Tesla CEO Elon Musk has attracted a lot of attention recently. The uncertainty of Tesla’s future is not helped by the CEO’s erratic behaviour. First there was the fiasco back in July of this year where Musk offered to build a submarine for the rescue of the youth football team trapped in a cave in Chiang Rai, Thailand. This whole incident culminated in Musk responding to criticisms of his submarine idea from a British diver and volunteer rescuer Vern Unsworth in a now infamous tweet calling Mr. Unsworth a ‘pedo guy’.
Mr. Unsworth was being interview by CNN, was asked to comment on Elon Musk’s submarine idea. His response was ‘He can stick his submarine where it hurts. It had absolutely no chance of working. He had no conception of what the cave passage was like. The submarine, I believe, was about 5 foot 6 long, rigid. So it wouldn’t have gone around corners, around any obstacles. It wouldn’t have made it the first fifty meters into the cave from the dive start point. Just a PR stunt.’
While there’s no doubt that had Musk been able to rescue the boys from the cave it would’ve been great publicity, it should be noted that Musk was asked to help, he did not simply invite himself to be there. It’s not as though the whole thing was staged from the outset as a PR opportunity. As for the Submarine plan not working, Dick Staton who co-led the dive team said at the time ‘it is absolutely worth continuing with the development of the system, [….] if the rain holds out it may well be used,’ in response to an email from Mr Musk. It is therefore understandable why Musk may have been hurt by Mr Unsworth’s comments.
Mr. Unsworth is now suing Mr Musk for defamation of character in the US and in the UK.
In early August Tesla’s founder threatened to return the company to private ownership. Somewhat paradoxically the funding for taking tesla private was to come from Saudi Arabia’s sovereign wealth fund, meaning that the world’s premier electric car manufacturer would now be funded by one of the world’s largest oil producers.
Just 3 weeks later he reversed his decision, listing in a blog post on Tesla’s website the four main reasons for his change of mind;
- Existing shareholders believe Tesla is better off as a public company;
- Not all existing investors would be able to own shares of a private company;
- It wasn’t clear how individual investors would take part in a deal;
- The process could distract the company from production of its first mass-market offering, the Model 3.
The directors were pleased with his decision to keep the company public, but the Securities and Exchange Commission (SEC) who regulate the stock market were not. The initial tweet sent Tesla’s stock soaring and caused a halt in trading pending a complete announcement. The stock tapered off in ensuing weeks and never came close to the $420 buyout price that Mr. Musk had said was in prospect, indicating that investors were sceptical of the claim. Mr. Musk is currently being investigated for market manipulation by the SEC. If he is found to have engaged in market manipulation, then he will face various criminal and civil lawsuits.
Shortly after this decision to remain public was made Tesla’s chief accountant Dave Morton resigned after only a month in the role, ‘Since I joined Tesla on August 6th, the level of public attention placed on the company, as well as the pace within the company, have exceeded my expectations,’ Morton said in the filing. ‘This caused me to reconsider my future. I want to be clear that I believe strongly in Tesla, its mission, and its prospects, and I have no disagreements with Tesla’s leadership or its financial reporting.’
Disregarding all of the drama surrounding the CEO and just purely looking at Tesla as a brand: it has three major marketing points, eco-friendly car, self-driving car, high quality premium executive saloon car. When Tesla first entered the market they were alone in this field. Tesla has now got strong competition in all 3 of these markets, with Nissan having released the Nissan Leaf and similar success to Tesla, selling 300,000 units since production started back in 2012. However, the Leaf has only a 160 km range battery while Tesla’s Model X has 450km range, still the price of the Leaf at around €30,000 is only a fraction of the cost of the new Model S which is €100,000.
It could be argued that the Leaf is not a premium car and the Model X is, but Tesla has competition from other premium car manufactures as well: Volvo, Audi, Mercedes, BMW have all released high quality expensive executive cars with self-driving autopilot features fully operational. This leaves Tesla in an odd predicament, where they no longer have a true unique selling point. Which begs the question why anyone would buy a Tesla when they could buy a Volvo XC 90 T8 Hybrid (which has self-driving capabilities as well as the eco-friendly aspect going for it) or a BMW 750i X.
To sum up, it’s unclear whether investors have confidence in Elon Musk as a CEO, and it’s unclear whether Tesla even have a unique selling point anymore and without a unique selling point it is unclear whether Tesla can compete with well established car manufactures for years to come.
By Robert Treacy – Business Editor
