Spaced-out Musk is spooking the markets
Tesla boss’s outbursts — signs of eccentricity or desperation?
● What does it take to damage a brand? In spite of Dieselgate, Volkswagen is still selling in the millions. The recall campaign that followed the unintended acceleration issue and the subsequent airbag recall did little to dent Toyota’s reputation.
Then there is Tesla and, more importantly, its visionary leader, Elon Musk. Is Tesla the brand or is Musk the brand? Is Tesla even a carmaker or is it just a massive marketing machine? Could Tesla exist without Musk?
These are all questions being asked as Musk continues a series of bizarre outbursts and actions that would have many corporate executives packing their desks.
Musk is not the typical corporate executive; he could be described as a leader, some might say a cult leader.
He has more than 22 million followers on Twitter, many of whom will lash out if a bad word is said about him.
Many of his actions lately show signs of desperation, but also of someone who does not like to be criticised, especially on the social media platforms that are his main form of communication.
There is no arguing that what he has achieved is remarkable, though, from the days of PayPal to Tesla, SpaceX, SolarCity and his most recent project, The Boring Company, which aims to provide underground tunnels.
But cracks are showing, and the recent revelation that Tesla is asking for some of its suppliers to give it cash back, as though it has some kind of loyalty card scheme, is not something that makes sense, not even to the markets, which are normally able to absorb Tesla scandals and crises.
It is the latest concern for the business, which has only just managed to achieve a production target of 5,000 vehicles in a week, although even then, the part of the assembly line is set up in a tent also makes Tesla’s position look somewhat precarious.
Achieving the target comes after months of setbacks during which Musk promised people hats and, bizarrely, flame-throwers.
A real Musk low point occurred just a few weeks ago, when Musk described Vern Unsworth, one of the British divers involved in rescuing a soccer team from caves in Thailand, as a “pedo guy”, inferring that Unsworth is a paedophile. Musk deleted the tweet, but as he should know, a tweet is never really deleted. He apologised, but it was the latest in a string of strange utterances by the Pretoria-born entrepreneur.
In May, Musk refused to answer questions from analysts during Tesla’s annual results conference call, instead saying that the questions were “boring” and that he would not answer “bonehead” questions.
Accusations of a lack of safety in the Tesla manufacturing facilities have also grabbed headlines in the past few months. The most intriguing of them is that Musk refuses to have traditional yellow safety markings because he hates the colour.
Quality concerns have also been in the news, with reports that suspension components on some Tesla vehicles are held together with cable ties, doors do not fit properly and wheels do not line up. The situation is not helped by the fact that Musk refused to put Tesla’s new Model 3 through the traditional automotive vehicle testing programme, instead saying it would be sufficient to run computer simulations before handing a few cars to staff to try out.
This latter point would be unconscionable for traditional car companies. They put their new vehicles through millions of kilometres of testing around the world before they release them. Even then, many vehicles still have faults and issues.
Knowing that your Model 3 has only undergone testing in a computer simulation is not going to inspire many.
Musk insists that the company has nothing to hide, though, telling analysts in 2017: “When we make mistakes it’s not because we’re trying to mislead anyone. We aspire to be less dumb over time.”
That will not be comforting for the families of those killed while using Tesla’s Autopilot autonomous driving system. In one instance in Florida in the US, the car failed to distinguish between the colour of an articulated truck and the sky, leading to it driving into the truck, killing the driver.
In typical Musk fashion, he points out how many people die in vehicles made by other carmakers daily, but Tesla is supposed to be a frontrunner in the technology.
It is a situation that is being watched by those in SA who were part of the original over 400,000 pre-orders for the Model 3 (some reports say as many as 100,000 have cancelled globally, but Tesla is not saying officially). Tesla has not revealed how many in SA paid a $1,000 deposit here after Musk promised (in a tweet, of course) that Tesla Motors would be in the country in 2018. Tesla Motors is not here, and nor is the Model 3.
Some close to the company have told me that it will be here in 2022, but what will Tesla Motors be in four years? For a number of years, it has had the edge, but, as governments around the world look at banning the internal combustion engine, the automotive industry has woken up.
From the BMW i3 to the superb Jaguar IPace, Chinese electric vehicle start-ups to even the probability of an electric RollsRoyce, Tesla is facing the reality that it will no longer be the brand icon it now is.
Should Tesla arrive in SA in 2022, then it will be here three years after the debut in the country of Mercedes electric EQ range, the Jaguar I-Pace and Audi’s e-tron offerings.
Tesla is in danger of losing its pioneering edge, in spite of the charisma of its leader. It is burning through cash at an alarming rate even as it starts to hit some of its production targets, and it looks likely that Musk will have to renege on his promise that it will not need to seek additional funding.
Musk has never been a typical CEO, but his outbursts of late display signs of desperation. If it goes wrong, then what will he do?