By on May 7, 2018

It would be unfair to criticize Tesla Motors’ CEO without also illustrating just how important he is to the company. Were it not for Elon Musk, Tesla would have never made it this far. He was not only integral in its foundation but also the driving factor as it picked up investors. While the company was building innovative products, he has kept shareholders looking toward the horizon and keeping the faith.

Unfortunately, 2018 hasn’t been a great year for Musk. While the brand has managed to keep its exceptionally loyal fan base, bad publicity has shaken investor confidence. No automaker is free from ugly stories but Tesla has been deemed semi-miraculous for some time — making any failures that much more glaring. The bar has been set unreasonably high and unkept promises have caused issues. Tesla has itself a PR problem and, like most things, it looks like it’ll be up to Elon to fix it. But it’s going to be a monumental task, Musk is already putting out fires everywhere and the pressure is only expected to build over the next 24 months. 

In addition to bringing up Model 3 production to 5,000 units per week by June, the company has said it intends to bring the Model Y crossover to market by 2020. The Model 3 has already been faced with numerous production hangups and had serious trouble reaching assembly goals by the dates previously promised. Musk has even begun sleeping at the factory to do whatever it takes to bolster production and prove his commitment.

However, office camping won’t be enough to ensure the Model Y will be ready to go in two years. Musk recently said that Tesla would be announcing a brand-new factory location before the end of 2018, which will eventually become the electric crossover’s industrial womb. But factories take a long time to build. Even a modestly sized factory can take over two years to complete once the ground is broken — and that’s assuming everything goes according to plan.

Then, and only then, can the automaker start prepping the facility for Model Y production. Meanwhile, it still has to plot what it’s going to do about manufacturing the new roadster and semi-truck.

Tesla Semi, Image: Tesla

Analysts and investors are starting to realize this is an immense amount for the company to achieve, perhaps too much. During last week’s earnings call with investors, Musk seemed to be fed up with analysts hoping to make sense of Tesla’s precarious financial situation. During a question about where the company stands in terms of capital requirements, he refused to answer.

“Excuse me. Next. Next,” Musk told the call operator. “Boring, bonehead questions are not cool. Next?”

But even more mundane questions, like what percentage of Tesla 3 reservation holders have started to configure options for their cars, were met with disdain. “These questions are so dry. They’re killing me,” he said.

But these are the kind of questions analysts need to know so they can make projections about the company’s profitability. If the answer isn’t one Musk wants to give, the brush off probably isn’t a great way to appease worried investors. Share prices even took a modest hit after the earnings call. But Tesla stock has been relatively flat since recovering from the real damage dealt in the wake of a high-profile Model X crash in California from last March.

Although, that has garnered continued bad publicity as well. The National Transportation Safety Board, which has been tasked with investigating the role Autopilot played in the incident, has been at odds with automaker since it released its take on the accident to the public. The NTSB even scrapped a joint investigation because it felt Tesla wasn’t adhering to agreed-upon rules. The investigative agency said the automaker was strictly prohibited from disclosing any details of the investigation and had violated that agreement.

According to Bloomberg, Robert Sumwalt, chairman of the NTSB, called Musk on April 11th to tell him that a blog post by his company casting blame on the driver of a Model X for a fatal crash is in breach of their arrangement. He then said he would be forced to remove Tesla from participating in the investigation. “Best I remember, he hung up on us,” Sumwalt told attendees of the International Society of Air Safety Investigators’ Mid-Atlantic Regional Chapter last week.

This doesn’t mesh with Tesla’s claims that it had removed itself from the investigation prior to the NTSB’s announcement and drew further criticism the company didn’t need. Most of the news surrounding Tesla during the last few months has been uncharacteristically negative. While some of it has been valid, like quality control issues, employee safety concerns, unmet production goals, and worries about the company’s long-term finances, other bits have been rather petty — driven by the company’s constant need for attention and the press’ symbiotic fascination with the automaker.

For example, Musk took quite a bit of heat over an April Fools’ prank that joked about bankruptcy. It didn’t go over well with the media and was, admittedly, poorly timed. But it seemed rather benign compared to the myriad of more-tangible issues the automaker was being faced with. Some of the staff here even found it to be darkly comical.

Tesla’s status as an industry outlier and its CEO’s high-profile nature really makes all of this exceedingly difficult. The firm is held up largely by people’s faith in it. Investors need to continue believing in it to exist, especially considering Musk has given it this company-of-tomorrow framework but it hasn’t turned an annual profit in its 15-year history. Bad publicity could really hurt Tesla’s future and it has had too much lately. If investors begin pulling out, it won’t have the funds necessary to build these new models and finally make some money.

