Elon Musk's fame used to be a huge advantage for Tesla — but now it's becoming a problem | México News Network

Elon Musk’s fame used to be a huge advantage for Tesla — but now it’s becoming a problem

Here is why TESLA could go bust in the next 12 months

By Redacción MXN Saturday, May 12, 2018 comments

2013 tesla model s cockpit

Here is why TESLA could go bust in the next 12 months


Maybe you haven’t been paying attention to all things Tesla for the past two weeks. Here’s an update:




Maybe it isn’t such a great idea to have a global celebrity as a CEO. Here’s why:


Every time your unpredictable CEO says something bizarre to investors or starts banging away at his iPhone keyboard, the stock can pitch up and down.




If you like Musk and you’re a Tesla investor, you have to enjoy volatility. Tesla’s stock has rarely enjoyed a calm ride.


But although shares were well off their 2017 highs just prior to the announcement of first-quarter earnings, they were trending up. Until Musk lost his cool.


Shares swiftly tanked. The next day, they were clobbered.


They recovered quickly, but the selloff was nobody’s fault but Musk’s. Prior to the huge Q1 loss, Wall Street had already priced in the negative return and was willing to give Tesla a pass.


Musk takes everything personally. Very personally.


Musk is entitled to his opinion, and he’s entitled to be upset at journalists. But he shouldn’t be telling them what to write about if they think Autopilot might be so oversold to the public that some drivers think it can provide a higher level of self-driving than it does.


Musk does, in fact, believe that this semi-self-driving system saves lives, and over the long haul, he could be right. But that’s assuming Autopilot evolves over time. At the moment, it’s effectively just advanced cruise control.


There are times to take stuff personally, and times to accept that journalism doesn’t care how you feel.


His commitment to spending his nights in the factory to fix the biggest problem the company has ever faced, goes out the window when he has the chance to walk a red carpet 3,000 miles away.




No one wants to rob a multi-billionaire of his fun, but attending the bright lights and madcap spectacle of Fifth Avenue and the Met Gala doesn’t exactly send a disciplined signal to the assembly line workers at Tesla’s plants, nor to the engineers who are now furiously trying to correct the damage done by Musk’s mistake of using more automation in manufacturing the Model 3 than Tesla could handle.


You never know when he’s going to support something extremely iffy, like having his brother on the board of directors.


Tesla’s board is very light on auto experience. Only Robyn Denholm has ever spent any time in the car business, and that was with Toyota in Australia, according to his bio.


CtW, an investment advisor for union pension funds (some of which hold Tesla stock), thinks this means that Musk’s brother, Kimbal, has no business being on the board, arguing that he “has no professional experience in the auto industry” in a letter urging shareholders to vote him off next month.


With all the misfires Tesla has endured since just 2015, when it launched a production-plagued Model X SUV, Musk as Chairman of his board and CEO could use some more seasoned advice about running a carmaker. The Model 3 debacle should have brought this home for shareholders. It’s possibly the most thoroughly botched rollout of a hyped vehicle in the history of the industry.


Time to get serious now.


One can explain Musk’s behavior as Elon being Elon — up to a point. But this latest episode has raised some questions about his leadership.


Tesla has been around for 15 years, and a public company since 2010. It has never posted an annual profit. General Motors, on the other hand, returned to the public markets in 2010 after a bankruptcy — and has made over $70 billion.


Their market capitalizations are essentially the same: about $50 billion.


Tesla routinely cites the “great man” risk in its official filings with the SEC, and the Tesla board voted on a new pay package for Musk that would make him mega-rich and take Tesla’s market cap to $650 billion. Clearly, they want to keep him around.


2013 tesla model s cockpit


But here’s the problem. Celebrity Musk has been quite valuable in getting Tesla to this point. But ever since the catastrophe of the Model 3 launch — which began last year and still hasn’t been rectified — Musk’s flaws have been on display.


He might be famous. But that isn’t going to get the Model 3’s rolling out the door.