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Tesla founder is challenging traditional auto companies

DETROIT – The personality cult of Elon Musk views him as a righteous disrupter of a staid auto industry.

For many industry executives, he’s a thorn in their side and an unrealistic dreamer, if not someone to be admired for his audacious vision.

The two portraits made the founder of Silicon Valley’s Tesla Motors perhaps the most polarizing person at the Detroit auto show earlier this month.

Musk is also chairman of SolarCity, the nation’s largest solar panel installer that will occupy a 1-million-square-foot factory currently being built in Buffalo.

Two years since Musk’s last trip to the Motor City, Tesla Motors has enjoyed a remarkable run, prompting one prominent stock analyst to call Tesla “the world’s most important car company.”

Much of Tesla’s growth is pegged directly to the sheer force of Musk’s personality. Put simply, the billionaire entrepreneur from South Africa does things differently than the rest of the industry.

His maverick strand of social media activity invariably generates a firestorm of publicity, even when he’s crafting dubious ideas like a rail system that could transport people across the country in a few hours, a creation he dubbed the “hyperloop.”

Not averse to blasting the traditional auto industry or firing his own deputies, Musk’s appearance in Detroit served to highlight the differences between the Musk way and the Detroit way.

Unlike most Detroit Three executives – or, for that matter, leaders of the German or Asian automakers – Musk likes to be provocative. For example, he once derided Toyota’s investments in hydrogen fuel cell cars, calling the technology “fool cells.” Last January he took aim at federal regulators – an absolute no-no among traditional auto executives – tweeting that “the word ‘recall’ needs to be recalled.”

His penchant for the sensational only adds to the Musk legend. As a co-founder of online payment service PayPal and the space-travel company SpaceX, where he’s still the chief product champion and architect, Musk is unquestionably among the greatest innovators in the world – and thus his remarks are viewed as pure gospel among technologists.

“All the people that worship at the church of Musk will come at you with a pitchfork if you say something bad,” said Dave Sullivan, an analyst with AutoPacific, who said he’s been accosted for questioning the company online. “They’re believers.”

The cult is growing. The company said in November that deliveries of its only vehicle, the Model S electric sedan, would soar 50 percent in 2014 to about 33,000 units. Tesla, which does not release monthly sales figures like the rest of the industry, projected another 50 percent increase in 2015. But Musk announced at the auto show the company would not be profitable until 2020, immediately sending the stock down 7 percent to around $190 a share.

Tesla’s stock soared 48 percent in 2014 to finish the year at $222.41, though it was a bumpy ride along the way. The shares rumbled through a series of wild fluctuations, hitting a low of $136.37 and reaching a high of $291.42.

The company’s luxury electric cars range in price from about $71,000 to more than $100,000, with driving range of 208 to 253 miles. The Model S has earned a bevy of critical praise for its sleek design and battery range.

Boston-area resident Chris Hansen last summer drove his Model S from his East Coast home to his cottage in Interlochen, Mich., plotting strategic stops to ensure the car maintains a charge. He said Musk’s breakthroughs have appropriately unsettled the auto industry.

“Some people might even call him a mad scientist, but the mad science is clearly working,” Hansen said. “He’s clearly a genius, and I think he scares some people with how brilliant he is. There are people out there who are genuinely afraid of what he might do. But I think people are also simultaneously starting to believe.”

In many cases, the believers include influential industry leaders. For example, Morgan Stanley auto analyst Adam Jonas, whose reports regularly move the market, recently gushed about “Elon’s infectious enthusiasm” and said “we can only imagine” what the company will do next.

The believers, however, do not include U.S. auto dealers, who have lobbied politicians to block the automaker from selling cars directly to consumers through company-owned stores instead of franchised dealerships.

Michigan’s State Legislature in October passed a bill ensuring Tesla cannot open its own stores in the state, and Gov. Rick Snyder signed it into law. The governor insisted that the bill only clarified existing laws and suggested he might be open to a change in the future.

Musk has regularly taken aim at politicians who seek to undercut Tesla’s momentum, so it would come as no surprise if he uses the platform in Detroit to excoriate the state of Michigan for its actions.

A Tesla spokesperson said the format of Musk’s appearance in Detroit is a Q-and-A, so he won’t have prepared remarks.

“Nobody knows exactly what he’s going to talk about. That’s part of his schtick,” said Dave Cole, chairman emeritus of the Center for Automotive Research. “The risks in this is the tremendous volatility we’ve seen in the Tesla stock. It’s been up; it’s been down.”

On Twitter, where he has accumulated an astonishing 1.4 million followers for a CEO, Musk is similarly unpredictable. He’s easily the most aggressive and prodigious tweeter among major auto executives, most of whom still avoid the service, and a single Musk tweet can move the market.

For example, on Oct. 1, he tweeted a mysterious teaser photo with the phrase, “About time to unveil the D and something else.”

A feverish buzz ensued. But when the news, revealed in an event Oct. 9, turned out to be a fancy version of an all-wheel-drive system, the buzz fizzled. The stock, which had risen 8 percent from Oct. 1 to Oct. 9, relinquished most of those gains within a day.

Most traditional auto executives would be aghast if their tweets moved the market. But Musk relishes the opportunity to sway public opinion through social media and to set the record straight.Musk’s aggressive approach on Twitter contrasts, for example, with the conservative approach of General Motors CEO Mary Barra, who generally sticks to harmless posts about GM activities.

Auto insiders have, in some cases begrudgingly, gained a respect for Musk’s accomplishments. What was once viewed as impossible – building a brand new car manufacturer from scratch – he proved was doable. GM executives, for example, have studied Tesla’s rise and have praised Musk’s contributions to the industry.

But building Tesla into a major global manufacturer is a far more difficult task than creating a luxury electric car company.Tesla has encountered several delays in development of its new crossover, called the Model X, which is now slated to hit production in late 2015, about a year later than once expected. And battery industry experts are skeptical that Musk can deliver on his promise to introduce an affordable electric car, called the Model 3, within a few years.

Peter De Lorenzo, a former auto industry marketing executive who blogs at Autoextremist.com, said Musk should be penalized for failures to deliver on the Model X.

“He gets a pass. We’re beyond the point where he should be getting a free pass for some of this stuff,” De Lorenzo said. “I’m not begrudging what he’s accomplished, but I think it’s been blown far beyond proportion.”