Grimes, the grunge musician he dated for about three years, just weeks after attending the Met Gala together. The couple gave birth to a son named X Æ A-Xii Musk in May 2020.

New Year’s resolutions?

The holiday season is usually synonymous with philanthropy for billionaires, but giving doesn’t seem to be a priority for the world’s richest person this year. Almost a decade ago, Musk signed the Giving Pledge, a pledge to donate at least half of his fortune to charitable causes. Forbes estimates that to date, Musk has donated less than 1% of his fortune to charitable causes.

According to Mr. Ives, the year 2022 will be marked by greater adoption of electric vehicles and increased competition. Tesla will therefore focus on increasing production capacity at its key factories in Berlin and Austin, Texas. Tesla could increase its overall production to two million cars a year, up from around one million currently, Mr Ives says. By comparison, Toyota, GM and Ford each sell more than four million vehicles a year, although only a fraction are electric vehicles.

“We really are seeing an arms race for electric vehicles,” says Ives. “Tesla is years ahead from a battery technology standpoint… But there is a target behind Tesla. »

This should make 2022 another exciting year for Elon Musk. On December 9, he tweeted that he was “considering quitting his jobs and becoming a full-time influencer.” Musk’s salary package for Tesla includes an additional 36 million options, worth nearly $32 billion, if he can satisfy the company’s investors and drive the stock price higher in the midst of forces he cannot control.

Article translated from Forbes US – Author: Eliza Haverstock

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