If we remove the virtual asset estimates, Elon Musk’s real total value is less than $100 billion, and that depends on the situation of Tesla’s electric car business.
Recently, Informa Connect’s prediction that Elon Musk could become the world’s first “trillion dollar” tycoon by 2027 has caused a stir among many people.
Tesla’s boss is currently the richest person in the world with a fortune of nearly 250 billion USD. Therefore, Informa calculates that if based on the average growth rate of 110% of assets each year, Elon Musk will reach 1 trillion by 2027.
However, CNN news agency said that this prediction missed too many factors, based on inferences that are no longer suitable for the market situation and valuation of a company that has not yet issued shares to the public.
110%
First, Elon Musk’s previous 110% annual growth in wealth was largely based on Tesla’s stock price boom when it dominated the electric vehicle space.
But the situation is different now as more and more players are jumping into this field and Tesla has not been able to maintain the sales growth as promised.
Even so, Tesla still cannot reduce the price below $30,000 per car to compete with gasoline cars, let alone Chinese electric cars.
Recently, CEO Joe McCabe of AutoForecast Solutions commented that if electric cars from China’s BYD were sold in the US, they could cost up to $12,000 less.
Therefore, even if it is taxed at 100%, this company can still keep the price of an electric car at 25,000 USD, much cheaper than Tesla or any competitor in the US.
As of July 2024, electric vehicles accounted for just over 10% of car sales in the US, but the ratio was around 50% in China, higher than the global average of 20%.
According to CNN, Tesla is sinking deeper into crisis as the company’s stock has lost two-thirds of its value in 2022 after a series of car brands jumped into the electric car game. Since the beginning of 2024, Tesla’s stock price has decreased by 8.27%.
Worse, Elon Musk’s empire has also had to repeatedly recall its products to fix bugs, including software patches for most Tesla electric cars sold in the US due to autopilot software errors.
It should be noted that Tesla is a car company, but Elon Musk is trying to manipulate public opinion to shape this empire into a technology company, thereby boosting stock prices and attracting capital.
It should be noted that in 2008, Tesla almost went bankrupt if it had not been given a loan at the last minute.
Then in 2018, Elon Musk continued to be fined millions of dollars by the US government for violating securities trading regulations.
Worse, Elon Musk’s acquisition of Twitter and a series of careless statements have severely affected Tesla’s image as well as customers’ views of this electric car company.
For the above reasons, although Tesla has a total capitalization of 710 billion USD, equal to Coca Cola, Bank of America and Boeing combined, whether Elon Musk can reach 1 trillion USD or not is still a question.
Currently, Elon Musk only holds 13% of Tesla shares, equivalent to 93 billion USD in assets at current prices.
Virtual assets
While Tesla is having trouble because of the saturated electric vehicle market, Elon Musk’s other assets cannot help this founder reach 1 trillion in the short term.
The Boring Company brand is having trouble implementing projects that are not on schedule, behind schedule, or require much higher funding than the original level.
The xAI platform and social network Twitter-X are suffering heavy losses as businesses pull advertising due to fears that Elon Musk’s careless statements will affect their reputation.
Even after Elon Musk spent $44 billion, mostly bank loans secured by Tesla shares, to buy Twitter-X, the social network lost value rapidly despite the boss still having to pay monthly interest on the debt.
Another project, Neuralink, is also testing chip implants in human brains, but this product is expected to be launched a long time ago due to safety concerns for users.
Then there is SpaceX, Elon Musk’s famous space technology company, which has not yet had its initial public offering. Although it has won a number of space contracts from the US government, making a profit is another story when its rival Boeing is not a company that easily gives up the game.
Elon Musk’s Starlink internet network is also facing trouble in many markets due to legal procedures as well as national security concerns.
Elon Musk currently holds 42% of SpaceX, equivalent to a total value of 210 billion USD based on the total estimated value of this space technology company.
It should be noted that all of the above names, except Tesla and Twitter-X, have not yet had an initial public offering (IPO). This means that their value, especially SpaceX, is only on paper.
Therefore, Elon Musk’s current assets of 250 billion USD, if minus the estimated value of SpaceX, is less than 100 billion USD.
Competitor
Another extremely important factor that Informa did not take into account, according to CNN, is the other billionaires in the ranking of the world’s richest people.
The artificial intelligence boom has already boosted Nvidia founder Jensen Huang’s fortune to $104 billion in a short period of time. If that growth continues, Huang could become a trillionaire by 2028 or sooner.
Similarly, names like India’s Gautam Adani and Facebook’s Mark Zuckerberg are all names that have the potential to reach the 1 trillion mark as their businesses continue to grow and they don’t have as many challenges to deal with as Elon Musk.
