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South Africa: Elon Musk’s journey to become the richest man – for a moment – in the world

By Mathieu Olivier
Posted on Thursday, 14 January 2021 10:46

Elon Musk, in Berlin, December 1, 2020 © Hannibal Hanschke / REUTERS

Elon Musk, the one-of-a-kind South African boss of Tesla and SpaceX, briefly saw his fortune exceed that of Amazon founder Jeff Bezos. Here is the life story of the genius who seeks to explore space.

Thanks to the surge in Tesla shares, which rose in value by more than seven fold in 2020, Elon Musk’s fortune reached $188.5bn on 7 January, according to the Bloomberg Billionaires Index.

The 49-year-old South African, who also runs SpaceX, was for a short time $1.5bn dollars richer than Jeff Bezos, founder of Amazon, from whom he briefly claimed the title of richest man in the world – ahead of Bill Gates, the founder of Microsoft, the emperor of luxury brand LVMH Bernard Arnault and Facebook boss Mark Zuckerberg, who is only 36 years old.

Space invader

The son of a South African electromechanical engineer and a Canadian-born model and dietician, Elon Reeve Musk was born in Pretoria on 28 June 1971 – in the midst of apartheid. Was it living in this padlocked cell that would push him to constantly want to escape? His parents divorced in 1980 when he was 12. Elon, who lived with his father after the divorce, created his first video game, Blastar, inspired by the famous Space Invaders, created five years earlier in Japan.

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He made $500 from it, selling the programme code to a South African computer magazine, PC and Office Technology. Musk reads a lot. He is a comic book enthusiast. This blond boy, who went so far as to name one of his sons Xavier after the teacher in X-Men, was often picked on by his classmates at Pretoria Boys High School, a place that was probably too traditional for him.

At 16, he tried to open an arcade with his brother Kimbal. They abandoned the project, but the young Musk was not short of ideas. He was convinced, from that time on, that the US would offer him the opportunity to implement them. He dreamed of Silicon Valley, where the technological world is creating the future with the help of processors.

Objective : Mars

In 1988, having obtained Canadian citizenship through his mother, he left home. Above all, he wanted to escape the military service of the apartheid regime. He went to Kingston, Canada, with his brother. Supporting himself through odd jobs (his father refused to pay for him to study outside of South Africa), he attended Queen’s University before leaving for the US four years later.

At the University of Pennsylvania and then Stanford, he studied physics and business, and also created his first companies: Zip2 (a web software company) and X.com (an online bank that would become PayPal). They would make him his first million dollars. In October 2002, Paypal was sold to eBay for $1.5bn. Musk, who owned 11.7 %, pockets $175.5m. Enough money to pursue his dreams of exploring space.

Disappointed by NASA, which he considers to be overcautious, he founded SpaceX in 2002 (two years before investing part of his fortune in Tesla), with the aim of producing reusable first-stage space launch vehicles, in order to lower launch costs and, in the long term, to make living on Mars possible.

Very optimistic – despite a few failures, such as the explosion of the Falcon 9 rocket in September 2016 and in December 2020 the blowing up of the SN8 prototype just after lift-off – Musk now plans to send humans to the Red Planet as early as 2024, once two unmanned spacecraft have been sent with all the necessary supplies to begin building a colony.

As early as May 2020, SpaceX was the first private company to send humans into space, to the International Space Station, and is currently working on prototype rockets that can be reused for several flights.

Artificial intelligence

Musk is also one step ahead of Google, Apple, Facebook, Amazon and Microsoft in his quest for a universal internet connectivity. In 2018, he got approval from the US government to operate a massive network of 4,425 satellites to provide broadband access across the world.

He is also obsessed with artificial intelligence (AI), both fascinated and frightened by it. In 2015, he founded OpenAI, a research association with a mission of “ensuring that artificial general intelligence benefits all of humanity.”

“When I was at university, I wanted to be involved in things that would change the world. Now I am,” the SpaceX boss once said, promising that he would donate half of his fortune to charity, including “major disbursements in about 20 years when Tesla is in a steady state.”

Doubts

However, these successes do not prevent periods of doubt. On 7 August 2018, in a tweet that surprised many, including those in the upper echelons of the US economy, Musk announced his plan to withdraw Tesla, the electric car manufacturer of which he is the CEO, from the US stock exchange, creating widespread panic there.

Two weeks later, under pressure from his shareholders, Musk retracted his statement, leading to a “fraud” investigation by the US Securities and Exchange Commission. This resulted in an out-of-court settlement agreement in October 2018, with Tesla and its founder each agreeing to pay a $20m fine.

A stock market achievement

That December, Tesla achieved success by being included in the prestigious S&P 500 index, a stock market index which includes the 500 largest companies listed on stock exchanges in the US.

By joining the S&P 500, Tesla shares were systematically incorporated into exchange traded funds (ETFs), which passively follow the index’s fluctuations. This further boosted the stock, which today is worth more than the combined total of General Motors, Ford, Fiat-Chrysler, Toyota, Honda and Volkswagen.

However, the group’s sales remain lower than those of traditional manufacturers: Tesla only sold 499,550 cars in 2020, a far cry from Volkswagen, which sold 11 million vehicles in 2019.

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However, it is one of the only manufacturers to have held its own in 2020. The automobile industry in the US, for example, came to a halt in the spring due to the temporary closure of factories and many car dealerships on account of the spread of Covid-19. Tesla managed to increase its worldwide deliveries by 36% last year, whereas GM saw its sales decline by 11.8% in the US.

Musk’s company is benefiting from investors’ enthusiasm for electric vehicles and the fact that it has managed to make money for five consecutive quarters. The company continues to operate almost like a start-up, according to analysts, who point out that it does not have to manage unions or multiple production sites.

Thanks to its new factory in Shanghai, Tesla is well established in China, a country which, according to Deloitte, could account for 49% of the electric vehicle market by 2030.