- Elon Musk’s presence on social media has created governance concerns for some fund managers.
- Tesla’s ownership of bitcoin, which is volatile, is problematic, Rathbones’ David Coombs said.
- Big carmakers are in the race to develop electric vehicles, and Tesla may not win, he added.
Elon Musk, the self-proclaimed Technoking of Tesla, has thrown out the corporate-governance handbook to the delight of his many followers, but for some fund managers, this is making his electric-vehicle maker uninvestable.
Tesla’s rise to EV-market dominance has been nothing short of extraordinary, boasting stock-price gains of well over 1,200% over the past five years. By late 2020, its market value was larger than that of the nine next biggest car makers in the world combined. For investors such as Baillie Gifford – the asset manager with headquaters in Edinburgh, Scotland, that oversees around $445.3 billion – the company has been one of the jewels in their portfolio.
But for others, Tesla has become less attractive, on the grounds that Musk himself poses too much of a governance risk, said David Coombs, the head of multi-asset strategy at Rathbones, which manages $3.17 billion.