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How Much Could This Cost Elon Musk?

Written by Monica Savaglia
Posted May 12, 2020

There’s a lot happening for Musk. 

He welcomed his newborn son into the world last week and created headlines by announcing the baby’s name — X Æ A-12. Musk is good at stirring the pot and the announcement of his child's birth wasn’t the only thing that made headlines last week.

On Saturday night, Lorena Gonzalez, an assemblywoman from San Diego, tweeted:

Lorena Gonzalez Tweet to Elon Musk

Musk's reply:

Musk Tweet Reply to Lorena Gonzalez

This response came after Musk talked about moving Tesla's (NASDAQ: TSLA) headquarters to Texas or Nevada. On May 9, Musk tweeted:

Frankly, this is the final straw. Tesla will now move its HQ and future programs to Texas/Nevada immediately. If we even retain Fremont manufacturing activity at all, it will be dependent on how Tesla is treated in the future. Tesla is the last carmaker left in CA.

Obviously, there’s a lot weighing on Musk’s mind. He also tweeted a threat to sue Alameda County “immediately.” Alameda County is where Tesla’s main plant is based and is currently shut down because of the coronavirus pandemic. Musk doesn’t agree with the time frame of when his plant will be allowed to reopen. 

An Alameda County official told The New York Times that the county was coming close to an agreement with Tesla and aimed to reopen the plant on May 18, but that Mr. Musk blew up the talks. Musk tried to go against local shut-down orders and called the lockdown “fascist.”

It’s important for Musk to get his plant up and running again because the shutdown is detrimental to his business. The factory employs more than 10,000 workers who assemble Model 3 compact cars; it is an important part of the city's economy. In a recent statement, Fremont Mayor Lily Mei said:

As the local shelter-in-place order continues without provisions for major manufacturing activity, such as Tesla, to resume, I am growing concerned about the potential implications for our regional economy. We know many essential businesses have proven they can successfully operate using strict safety and social-distancing practices. I strongly believe these same practices could be possible for other manufacturing businesses, especially those that are so critical to our employment base.

Before the pandemic, Tesla began 2020 telling its investors that it planned to increase deliveries by more than 36%. However, when the company recently announced its first-quarter results, it was clear an increase in deliveries would be impossible due to the closure of Tesla’s businesses and the uncertainty of what will happen for the rest of the year thanks to COVID-19.

Musk is busy fighting to keep his current factories open to meet the company’s current goals for increasing deliveries. He’s not looking ahead; he’s just trying to keep business afloat for the rest of the year. It's unlikely he's looking to the future of his product line because the stress of fighting to open up his plant probably has him a little distracted.

And that distraction could have him missing out on a crucial aspect of the future, especially with the industry that his business is in. This distraction could cause Tesla vehicles to be out of date in less than three years’ time. 

Finally, Some Innovation

The electric motor has a weakness — a weakness that involves the modulation of current flow, giving it a total lack of regulation. A lack of regulation means every electric motor that has ever been built has torque production limitations. Peak torque can only be achieved at certain motor speeds. If it goes higher or lower, power drops off, causing more wear and tear, shorter life span, and more breakdowns.

But now there’s a solution that could be a huge advantage for many major industries, especially for the future of electric motors and electric power generation. This solution and invention is set to make every existing electric motor and power generator obsolete in the next five to 10 years.

Dynamic power management technology is exactly the type of innovation that the electric motor needed. Electric cars could have hundreds of miles of added range. Diesel-electric trains would be able to run twice as far and carry twice the payload while using the same amount of fuel. 

A Canadian tech company is behind this innovation. It has already signed licensing deals to put this technology into various commercial products, including electric bikes, electric motorboats, and farm equipment. It’s changing the world we live in. It’s only a matter of time until an electric car maker jumps onboard and invests in this technology. 

This company is building motors that have efficiency ratings that beat everything on the market today. This new generation of motors has been shown to use less energy, are smaller in size, cost less to maintain, and last longer. 

Today, over 50% of all electricity created on planet Earth is consumed by electric motors in different forms, and 99% of the electricity we use is created by using power generators. It only makes sense to increase efficiency.

This is just a glimmer of the possibilities of this technology and the Canadian company engineering it. 

To hear more about the technology and the company behind it all, click here. 

Until next time,

Monica Savaglia Signature Park Avenue Digest

Monica Savaglia

Monica Savaglia is Wealth Daily’s IPO specialist. With passion and knowledge, she wants to open up the world of IPOs and their long-term potential to everyday investors. She does this through her newsletter IPO Authority, a one-stop resource for everything IPO. She also contributes regularly to the Wealth Daily e-letter. To learn more about Monica, click here.

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