Tesla CEO Wrong About Model S Timeline? $1,000,000 Says Yes

thecarchik writes with the snarky-sounding claim that Elon Musk, CEO of electric-car startup Tesla Motors, sometimes says "things that later prove not to be quite true." thecarchik continues: In that, he's like many entrepreneurs, who spend a portion of their time persuading the unconvinced and painting pictures of the rosy future, despite inconvenient facts that may contradict that vision of the future. And in the case of the 2012 Tesla Model S all-electric sports sedan, which Tesla says it will launch before the end of next year, skeptics abound. Pulitzer Prize wining Journalist Dan Neil said the schedule promised by Musk was 'an audacious timeline that makes many in the car industry roll their eyes.' And, he added, 'Even people inside Tesla are leery.' The implication was clear: Neil didn't believe Tesla would be able to deliver on Musk's promises. A week later, Musk e-mailed Neil and told him in no uncertain terms that he was wrong. After several lively rounds of e-mail, he challenged Musk to a $1 million bet on the outcome based on the Tesla Model S hitting 4 targets. If the Tesla Model S misses any of the targets, Neil wins the bet." I'd like to see many more media statements backed by explicit wagers, and not just the indirect gamble of the stock market.

Comments

How it should work

[hairyfish]

The system now is broken. Today's CEO get paid multi-million dollar bonuses win, lose or draw. Someone has to lose, and right now that is the rest of us. Every CEO should be given an agreed goal, and their bonus works both ways. If they achieve it they win their bonus, if they lose they pay out. How much more effective would executives be under this system? It would certainly weed about the bullshit-artists and big talkers.

Re:How it should work

[whoever57]

Today's CEO get paid multi-million dollar bonuses win, lose or draw. Someone has to lose, and right now that is the rest of us. Every CEO should be given an agreed goal, and their bonus works both ways

You are probably (certainly?) right the case of most CEOs. However, Elon Musk has invested a lot of his own money in Tesla and if it fails, he stands to lose that investment -- far, far more than he has likely received from Tesla in his position as CEO.

Re:How it should work

[Anonymous Coward]

And let's not forget, we're not talking about a typical car company CEO. This is a capable engineer and businessman that, as another project, built a successful aerospace company that designed and built capable launch platforms in fractions of the time it would take NASA... who then contracted him for large cargo lifts and future manned spaceflight.

Bold, yes. That's his style. But if anyone can deliver on crazy-bold statements, it's probably him.

Re:How it should work

[GodfatherofSoul]

The problem is that culturally we look at CEOs as corporate superstars and not just employees. The attitude is that the company is an extension of the CEO which is probably only true in rare cases (like Jobs). So, the storyline becomes "we have to pay for talent" and not just another cog in the corporate wheel (upper management). I'm sorry, but running a corporation doesn't take billion-dollar bonus talent.

Interestingly, we used to have our tax code structured (via extremely high top-end tax rates) to prevent this precise thing from happening. It used to be 90%! Law makers were pragmatic enough to know that in the absence of some regulatory brake (disincentive by reduced net wages for CEOs), upper management would eventually get smart enough to bleed their respective companies dry. Of memory, I think it was Dick Grasso who was the CEO of NASDAQ years ago. The company made $800 million one year and he got a $200 million bonus!

Now that's the CEO. Don't forget about all the VPs underneath them and what they're getting as well.

Re:How it should work

[GauteL]

This sounds to me a rather simple idea. Corporation CEOs are rich people. And as a condition for taking up their position, they should be required to make a substantial investment in the company. Nobody should trust a Fortune 500 / FTSE 100 company to a CEO who isn't willing to bet some of his/her own money on their own skill as a CEO. And they should be required to keep this investment until at least 2-3 years after they step down.

This way they will win or lose depending on how the company performs over time, not last quarter.

Re:How it should work

[Pope]

They are superstars that employ hundreds of thousands, if not millions, of high paid workers.

They don't employ anyone. The company does.

Re:Legal?

[FleaPlus]

I hope they were in a state where wagering is legal. Otherwise, a public bet like that should be for token gifts and/or bragging rights.

I'm pretty sure these terms are legal in just about any state:

(1) Series production models of the Tesla Model S have to be delivered to paying customers before the end of 2012. (It was originally 2011, but Neil concedes that Tesla said it wouldn't make that date fairly early, and has since stuck to its 2012 date.)

(2) The Model S has to have seven passenger seats, certified as such by the National Highway Traffic Safety Administration, and earn a 4- or 5-star safety rating from the NHTSA.

(3) It has to have a battery pack that allows en-route swapping at a highway roadside station, similar to the Better Place battery swapping scheme.

(4) Model S prices must remain at the levels Tesla and Musk announced: $57,400 for the version with 160 miles of range, $67,400 for the 230-mile version, and $87,400 for the top-of-the-line 300-mile version (which will comprise the bulk of early production). All prices are before any Federal or other incentives.

If Tesla misses any one of those targets, Neil says, he wins the bet and Musk must donate $1 million to Médecins Sans FrontiÃres (Doctors Without Borders).

But if Tesla does what it said it will, Neil loses, and--being a journalist, not a multimillionaire entrepreneur--he will donate $1,000 to the same group.

Re:Legal?

[flyingsquid]

You know, usually about this time on a thread about companies overpromising and underdelivering, we would have already had a good joke or three about Duke Nukem Forever. Sigh.

Re:Neil is a pussy

[jtownatpunk.net]

I'm too lazy to do the research but $1000 is probably a greater percentage of the reporter's net worth than the million is a percentage of Musk's net worth. (Yeah, that's horrible grammar but I'm too lazy to fix it.)

Re:Disgusting.

[JordanL]

How dare they make a bet to donate to a charitable organization that brings health care to the poor and underprivileged all around the world! The rich bastards!

Re:What?

[JordanL]

Also strange is the title... there is $1,000,000 saying the Tesla CEO is NOT wrong about his timeline. There is $1,000 saying he is.

Incorrect title!

[Anonymous Coward]

Read the article! It's not a symmetrical bet. $1,000 says yes, $1,000,000 says NO!

Re:Legal?

[Opportunist]

He's a CEO. A million IS a token sum.

$1,000,000 Says Yes?

[feepness]

That is completely incorrect. $1,000 says yes.

If the wager is accepted $1,000,000 would be saying NO, he is NOT wrong.

It is irrelevant

[aiken_d]

If Musk makes the charitable contribution, it will be a $1m tax deduction, which is accounted for by reducing the net pre-tax income. Given that SpaceX and Tesla are both in startup phase, I doubt he's drawing any kind of significant salary. Even given his cash-out of eBay stock for living expenses and the capital gains involved, the deduction will probably offset his total income for the year, resulting in zero taxes.

The money isn't free -- he could buy expensive cars with it and pay taxes -- but it is significantly discounted.

Re:What?

[fnj]

It's not just strange. It's WRONG in any universe. It should say "$1,000,000 Says NO."