‘Stretched to the limit’
EXECUTIVE DEPARTURES RAISE PRESSURE ON TESLA AMID RACE TO PRODUCE MODEL 3
Tesla Inc. is losing key personnel as it races to bring the Model 3 — its most critical electric sedan yet — to market later this year.
Chief financial officer Jason Wheeler’s impending departure, announced just 15 months after he joined Tesla from Google, will be the latest in a raft of largely under- the- radar exits. Former executives, who spoke on the condition they not be identified, cited a range of reasons for their exits over the past year, including long hours in the rush to highvolume production, mission creep, and a tense culture that reflects their visionary but indefatigable chief executive officer, Elon Musk.
“Tesla looks like a company that is getting stretched to the limit,” said Dave Sullivan, an analyst at industry researcher AutoPacific Inc. “The pressure of getting out the Model 3 is getting to everybody, from the people on the factory floor to the people at the top.”
A Tesla spokesman in an emailed statement called attracting and retaining talent “one of our biggest assets” and said the company’s attrition rate was below average among technology companies.
Long hours and job- hopping are routine at tech companies in California’s Silicon Valley, and Palo Alto- based Tesla continues to make high- profile hires. Even so, analysts have flagged the departures as a risk to what will be Tesla’s most challenging execution year in its short history. Musk plans to introduce the Model 3, is starting battery production at the Gigafactory and will integrate SolarCity, the recent acquisition that pushed Tesla’s global workforce to roughly 30,000 people.
Like many companies, Tesla noted among risk factors in its just- filed annual report that it needs to attract and retain skilled workers. This year, however, it added a new phrase to the boilerplate, saying the efforts are needed “especially to support our expansion plans and ramp to high- volume manufacture of vehicles.”
“Any time you’re going through a big change it’s important to have consistent management,” Colin Langan, a UBS analyst who has a sell rating on the stock, said in an interview. “Jason Wheeler was a big hire and he’s leaving, and there have been many other departures. If you’re putting out aggressive targets and the people aren’t there to meet them, it’s a problem.”
Wheeler, whose departure was announced on last week’s quarterly earnings call, said he wants to pursue work in public policy and praised what he called the “A- team” at Tesla. Deepak Ahuja, the CFO who led Tesla from the brink of bankruptcy through its 2010 initial public offering and retired in 2015, will return in April for a second tour of duty.
Bloomberg News compiled a list of more than two dozen management departures over the past year, including vice presidents of finance, communications, regulatory affairs, production, manufacturing, products and programs. Most recently Tesla lost Mark Lipscomb, vice president of human resources, and Satish Jeyachandran, director of hardware engineering.
Tesla is generally opaque about its leadership beyond Musk and chief technical officer J. B. Straubel, with no list of executives or vice presidents on its website, its investor relations page or in the annual report filed with the SEC this week.
Among Tesla’ s senior leadership team, three quarters have more than three years of tenure, 60 per cent have been with the company at least six years and 20 per cent have worked there a decade, according to i ts spokesman. Almost 60 per cent of those who’ve had a leadership position at Tesla over its 14-year existence are still with the company, Tesla said.
None of the former managers Bloomberg News reached agreed to speak on the record.
Goldman Sachs Group Inc. this week downgraded Tesla to sell from neutral, with analyst David Tamberrino casting doubt on its ability to deliver the Model 3 on time. The Feb. 27 report contributed to the shares dropping about 11 per cent from their 19- month closing high of $ 280.98 on Feb. 14. Of 23 analysts tracked by Bloomberg, eight have buy ratings on the shares, nine are neutral and six recommend selling.
Tesla’ s shares have jumped about 28 per cent over the past year. Revenue surged 73 per cent to more than $7 billion in 2016.