A Series of Unfortunate Events: Inside Tesla’s Nightmarish Month
WHY YOU SHOULD CARE
Because the rocket ship company that once was Tesla appears to be coming back down to earth.
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WHAT TO KNOW
What happened? The last few weeks have been a nightmare for the carmaker Tesla and its high-profile CEO, Elon Musk. After a fatal accident involving an autopiloted Model X in Mountain View, California, last month, Tesla’s stock took a nosedive. Not long after, Moody’s downgraded Tesla’s debt from stable to negative. This week, a report from the Center for Investigative Reporting (CIR) concluded that the company mislabeled and underreported workplace injuries, though Tesla denies the allegations.
What didn’t happen? Tesla has also been under fire for what it hasn’t done, starting with hitting production targets. The company missed its goal of producing 2,500 Model 3s per week by the end of the first quarter — and now it’s shooting for twice that number per week by mid-2018, with Musk claiming that the assembly factory will operate “24/7” until it meets its goal. Musk also promised that the company will return to “first principles,” even as many investors start to lose their patience with the charismatic CEO.
HOW TO THINK ABOUT IT
They’ve got 99 problems — and cash may be one. Thanks partly to bad PR, Tesla’s financial well-being is under question. The company’s stock value has dropped by double digits in recent months, and though it’s still valued at nearly $50 billion, observers say that figure depends on significantly boosting production. The company lost more than $2 billion last year, and some analysts believe the carmaker, which denies that it’s facing a cash crunch, needs to raise another $3 billion in capital this year just to stay running. Meanwhile, hedge fund Vilas Capital Management says Tesla will crash within six months … even though shareholders just approved a $2.6 billion pay package for Musk, one of the largest ever.
Will Tesla take a back seat? The electric-car market so far is tiny — only accounting for 1 percent of the 90 million vehicles sold each year. But it won’t be for long. Global carmakers are set to invest at least $90 billion in electric cars and batteries, and within the next 15 years, experts expect full battery-powered vehicles to account for up to 20 percent of new car sales in the U.S. Tesla dominates the American market, but it will soon be competing with the likes of Ford. Plus, dozens of fully electric and hybrid models are being developed in China and Germany. Tesla could sink in the flood of new competition or be buoyed by electric options becoming more mainstream.
“Save us, Elon!” That’s what one crowd member shouted during the unveiling of Tesla’s solar panels last year. Such tongue-in-cheek exuberance illustrates why the entrepreneur is treated with reverence by his loyal fans. Musk has big ideas: saving our environment with solar energy, colonizing Mars and transferring human consciousness into computers. And this year he launched a car into space while Tesla struggled to meet production targets. It remains to be seen whether Musk can keep up with his bucket list of big ideas while still keeping his core business on track.
The greatest showmen. U.S. President Donald Trump has praised the South African–born entrepreneur for demonstrating “American ingenuity at its best!” And Musk appears to be borrowing from the Trump PR playbook. He recently lashed out at the CIR, calling it an “extremist organization,” and also boasted on Twitter that he was “building a cyborg dragon” — raising the question of whether the entrepreneur was serious or trying to distract from recent scandals. Musk, like Trump, also recently retweeted praise from Kanye West.
WHAT TO READ
Elon Musk Has a Lot Going On, and It May Be Coming at the Expense of Tesla, by Jaden Urbi at CNBC
“So for now, it looks like Musk isn’t slowing down. And that could make for a rocky relationship between Tesla, Wall Street and Musk’s grand vision for the future.”
How Elon Musk Plays on Our Science Fiction Dreams, by Chris Ip at Engadget
“Musk’s stories are irresistible, and a key reason is that he taps into the public’s science fiction fantasies.”
WHAT TO WATCH
Elon Musk Demonstrates and Defends Tesla’s Autopilot System to Gayle King
“The system worked as described, which is that it’s a hands-on system, it is not a self-driving system.”
Watch on CBS This Morning on YouTube:
Stephen Colbert Admires the Red Tesla That Elon Musk Sent Into Space
“It’s so surreal and moving to see something that ordinary floating in space, I literally watched it for hours. Whoever bullied Elon Musk in high school: Thank you.”
Watch on The Late Show With Stephen Colbert on YouTube:
WHAT TO SAY AT THE WATERCOOLER
Will China save Tesla? Last year, China was Tesla’s fastest-growing market. The nation of more than 1.3 billion is also the largest market for electric vehicles, and that market is only going to get bigger: The Chinese government has mandated that by next year, 1 in 10 new passenger vehicle sales must be plug-in electric.