Elon Musk, the maverick boss of Tesla, has overtaken Amazon’s Jeff Bezos to become the world’s richest person, after shares in the electric car company he co-founded soared on hopes that a Democrat-controlled US Senate would usher in a new green agenda.
A 4.8% rise in Tesla’s share price was enough to push Musk into the top spot according to the Bloomberg billionaires index, which tracks the daily changes in the fortunes of the world’s 500 wealthiest people.
The 49-year-old entrepreneur’s net worth hit $186bn (£136bn) at 10.15am in New York on Wednesday, making him $1.5bn richer than Bezos, who had held the top spot since October 2017.
Musk responded to the news of his status as the world’s richest person with tweets stating “how strange” and “well, back to work …”
Musk said he intended to use half of his fortune to “help problems on Earth” and “half to help establish a self-sustaining city on Mars to ensure continuation of life (of all species) in case Earth gets hit by a meteor like the dinosaurs or WW3 happens & we destroy ourselves”.
In a series of tweets that the South African-born billionaire pinned to the top of his timeline, Musk said the reason why he wants lots of money was “not what you think”. He said he had “very little time for recreation” and doesn’t have “vacation homes or yachts or anything like that”.
It is less than two months since Musk, who helped found Tesla just 17 years ago, surpassed Microsoft founder Bill Gates to become the world’s second richest person.
Tesla’s share price has risen by more than sevenfold this year as demand for electric cars soared and government’s announced further measures to wean the world off internal combustion engines.
The market value of Tesla, which recently joined the S&P 500 index of the US’s biggest companies, exceeded $700bn (£516bn) for the first time this week. That makes the company worth more than Toyota, Volkswagen, Hyundai, GM and Ford combined.
Musk, who owns 20% of Tesla’s shares, was the 35th richest person in world at the start of 2020. He also owns the rocketship company SpaceX, which is transporting astronauts to the International Space Station in a deal with Nasa.
Last year Musk named his seventh child X Æ A-12. The baby’s mother, the Canadian singer Grimes (real name Claire Boucher) explained that the name referred to “artificial intelligence”, a long range reconnaissance aircraft and her favourite song Archangel. Neither parent was sure how to pronounce the name.
Analysts said Tesla’s value was buoyed by the Democratic victories in Georgia to take control of the US Senate, as it meant the US would probably introduce tax credits for electric vehicles and join the green agenda already set by many European countries.
Daniel Ives, an analyst at Wedbush Securities, said: “A blue Senate is very bullish and a potential ‘game changer’ for Tesla and the overall electric vehicle sector, with a more green-driven agenda now certainly in the cards for the next few years.”
Expected US electric vehicle tax credits would benefit Tesla, “which continues to have an iron grip on the market today”, he added.
Ives reckons Tesla’s shares could hit $1,000 in a “bull-case” scenario, if the company can hit 1m electric car deliveries by 2022.
Tesla was within a a whisker of achieving his target of half-million cars last year. The California-based manufacturer’s annual sales rose by 36% after a final quarter that exceeded analysts’ expectations despite the pandemic to deliver a total of 499,550 cars in 2020.
Musk’s wealth could soar higher as Tesla’s share price growth puts him on target for a bonus deal that could pay a record $55.8bn.
However, fears are mounting that share prices could be rising far above real values and the bubble may burst in spectacular fashion.
Jeremy Grantham, the British co-founder of the US investment firm GMO and who is credited with calling the market peak in 2008, said current investor behaviour bore the hallmarks of the mood in the run-up to the 1929 Wall Street crash.
“I believe this event will be recorded as one of the great bubbles of financial history, right along with the South Sea bubble, 1929, and 2000,” Grantham said in a letter to clients.
SpaceX recently sent four astronauts to the International Space Station on its Falcon rocket and Dragon capsule in a commercial contract with Nasa. The company will also launch 60 broadband internet satellites into orbit.
While Musk has delivered huge returns for investors, some have called for action against his vast pay deal and criticised his habit of engaging in expensive fights on Twitter.
Pirc, an influential adviser to shareholders, including the UK’s local authority pension funds, last year recommended that investors voted against his pay deal because it “unfairly enriches the chief executive”.
The shareholder adviser also called on investors to vote against re-electing Musk to the board because he posed “a serious risk of reputational harm to the company and its shareholders” in his derogatory tweets.
In 2019 Musk was sued for $190m in defamation damages over tweets about the British caver Vernon Unsworth, who was helping to rescue 13 people trapped in a Thai cave. A jury found the tweets did not reach the legal standard for defamation and Musk was not found liable for damages.