Is Elon Musk nonetheless match to run Tesla?

It’s arduous to have a look at the information recently with out Elon Musk being on the entrance and heart of issues. His current $44 billion acquisition of Twitter and the ensuing turmoil have been feeding the headlines for a month. However there’s way more at stake than simply his social media big; Musk leads different multi-billion enterprises, Tesla and SpaceX. Which makes his oversight of The Boring Firm and Neuralink look like hobbies. 

In different phrases, Musk has loads on his plate, which ends up in the logical query of whether or not he’s nonetheless able to main Tesla. There’s significance on this question as a result of Tesla is a publicly traded firm (his different ventures are personal) and is the dominant model within the exploding world of electrical autos. 

Let’s take a look at each side of the story to see if Musk is worthy of retaining his CEO title at Tesla.

Musk’s hits with Tesla

Market management: It’s arduous to argue that Tesla is the undisputed champ in EVs. In accordance with Autonomy, 65% of EVs registered this 12 months (by way of September) have been from Tesla. As well as, the corporate holds its personal towards conventional luxurious manufacturers which might be nonetheless largely promoting ICE-powered autos. Tesla bought extra vehicles within the U.S. in 2021 than Lexus, Mercedes-Benz, or Audi and fell in need of beating BMW by 24,000 autos. Opponents are nipping at Tesla’s heels, however the automaker is unlikely to lose its management place quickly.

Trendsetter: Tesla’s affect is straightforward to identify all through the auto trade. What number of autos had iPad-like show screens earlier than the Mannequin S hit the market in 2012? The reply is zero. Equally, different automakers are taking part in catch-up with over-the-air replace programs and autonomous driving options. 

Distinctive enterprise mannequin: The thought of promoting vehicles with out franchised sellers by no means entered anybody’s consciousness earlier than Tesla got here on the scene, a transfer duplicated by EV startups like Lucid and Rivian. The corporate additionally limits its choices to a couple high-margin fashions, giving it higher profitability than many opponents. It ties right into a inventory that’s elevated greater than 13,000% since going public. 

Supercharger community: Tesla’s aggressive rollout of its recharging platform continues to offer the corporate a leg up towards different EV producers. These opponents are pressured to associate with third-party charging suppliers and undertake the event of their very own charging networks in an try and catch up.

Musk’s misses with Tesla

Excessive worker turnover: Working in a high-pressure atmosphere isn’t everybody’s cup of tea, particularly when the massive boss is understood for working 100-plus hours every week and sleeping on the manufacturing unit flooring. Tesla’s 44% turnover charge amongst executives who report on to Musk is considerably greater than the 9% common amongst comparable companies. These are key personnel, particularly as Musk’s consideration will get directed elsewhere.

SEC issues: Musk could imagine his wealth grants him the fitting to uncensored speech, however the U.S. Securities and Change Fee feels in any other case while you’re speaking a few public firm (Tesla). Musk’s 2018 feedback on taking the enterprise personal raised the specter of fraud costs. The matter was settled with Musk shedding his chairman title and $20 million in fines for each Tesla and Musk.

Shareholder lawsuit: A authorized motion by a Tesla shareholder claims that Musk’s $50 billion compensation bundle is unjust enrichment enacted by a rubber-stamp board of administrators. The swimsuit remains to be being litigated, nevertheless it signifies that firm cash is being spent on legal professionals whereas some staff deal with one thing apart from constructing and promoting vehicles. 

Redirection of Tesla assets: The mass departure of software program engineers from Twitter left Musk in a bind, so he pulled as many as 50 Tesla coders to briefly work at Twitter. Musk claimed the staff did this on a “voluntary foundation” and solely labored after hours, nevertheless it’s secure to say these Tesla staffers weren’t working in peak situation following late nights and weekends at Twitter.

Coverage violation: Tying again to excessive worker turnover at Tesla, the quickest method to trigger an issue within the ranks is inconsistent remedy, primarily when management isn’t held to the identical requirements as on a regular basis employees. Musk’s smoking of marijuana on Joe Rogan’s podcast raised eyebrows as a result of it violated Tesla’s coverage concerning the exercise (leisure use of pot is authorized in California however not beneath federal legislation). An article from SHRM detailed how Tesla staff have been fired for a similar exercise. 

Distractions: Lastly, it’s truthful to say that when Musk is placing out fires at Twitter or serving as chief engineer at SpaceX, he’s not being CEO at Tesla—irrespective of what number of hours he works or the place he sleeps. An affordable argument can be made that Musk’s 11-figure pay bundle of inventory grants (he receives no wage) ought to demand his undivided consideration in direction of Tesla. 

What ought to the longer term maintain for Musk and Tesla?

Musk deserves each accolade for bringing Tesla to the place it’s at this time. Calling him a visionary or an EV prophet isn’t misplaced. However the auto trade is remodeling at a tempo by no means earlier than seen. Musk’s foundations alone will now not serve Tesla now that mega billions of {dollars} are pouring in to tackle the EV chief. 

It’s time for Musk to fish or minimize bait relating to Tesla. The corporate’s $1 trillion market capitalization has been minimize in half in a 12 months, with distractions and market modifications undoubtedly taking their toll. Musk ought to borrow Invoice Gates’ and Jeff Bezos’ playbooks and step again from day-to-day management in favor of a extra advisory function. 

Maybe this concept is exactly what Musk has in thoughts, as a Tesla board member not too long ago confirmed there have been discussions a few CEO substitute. Names within the rumor mill embody former Volkswagen CEO Herbert Diess, who’s been out of labor since August and is reportedly chummy with Musk.