Baillie Gifford slashes Tesla stake as investor calls on Musk to step down
Baillie Gifford has slashed its stake in Tesla to a record low as a major shareholder has called on CEO Elon Musk to step down from the company.
The Edinburgh-based investment manager first invested in Musk’s electric car company in 2013 and has been a strong backer of the billionaire’s firms ever since.
However, a spokesperson told CityAM that Baillie Gifford has now reduced its stake to just 0.06 per cent of the company’s shares, including its investment trusts.
“The recent challenge we’ve faced as Tesla shareholders is that the valuation of the company increased by more than half a trillion dollars towards the end of 2024 in the absence of any fundamental news,” said a Baillie Gifford spokesperson.
Tesla’s stock price jumped 120 per cent in the two months after the US the election, reaching a peak valuation of $1.7 trillion.
However, since then, it has more than halved, falling to a $728bn valuation and undoing all growth it had achieved since October.
“It is hard to think of a time in the history of the automotive industry where a brand has lost so much value so quickly, across the globe,” said Mamta Valechha, consumer discretionary analyst at Quilter Cheviot.
Analysts have credited the fall to management distraction, negative brand sentiment and weak sales data, with particular attention paid to Musk’s work with the US government and increasingly radical politics.
Meanwhile, Tesla sales have declined across the world, but especially in Europe, falling 45 per cent in January even as the electric vehicle sector grew 37 per cent.
“Across the world, we have seen protests towards the brand in many ways including sales boycotts, vandalism, affixing bumper stickers, removing the brand logo or even replacing that logo with one of another car company,” added Valechha.
The news comes after one of Tesla’s earliest investors, Ross Gerber, called on Musk to step down as CEO, arguing that he had lost his focus and become too “divisive”.
“It’s time for somebody to run Tesla,” said Gerber on Sky News yesterday.
“Either Elon should come back to Tesla and be the CEO of Tesla and give up his other jobs, or he should focus on the government and keep doing what he is doing but find a suitable CEO of Tesla,” he added.
Baillie Gifford declined to comment on whether Musk should stand down as CEO of Tesla or any other his other companies when questioned.
Spacex not Tesla?
Despite slashing its stake in Tesla, Baillie Gifford was still ready to defend Musk’s second largest company: Spacex.
As an unlisted company, Spacex has been a core holding of many of Baillie Gifford’s investment trusts, including FTSE 100 giant Scottish Mortgage.
A spokesperson for Baillie Gifford said that Spacex was “radically transforming space travel,” and attracting “top talent to enhance their launch capabilities”.
“There’s huge potential as billions of people around the world have little to no internet access,” they added, referencing the firm’s Starlink satellite network.
However, some Baillie Gifford trusts also seemingly disposed of their “particularly large” exposure to Spacex at the end of last year after a tender offer from the company.
Reports emerged in November that a tender offer valued the firm at $250bn (£200bn) for outside investors.
Analysts calculated that Baillie Gifford’s trusts had upped the valuation of its Spacex holdings by between 40-45 per cent and sold back some of their shares in the process.