Investment Analyst: Elon Musk May Not Be The ‘Right CEO For Tesla’
Tesla Motors’ recent financial problems are likely a result of the company’s inability to deliver on the lofty visions of its president and CEO, Elon Musk, according to the co-founder of one tech investment group.
“The time has come to ask whether Elon is the right CEO for Tesla,” Matt Stack, the co-founder of Devonshire Research Group, told the Daily Caller News Foundation. Musk’s vision is so far beyond what Tesla is capable of producing, Stack said, that it caused the company to miss deadlines, which risks creating distrust among contractors.
The head of the tech investment group was responding to recent comments by Barclay analyst Brian Johnson, who argued in the Wall Street Journal that Musk’s 2006 “Master Plan Part” resulted in a the company digging itself in a $4.2 billion hole. Johnson gave the plan’s business model a D grade.
Even though it managed to help the company generate about $1.7 billion from selling its cars, and another $500 million from zero-emission vehicle credits, Musk’s master plan resulted in the company spending $2.1 billion on R&D, and another $4.1 billion in capital investment, leaving Tesla with a deep deficit.
Johnson did hedge his bearish view on the electric vehicle maker by noting that Musk’s plan did result in the creation of large fleet of electric powered sports cars and luxury vehicles. He gave the plan a B grade for accomplishing its mission of producing a working, marketable electric vehicle.
Stack was not as optimistic as Johnson.
“DRG would say that ambition can be problematic when operating a multi-million dollar corporation,” Stack said, adding that, CEOs like Musk must counterbalance their ambition with a tangible sense of realism.
Other visionaries in Silicon Valley such as Apple’s Steve Jobs, according to Stack, had exceptionally brilliant engineers like Steve Wozniak helping them develop the nuts and bolts of their vision – in a sense, Wozniak allowed Jobs’ vision to come to life in a manageable way.
“Elon is missing his Wozniak,” Stack said, adding, Apple had equal parts Jobs’ vision and Wozniak’s engineering brilliance, leading to the computer company producing products in a timely fashion.
DRG has been striking a bearish tone on Tesla over the past several months.
The group warned that Tesla’s move to acquire solar panel company SolarCity in early July was likely part of the company’s plan to attract “loss-tolerant” investors in an attempt to avoid possible financial downturn. Loss -tolerant investors are capable of tolerating massive amount of losses in an enterprise, company, or asset with or without knowledge of the loss – it’s a type of pyramid scheme, according to DRG report in May.
Panasonic, for instance, invested massive amounts of money in Tesla’s new giant Nevada-based Gigafactory, a 1.9 million square foot monstrosity in Nevada slated to cost more than $64 million. DRG argued Panasonic is one such loss-tolerant investor, because it is unlikely to know exactly what will come of its investment, as it doesn’t fully understand the complex nature of Tesla’s business model.
Stack’s group handicapped Tesla still further in March, when it argued Musk’s company is not as environmentally sound as supporters and shareholders might think.
Lithium ion batteries, for instance, soak up troves of energy, ultimately placing them dead last in greenhouse gas emissions. Worse still, Tesla’s contractors and miners use massive fossil fuel-powered earth-moving equipment like backhoes, excavators, and bulldozers to mine the miners that go into the lithium batteries.
Stack pointed to Tesla’s inability to hit crucial production deadlines as an example of Musk’s vision overshadowing the company.
The missed deadlines will only add to the growing mistrust contractors are no doubt feeling toward the Tesla brand, he explained.
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