A Pennsylvania pension fund has halted new purchases of Tesla shares, citing concerns about the company’s financial performance and the behaviour of chief executive Elon Musk, as initially reported by Fortune.
The Lehigh County Employees’ Retirement Fund, which manages about $593 million in assets, voted this week to instruct its external managers to pause any new investments in Tesla stock until the board’s next meeting.
The fund becomes now the first public pension plan in the US to suspend new investments in the company, though officials in other states have encouraged investment managers to reassess exposure to the electric carmaker.
Mark Pinsley, Lehigh County’s controller, told Fortune that Musk’s public behaviour has harmed Tesla’s brand, even as he shifts his focus back to the company.
“I don’t think him going back to Tesla is what makes a difference,” said Pinsley. “What makes a difference is if he keeps his face out of the news.”
The fund holds less than 1% of its portfolio in Tesla through passive index funds tracking the S&P 500.
Musk said at the latest earnings conference call that he would begin allocating more time to Tesla starting from May — something that immediately sent the company’s shares higher.
“He literally threw away the Twitter brand and now he’s basically doing the same thing to Tesla,” Pinsley said. “He doesn’t seem to care that when he’s out there with a chainsaw it impacts people. They know his political bent and they don’t want to buy from him—and he represents Tesla.”
The board also requested a report from its investment consultant outlining Tesla’s financial, governance and reputational risks, along with the fund’s exposure.
The resolution cited a 71 per cent fall in Tesla’s net income to $409mn in the first quarter, a 9 per cent decline in revenue to $19.3bn, and a 20 per cent drop in automotive sales to $13.9bn.
Earlier this week, the U.S. Patent and Trademark Office (USPTO) rejected Tesla’s application to trademark the term “Robotaxi.”The trademark for the ‘Cybercab’ has been suspended.
During Tesla’s first-quarter earnings call last month, Elon Musk reaffirmed the brand’s plans to launch fully autonomous paid ride services in June.
However, contrarily to what was previously expected, the chief executive said the service would initially operate with “maybe 10 or 20 vehicles on day one,” using the recently refreshed Model Ys rather than the Cybercab.
He stated that the company plans to “scale it up rapidly after that” and that by the “end of June or July,” anyone can “just go to Austin and order a Tesla for autonomous drive.”
