Elon Musk and Tesla settle with the SEC, and the shares are flying. Has anything changed?

Analysis: He may have been stripped of the Tesla chairmanship but Musk will, says James Moore, ensure his replacement is someone who won’t rock the boat

Elon Musk: Tesla's founder has agreed a settlement with American securities regulator the SEC (Reuters)

It came in the wake of the settlement agreed with the SEC, America’s securities regulator, over the weekend.

Wall Street had all but thrown in the towel at the end of last week, with news of the action brought against the electric car company’s boss by the watchdog handing the stock its worst day since November 2013.

The SEC’s complaint held that Musk issued “false and misleading” statements and failed to properly notify watchdogs of material company events. This followed his now notorious tweet suggesting that he had the money to take the business private, only to abandon the plan.

The investment bears grinned toothily and bared their claws amid dark talk about what this could mean for the company. Some talked of Mr Musk’s possible departure.

In the end, however, the SEC accepted $20m (£15m) from him, $20m from the company, and an agreement he will surrender the role of chairman within 45 days as the price of staying in post as CEO.

That’s a bit like traffic cops letting you off with a lecture for doing 60mph in a built up area, given the resources at Mr Musk’s command.

Tesla’s success or failure depends on the details now, so it might stand a better chance of successfully moving into its next phase with a more conventional nuts and bolts type CEO

The appointment of an independent chair is, it’s true, a step even some Musk supporters have been calling for. It brings the company into line with best practice as regards corporate governance and it’s even possible that a sage older head might exert a moderating influence on the mercurial businessman.

But don’t forget that Tesla is Elon Musk’s baby. The non executive directors who sit around the boardroom table with him have been prepared to put up with all of his foibles and eccentricities, including signing off an absurd salary package that could pay him up to $2.6bn, to date. Whoever is appointed to fill the role of chairman will have to do the same. Mr Musk will get someone that he wants, someone that he is comfortable with, and someone who is comfortable with him. He will get someone who is on Team Musk.

It could hardly be any other way. When it comes to Tesla, the world is basically divided into two camps. In the first are those who believe that Mr Musk is the second coming, a visionary who can do no wrong and who will make them rich.

In the second are those who think he’s wearing the emperor’s new clothes, and that putting the company in the same camp as General Motors in terms of its market value, when it has about 1 per cent of the production and doesn’t make any money, is crazy.

This split will not change. The SEC affair; the tweets lambasting his critics; the bizarre claim that a British diver involved in trying to rescue trapped Thai schoolboys from a cave was a ‘pedo’ without any evidence or justification: these recent events might have shifted one or two into the opposing camp, but for the most part, the true believers are still true believers. Their loyalty is similar to that which sports teams count upon, and they will often attack anyone who thinks differently with the fervour of the fan, following the lead of their hero when they do so.

The company is propelled by the force of its leader’s personality and the fealty given to it.

Would Tesla even exist without it, and him? Is there a viable business there underneath it all?

Possibly. What Tesla needs now is less about vision, more about nuts and bolts. Its success or failure depends on the details now, so it might stand a better chance of successfully moving into its next phase with a more conventional nuts and blots type CEO. That would allow Mr Musk to focus on his dreaming. With his alleged 18 hour days, it might do him a lot of good if he would allow himself the chance to do that while in bed.

On the other hand, however, it isn’t only Tesla investors who buy into the firm because of their loyalty to Elon Musk. A lot of his customers do too.

Tesla’s cars have not been without their problems. And they are not, now, without competitors. One of the positive things to have emerged from its arrival on the scene is that Detroit, and its rivals, now take electric cars very seriously.

Would Musk fanboys still buy Teslas without him or would they be more inclined to consider the alternatives?

That’s the dilemma isn’t it. If Musk is wearing the emperor’s new clothes, Tesla might end up putting them on without him.