How Elon Musk's Exit from Tesla Would Turn Him

Now, this could be imminent.

The Securities and Exchange Commission sued Musk on Thursday, accusing him of fraud and asking a judge to dismiss him as CEO and chairman of Tesla.

This decision raises the serious possibility that Tesla will be forced to find a new leader at a crucial time for the company, which is fervently trying to stop its loss of money and improve its nascent production of the model 3 electric car. .

"Tesla and Musk are inextricably linked," said Michelle Krebs, an analyst at Autotrader. "Without Musk, if that were to happen … can he maintain that brand strength and almost follow a cult?

Tesla's thinking without Musk is like Ford Motor Co. without Henry Ford. It is unthinkable until one day, it happens.

The difference is that Ford was already one of the largest and most diverse car manufacturers in the world after Henry Ford. Tesla remains a company specializing in electric vehicles that aspires to be much more.

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Musk is a "charismatic character who has a somewhat contagious vision," said Ian Beavis, head of strategy for auto consultants AMCI Global. "It looks like what Steve Jobs has created for Apple."

But unlike Jobs, who encouraged Tim Cook to succeed him as CEO, Musk has no one on the bench ready to take over as manager of this team.

In fact, he refused to hire a # 2 officer, despite calls for him to install an operations manager with financial and manufacturing expertise to speed up production. of the model 3 electric sedan. It also appealed to dozens of other leaders, making leadership instability one of the only constants of the company.

"It has not trained a new generation of managers and operators to move society forward," Beavis said.

On the other hand, his other company, the rocket builder SpaceX, has a team of well-qualified executives who execute his vision.

Musk is more than the public leader of the company – for many investors he is the company, said branding expert Rob Frankel.

"It's 100% the face of all its interests, from flamethrowers to rockets," Frankel said. "I would say he probably has a greater public awareness than some of his own brands. It's by design. It's a big problem. "

Without Musk at the helm, Tesla could face radical changes. Key opportunities:

1. A successor from the outside is appointed.

The successor of Musk would certainly come from outside the company. The candidate could also be found outside of the auto industry, much like Ford CEO Alan Mulally in the 2000s to perform a turnaround, suggested Krebs.

But potential candidates for the job are extremely difficult to identify.

"Given the financial situation of the company, production problems and logistics /
Jeffrey Osborne, Cowen Analyst

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Tesla's CEO tweeted some questionable articles, and one of them sued the Securities and Exchange Commission.
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2. Musk keeps a visionary role.

Musk could negotiate a small role for Tesla in a settlement with the SEC, probably playing a visionary or technical role.

It would not be unprecedented. In 2003, the SEC tried to prevent Martha Stewart, life guru, from sitting as a director and restricting her activities as the CEO of any publicly traded company when the regulator l '. accused of the offense of insider trading

However, a 2006 regulation imposed a lesser penalty: a five-year ban on Stewart as director of a public company and a five-year restriction on the scope of his duties as an officer or employee of such a corporation. firm.

She had previously resigned as President and CEO of Martha Stewart Omnimedia in 2004 after being convicted of obstruction of justice charges and other allegations. She assumed the role of founding editorial director of the company.

In 2011, Stewart joined the company's board of directors.

Musk has already considered the possibility of giving up one day as CEO and focusing on product development.

This result would allow Tesla to maintain Musk's call while settling his operations under the new management.

But it's not clear whether Musk with strong will could hand over to a newcomer.

"Musk is very dynamic and very strong, and I think his visions are very well encoded in the DNA of all his companies," said Frankel. "Even if the SEC says, you can not own it, you can not touch, you can not do anything," nothing says that he can not advise them, he can not advise. "

3. Tesla reduces his ambition.

As part of Musk, Tesla has developed a wide range of products in constant evolution: electric cars, electric semitrailers, solar tiles, batteries for the home, batteries for utilities and installation of solar panels.

Some critics say that the company is not focused and must focus on its core business: the production and sale of electric vehicles.

"They are in a precarious financial situation, and it's a time of financial transition," said Krebs.

A more focused Tesla could be a more viable Tesla, perhaps even with lasting benefits to demonstrate.

4. The board receives new members.

Tesla's board of directors supported Musk's leadership and integrity after filing the SEC's complaint. But council members have been criticized for failing to adequately monitor Musk.

The council may still feel the pressure to prompt Musk to settle the case before the ship sinks.

"The problem is that the board has not done anything in the long run," said John Coffee, an expert in securities law and a professor at Columbia University Law School. "They have to do the impossible, that is, ask him to be mature."

Until further notice, however, "the advice simply allows him to do what he wants," Beavis said.