Baillie Gifford 

Baillie Gifford backs Tesla despite Musk tweets

Baillie Gifford backs Tesla despite Musk tweets

Tesla’s third biggest shareholder Baillie Gifford continues to see value in the company as a business, despite considering chief executive Elon Musk’s tweets an "embarrassment".

Iain McCombie, manager of the Baillie Gifford Managed Fund said in a briefing yesterday (31 October) in Edinburgh it was exciting to see that despite the short-term noise about production Tesla was "now starting to hit volumes".

Tesla's third-quarter results announced last week surpassed analysts’ expectations, with profits at $312m, or $1.75 per share. The company also announced its Model 3 had achieved a gross margin of more than 20 per cent, which compares with a negative figure in the previous quarter.

Mr McCombie said: "It's a company everyone wants to talk about, and yet I think people are missing what is really interesting.

"Obviously his [Mr Musk] tweets are a giant distraction, and embarrassment, and I wish he didn't do it."

He said investors needed to accept the fact that Tesla was "part about the genius of [Mr] Musk".

He noted: "He has done something pretty remarkable, and that is how often entrepreneurs are like. If Henry Ford was allowed to tweet this stuff would be pretty mild. 

"A lot of these entrepreneurs are eccentric, they're not everyone’s cup of tea. But the reason that they're not everyone cup of tea is why they are genius, because they challenge conventional wisdom."

Mr Musk had faced charges of impropriety brought by the US Securities and Exchange Commission (SEC) following tweets he sent to his 22.8 million followers in August, stating that he was going to take Tesla private at $420 per share.

He also claimed funding had been secured and a shareholder vote was the only potential stumbling block.

The US market regulator reached a settlement with Tesla and Mr Musk in October.

Mr McCombie noted, however, that "there are still risks at Tesla".

He said: "It could still go wrong, but what we can see is that the market is changing. The biggest issue will be for the traditional carmaker companies.

"Tesla is exciting because they don't have legacy issues. We expect others to come into the market, we are expecting the market to expand dramatically from here."

Craig Harrison, managing director of Creative Wealth Management, said: "Elon Musk is an unconventional and often divisive character to say the least, but he’s done a great job in pushing Tesla to be at the forefront of the electric vehicle market."