It has been a tough few weeks for the leader of Tesla, but he himself is the cause of a lot of their problems.
For example, once again it turns out they have massively over-promised on the number of cars they will build in 2016. They have been claiming they will build 80,000 to 90,000 units. It was just announced that for the first six months, they built 29,190 (14,820 in Q1 and 14,370 in Q2). They are clearly going to miss their target range, like they do all the time!
Also Tesla hugely embarrassed itself recently when commenting on the death of the Tesla driver who was using Tesla Autopilot feature. In their blog posting reporting on the accident they were super defensive, stating that the Autopilot didn’t notice “the white side of the tractor trailer against a brightly lit sky, so the brake was not applied.” These “rare circumstances caused the Tesla Model S to pass under the trailer, with the bottom of the trailer impacting the windshield of the Model S.” So I guess white trucks and sunny days are the problems, not the Tesla Autopilot system!
To me, the worst example involves SolarCity, where the co- founder and chairman is also the co-founder and CEO of Tesla. SolarCity is on the verge of bankruptcy. It had a negative cash flow of $218 million in 2014, and $790 million in 2015. It is burning through cash very rapidly; $1.2 billion in 2014 and $1.8 billion in 2015. In 2015 the company added $800 million in debt. Its stock price has gone from $51/share to $22 in the last six months, due to its big cash problems, but also because the company reported a loss of $283 million in the first quarter of 2016.
Given this horrific financial blood bath, no wonder Wall Street smacked Tesla with a one day decline of 10% in its stock when it announced Tesla was going to merge with SolarCity. This caused the Tesla CEO to make a bunch of crazy statement, such as in his opinion that the deal is a “no-brainer.” This caused one financial analyst who follows Tesla closely to claim: “No brainer? Yes… since it takes no brains to attempt this. ”In general, Wall Street’s views on this merger are summarized by the following comment by one analyst: “I see this as an attempt by the Tesla leader to salvage his reputation and legacy. I don’t see anything else behind this than saving SolarCity from eventually declaring bankruptcy.”
One of the most important assets a leader can have is credibility. For a leader to continue to have the confidence and respect of his or her followers, they need to consistently tell it like it is and not attempt to spin the facts into something that simply does not ring true. The Tesla leader is clearly pushing the boundaries of credibility.
