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Elon Musk – the visionary of technology, showman – knows how to set up a charm offensive. When the Tesla boss inaugurated the company's annual meeting of shareholders, he seemed to hold tears when he said, "It's going to sound a bit cheesy, but at Tesla we're building our cars with love." .
This did not prevent him from declaring, in all sincerity, that Tesla will probably reach this month the production target which is considered a turning point for the company of electric cars . The magic dust of Musk has not lost its power at all. His performance provoked a rebound that added 23% to the late Tesla shares placing it, again, very close to its historical maximum. After a troubled spring, Musk regains control
For other bosses, the course could be a mark of personal pride or claim. But for Musk it's a lot more. He became the main weapon of Tesla, allowing the company, which still loses money, to return to Wall Street in search of more and more money. money.
While critics shake their heads and warn that Tesla investors are getting tired of this game, the manufacturer's shares are now 35% higher than the last time Musk used it again capital, early 2017. The message: Musk's loyal shareholders are always ready to support him, no matter what happens.
They Point to a Fall of Tesla
In reading the headlines for much of this year, it seemed that Musk's chances of success were quickly reduced. The problems posed by the Model 3 – his company's first attempt to reach the mass market – delayed production far from programming.
This led analysts to predict that Tesla should return to Wall Street to raise $ 2 billion more this year, something he strongly opposes.
A fatal accident of his Model X led to a new examination of the company's autopilot ( autopilot ), a prelude to ] software complete autoconduction which, according to Musk, will be published in a few weeks. And as a sign of pressure to put order in his finances, two weeks ago, Tesla announced a restructuring for the entire company that will result in the loss. of about 3,500 jobs 9% of staff
In announcing the job cuts, the Tesla leader admitted that it was "a fair and just criticism of the job". the company's history "that he had not managed to achieve consistent profitability.
Company critics for a long time They believe that all this has been proof that Tesla and his executive director risk disarming in an operational, financial and psychological way.
Musk himself is at the center of the drama. Last month, at a conference to discuss Tesla 's findings, the CEO dismissed the "boring and absurd questions" of one analyst and completely ignored the question of another.
Musk's resentment immediately eliminated 8% of Tesla's price. "That made many long-term investors wonder what was going on," says Ben Kallo analyst at RW Baird .
Supporters say the erratic behavior is understandable given the pressure that is going on. "Put yourself in this situation: you feel that your mission is to save the earth, and you become very hostile to the people you think destroy this vision," says Ross Gerber founder and executive director of ]] asset manager Gerber Kawasaki .
A former director of Tesla, who worked with Musk for several years, said, "Every time you sneeze, there is a reaction, it's normal when you're a public figure, but you take very personally. Even Gerber agrees that Musk's behavior was misplaced. "The conference was a low point, I agree with him, but I think he did not handle it well," he says.
The performance fueled long dormant questions about whether Tesla has adequate counterpoise to control a CEO who feeds on breaking conventions.
An analyst who covers Tesla for a large bank says that many analysts believe that Tesla does not have "adults" to control Musk's explosions in particular on Twitter where ] harasses the journalists and promises to "burn" the speculators who bet in the short term on the actions of the company.
An industry executive who knows Musk adds, "If another CEO of the planet showed behavior like him, he would be left out in a moment."
Critics also complain that Musk is distracted. With SpaceX other companies that demand their time, include a tunnel construction company called The Boring Company who recently won a construction contract from a high speed underground rail link in Chicago. The news came right after Musk turned to Twitter to celebrate the delivery of the company's first consumer product.
Gerber notes that his unusual approach to public participation is part of his appeal. "If you want traditional businesses, you buy GE shares and you get frames in suits," he says.
Betting on the Model 3
The production of cars has proved to be their most difficult proposition. However, despite its production damage, Musk continues to lecture the rest of the industry on how to make cars, claiming that Tesla's true competitive advantage lies in a superior production system. This year, he compared the current top speed of the industry's production lines with "a grandmother with a walker", while they should reach "30 … 40 km / h".
It's boring for the most experienced automakers. "He thinks that in Detroit, they are all dinosaurs," says Bob Lutz who held senior positions in the top three American automakers. It calculates that Tesla now employs between 9,000 and 10,000 people in its only factory in Fremont near Silicon Valley where a more experienced manufacturer could reach the same production with 2,500 workers.
In the middle of the crisis, Musk was put in charge of production. Even formerly fiercely loyal employees believe that Tesla would benefit from a full-time operations manager to lead the company, while the executive director sets the direction and strategy.
With the final production period in July the crucial moment for the company finally arrived. In addition to claiming that Tesla will achieve its goals, Musk predicts that it will continue to be profitable and with a positive flow in the last two quarters of the year, a milestone in its search to be financially viable.
Analysts remain cautious with the company, which admitted that she could get out of her troubles. The increase in production, the inversion of investment decisions and the reduction of jobs "all contribute to reducing expenditure", explains Philippe Houchois analyst at Jefferies . "Achieving a break-even point in the second half and generating cash flow is not unrealistic," he adds.
But even if Musk can achieve these goals, it will take more than a quarter or two to show that achieving profitability in Model 3 is a turning point for the company. Compared to its initial price of $ 35,000, Tesla made its first orders for vehicles with an initial price of $ 49,000 a premium that will cover first-time profit margins. "If they can produce enough of these cars and sell them at a pretty high price, they could make a profit for the quarter, but it's short-lived," Lutz says.
In addition, this year, Tesla announced that it would begin to deliver orders for cars equipped with fewer additional features, with prices starting at $ 35,000, a change that exposes them to the risk of returning to the losses of the company.
If the demand for electric cars is not clear, then there is not much doubt about the new offer that will soon reach the luxury car market . Thanks in large part to the success of Musk with its Model S, luxury automakers will soon arrive with their own electric cars .
"There is no single technology, none," says Lutz, who predicts a much tougher future for Tesla. For Lutz, luxury brands like BMW and Mercedes that have a better reputation in their quality, will dominate the market that Tesla has had up to here for her. This will be the most severe test of Musk's dream of profitability.
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