Tesla’s mounting problems could have been easily avoided (TSLA)


elon musk

Tesla and Elon Musk have made several bold decisions over the past few years that have created major, costly problems for the company.
Musk could have chosen a more modest approach for Tesla.
If he had, Tesla could be thriving now, but at a smaller scale.

It would be an understatement of the highest order to say that Tesla has been in any way boring for the past 12 months. What we’re dealing with here is basically a total war on numerous fronts, ranging from automobile manufacturing to experiments in robotics to financial speculation to 21st-century media relations.

The whole combative saga lurches from violence to truce to melée to retreat, often in the same day, and usually in the same week. CEO Elon Musk is smack in the middle of it, taunting short-selling hedge funds one minute and rallying the troops the next, retiring to his giant tent in the parking lot of his factory in California for a few hours of sleep before blasting out some tweets and then starting all over again.

War is hell — worse than what Musk has already often described as “production hell,” which if you haven’t been keeping track of for past year or so is simply shorthand for business-as-usual at Tesla.

War is also foggy. There’s chaos on the battlefield, and nobody is entirely clear what’s going on or what’s happened until it’s time to tend to the wounded and count the bodies. I’m not going to stick with this bloody metaphor, so don’t panic, but in times of extreme conflict it’s useful to think about fundamentals. And that’s something that in its present configuration, Tesla has gotten away from.

Profit … or bust?

Musk has decided that Tesla must notch a profit in the second half of 2018. The last time the company was in the black, was in the third quarter of 2016. Since then, the losses has been staggering. But even though Tesla was down to less than $3 billion in cash at the end of Q1 2018, it seems clear that Musk directed everybody to throw whatever was needed at the goal of achieving a weekly production rate of 5,000 Model 3 vehicles.

And Tesla basically did it, establishing a single-week total of just over 5,000 in the waning days of June. The carmaker had to deviate, I assume expensively, from all manner of industry best-practices, most spectacularly the construction of a giant tent outside the confines of its actual factory. We’ll see what the bill was over the next few months.

That’s Tesla’s reality: a $50-plus billion market capitalization absurdly awarded to a company that’s in fact incinerating billions while celebrating a stretch milestone that nonetheless falls woefully short of some long-forgotten, more ambitious targets.

The properly mass-market, $35,000 Model 3 shows no signs of arriving anytime soon, perhaps a good thing as Tesla needs the fatter margins of a $78,000 high-performance version to deliver Musk’s second-half profitability. The CEO is under siege. Executives are leaving. The dreams of a whole new way …read more

Source:: Business Insider

      

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