It is uncommon for managers at Baillie Gifford, the largest shareholder in Tesla to speak anything about the company publicly. Elon Musk’s antics don’t make them comment on the company’s future. However, one of the managers has recently advised Elon Musk about the electric car manufacturer’s path to the future.
Why was the advice necessary?
Tesla could be riding a rough road when it comes to setting and achieving targets. While pitching to investors earlier this year, the company’s CEO Elon Musk made several bold claims about his vision. He promised that there will be over one million robo-taxis on the streets by 2020, i.e., next year. His words sparked magic, and the value of the company rose by 1000% to reach $500 billion.
For Tesla, shifting strategies like this isn’t new, but this could have finally rubbed their largest shareholder a little too hard. Now, James Anderson, a partner at Baillie Gifford is advising Musk to maintain his focus. The Scottish investment firm’s partner spoke to Bloomberg News on the sidelines of Allen & Company’s annual summer conference in Sun Valley, Idaho. He said,
“One should, on the whole, try not to give too many targets that may not be attainable, with specific dates at establishment.”
He added that one would not want sudden policy reversals and as a major shareholder, that may not be a finicky demand that Musk couldn’t meet. In the past 12 months, the Scottish firm which manages $221 billion in assets, remained quiet on the EV manufacturer’s undertakings. It did not mention anything about Musk when the value of the company sank by 37% amidst regulatory fights.
A vision for long-term investment
Baillie Gifford wants to commit investment in early-stage companies for the long term. They have maintained their focus on Tesla even after other institutional investors like TD Ameritrade started cutting corners in the car company.
Stuart Dunbar, another partner at the investment firm, said that they don’t bother with the market. He specified that the company is “not invested in the market,” but in a “handful of great companies.” Tesla passes that vision with ease as it is quickly becoming one of the most sought after EV manufacturers around the world, and the demand for its Model 3 is constantly rising. Dunbar noted that they are only interested in seeing if the companies progress the way they want them to.
The partners at Baillie Gifford have spoken out against changing strategies but maintain their firm belief in Musk.