Take Brexit Britain and Trump’s America. Add climate change, instability in the Middle East, cryptocurrencies, and self-driving cars… and you have the world in 2018: hopeful, yet seemingly unpredictable.

We have assembled 11 unlikely events that - if they somehow happened - have the potential to profoundly affect the world as we know it.

To assess the political, economic, financial, and social impacts, IG brought together global economic/political experts to give their perspectives and predictions.

Explore some of the great unknowns facing us all today

tesla car

What If

Tesla files for bankruptcy

Pic: Joseph Thornton

Investors are losing confidence in Tesla. The car manufacturer’s share price has dropped over fears it won’t make its production goals. CEO Elon Musk has laughed off concerns that the company will go bust, but facing a recall of 123,000 cars and a probe into a fatal crash, can Tesla survive?

Category: Tech Region: North America

map of USA

Our panel of experts (interviewed March-May 2018):

Robert Kelly

Robert Kelly

Professor of Political Science and Diplomacy, Pusan National University

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Robert Kelly is a Professor in the Department of Political Science and Diplomacy, Pusan National University in South Korea. His work focuses on international security and political economy. His areas of interest are East Asian security, US foreign policy, the Middle East, the World Bank and the International Monetary Fund. Kelly has appeared as an analyst on television news services, including the BBC and CNN.

Andreas Kokkinis

Andreas Kokkinis

Professor, Corporate Banking Law, University of Warwick

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Dr Andreas Kokkinis joined Warwick Law School in 2013. He is the course director for the LLM in International Corporate Governance and Financial Regulation, and the editor of the GLOBE Centre Briefing Papers Series. He holds a PhD from University College London, an LLM from the London School of Economics and an LLB from the National University of Athens.

John Kicklighter

John Kicklighter

Chief Currency Strategist, IG

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John Kicklighter is Chief Currency Strategist and head of DailyFX in New York City and San Francisco. He specialises in combining fundamental and technical analysis with money management. On his personal accounts, he trades spot currency, financial futures, commodities, stocks and options. Kicklighter holds a Finance and Investment degree from the Zicklin School of Business at Baruch College in New York City.

[ What if this happened? ]

Robert Kelly
Robert Kelly
It would quickly be replaced by other similar companies as the demand for electric cars, solar panels and so on, is only rising. There would be a lot of TV coverage because of the company’s visibility and Musk’s prominence. But the market itself is developing, and this would not stop it.
Andreas Kokkinis
Andreas Kokkinis
It would be a major step back for electric and autonomous vehicles.
John Kicklighter
John Kicklighter
Though not one of the ‘FANG’ (Facebook Apple Netflix Google), Tesla is still presented as one of the exemplars of tech shares’ outperformance and a leader for equities in general. It could very well trigger wide tech-sector tumult.

[ Likelihood ]

We asked our experts to rate how likely it is that Tesla will file for bankruptcy.

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[ Impact ]

Panel members also rated the impact they would expect this event to have.

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The Political Impact

Robert Kelly

Robert Kelly

Professor of Political Science and Diplomacy, Pusan National University

Tesla is just a firm. Maybe a few governments in Asia would think that some government subsidies need to be given to the sector to jump-start it. This strikes me as a concern driven mostly by media attention on Musk himself – wealthy, vaguely futurish, handsome, etc – and quirky things like putting his car into space. But ultimately, the technologies Tesla represents are coming regardless of which firm finalises them. Mobile phones, for example, would continue even if Apple collapsed. What matters is the market demand – which is very high for Tesla’s products – and not individual firms themselves. There is so much interest in things like electric vehicles, solar power, cheap space travel, etc, that other firms will rise were Tesla to fall. Indeed, competition is always good, so we should hope more companies push into Tesla’s space, forcing them all to work harder.
Andreas Kokkinis

Andreas Kokkinis

Professor, Corporate Banking Law, University of Warwick

Perhaps it would highlight to politicians that if they want to build a world with no transport-based carbon emissions or accidents, which can only be achieved by electric and autonomous vehicles, the state might have to support their creation through subsidies.
John Kicklighter

John Kicklighter

Chief Currency Strategist, IG

The effect would be minimal beyond those local politicians who had promoted Tesla as a part of modernising their counties and states.

The Economic Impact

Robert Kelly

Robert Kelly

Professor of Political Science and Diplomacy, Pusan National University

The effect would be minimal. Because electric cars are not widespread, there would be no serious dislocation of existing consumer practices.
Andreas Kokkinis

Andreas Kokkinis

Professor, Corporate Banking Law, University of Warwick

It would cast doubts on the sustainability of electric and autonomous vehicle manufacturing for the immediate future, and would delay the development of the relevant sector. But it would also have some positive effects on competitor firms. In the longer term, the sector is likely to continue developing fast given the level of commitment by a number of manufacturers. For example, Jaguar is currently investing in autonomous electric vehicles and is working with Warwick University’s International Automotive Research Centre to achieve zero traffic, zero emissions and zero deaths on the road using these technologies.
John Kicklighter

John Kicklighter

Tesla is a high-flyer, but it isn’t an economic powerhouse or critical employer in the US. Unless it triggered broader risk aversion, economic fallout would be controlled.

The Financial Impact

Robert Kelly

Robert Kelly

Professor of Political Science and Diplomacy, Pusan National University

A short hiccup; so capital movement out of the sector, which might encourage some government to subsidise it. But this sector is up and coming, and investment is more tied to the relevant technologies and the pace of their advance, rather than any specific company.
Andreas Kokkinis

Andreas Kokkinis

Professor, Corporate Banking Law, University of Warwick

There would not be any major effect on financial markets.
John Kicklighter

John Kicklighter

Chief Currency Strategist, IG

Tesla is an exceptionally innovative company and a tech darling, but its individual capacity to move US – much less global – risk trends is limited. From a market capitalisation backdrop, the unicorn is far from the FANG members. As a symbolic leader of a nine-year bull market that has evolved into a ‘tech-sector bull market’, it is still not breaking the concentrated influence of its peers. However, if the bankruptcy happens alongside any other significant, finance-related disaster from a major tech firm, there may be enough sentiment sway to topple a wobbly risk view. But alone, there is just enough impetus.

The Social Impact

Robert Kelly

Robert Kelly

Professor of Political Science and Diplomacy, Pusan National University

Perhaps a short delay in the introduction of driverless electric cars which seem to be the Tesla product closest to direct consumer use.
Andreas Kokkinis

Andreas Kokkinis

Professor, Corporate Banking Law, University of Warwick

It would strengthen the case of those doubting the feasibility of autonomous vehicles. There is naturally substantial disbelief on behalf of customers regarding the reliability of self-driving cars, as well as amongst business people regarding their marketability to a broad enough audience. Legal issues also have not been fully resolved in many countries. In parallel, Tesla’s bankruptcy would be bad news for the environment due to the loss of a champion of clean vehicles, the success of which can help reduce CO2 emissions. In view of scientific evidence, this appears to be an urgent issue.
John Kicklighter

John Kicklighter

Chief Currency Strategist, IG

There are many that believe in the Tesla brand and hobby investors that would be disappointed. However, it is unlikely that their bankruptcy would stall the automotive industry’s transition to electric.

Find out about another risk facing the world in 2018 and beyond

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