That doesn’t mean the company’s about to throw itself against a wall. But it does mean it has to be careful to not let things fall apart now. It may have already made amazing strides but it’s still technically an automaker in its infancy. Tesla is, no doubt, hoping the public will understand growing pains are part of the evolutionary process as it hunts for production volume. Meanwhile, Elon Musk has recanted upon his behavior during the earnings conference. We don’t expect him to take it easy on those who are critical of the company’s prospects but it’s good to see him trying to right the public-relations ship and acting a little less stressed out. Because he’s going to need to remain confident and keep a level head if he’s going to get through the next couple of years.

[Images: Tesla Motors; Elon Musk]

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31 Comments on “Unpacking Elon Musk and Tesla’s Current PR Problem...”


  • avatar
    CombiCoupe99

    No longer interested in the fake Musk miracle. I am now just waiting for the collapse.

  • avatar
    stingray65

    Silicon valley billionaires such as Elon seemed to think that making physical products such as electric cars and solar panels would be as easy and profitable as software based products. After all, if all those deplorables in flyover country could do it, how tough could it be? Turns out they were wrong.

    • 0 avatar
      mcs

      @stingray: They typically underestimate the difficulty of building software (e.g. autonomous car software) too. They’ve just carried the same mistakes over to manufacturing.

      • 0 avatar
        Sam Hall

        This. I was really hoping that as companies like Tesla took Silicon Valley into industrial products like cars and trucks, their experience would bring software up to the (recent) reliability standards of cars and trucks. Instead, cars and trucks have gone toward the reliability of software.

    • 0 avatar
      Bazza

      Software companies of all stripes are quite comfortable with using customers as beta testers. Car companies do it also but have much less margin for error; it’s that reduced margin that’s proving difficult for Musk to manage in getting product out the door.

  • avatar
    ra_pro

    I just read a story somewhere last week (Bloomberg I believe) where a couple of professors said that they believed most of Tesla’s production problems are related to Tesla trying over-automate its production. They said that it was tried before by other firms and they all failed. They said that so far that are no robots on the horizon that could do final assembly and production control as well as people, not even close.

    This would make sense for what it’s worth but my question would be if this was tried already a number of times and it always failed miserably why would Tesla think they could do better? Hold on, gee, this is Tesla they can always do better than anybody else.

    In any case, I think major investors will stick around as long as there is no major economic or financial crises in the next couple of years.

    • 0 avatar

      “This would make sense for what it’s worth but my question would be if this was tried already a number of times and it always failed miserably why would Tesla think they could do better?”
      Because…Progress!
      Seriously,they may have thought there has been significant enough advances in robotics that this time would be different.

      • 0 avatar
        Tstag

        I suspect the reason Tesla attempted to over automate the process is because they have no experience in the mass production of cars. When their share price was higher they should have issued more shares and bought out a company like Mazda who could have thought them how to do it.

        As it is they are becoming prey to a number of other car makers. Their problems are going to intensify as new cars like the Jaguar I Pace arrive.

      • 0 avatar
        GiddyHitch

        @stephen

        The heavy six axis industrial robots used in automotive production probably haven’t seen significant improvement since the 80s or 90s. Humanoid and collaborative robots is where you see a lot of development these days and maybe AGVs too.

        • 0 avatar
          cdotson

          There’s been a lot of progress in recent years in vision systems and machine learning, probably the area that’s most proximate to anything “AI” that’s viable right now. This is suitable for fully automated nanoscale chip production/assembly and for QC systems, but of minimal aid to automotive production.

    • 0 avatar
      GiddyHitch

      Tesla has always been plagued by production issues because they don’t have the design and manufacturing expertise of more established automakers. Story of every automotive upstart sure, but the situation is exacerbated to a painful and predictable degree now by a casual dismissal of Detroit expertise, proliferation of new models, unrealistic development timelines and production quotas, running Fremont on a shoestring budget, shifting key resources around the Tesla umbrella companies frequently, and operating under a CEO whose attention frequently shifts among cars, rockets, batteries, solar cells, and now candy.

      I used to be a Tesla defender in these very pages since the Eberhard days, but a test drive of a Model S three years ago and the company’s performance, not to mention Elon’s behavior, disabused me of that notion.

    • 0 avatar

      Automation replacing humans in car factories? Again, see General Motors in the Roger Smith era.

  • avatar
    Whatnext

    The haters love to dump on Elon Musk but consider this, would you have believed anyone who said ten years ago that many 5 series and E-Class customers would be trading their cars for an electric vehicle made by a start-up manufacturer? The Model S is far more numerous here now than either. And consider the hyp over the Model 3, while the capable and cheaper Bolt by GM, in business for a century, goes largely unnoticed.

    • 0 avatar
      TwoBelugas

      “The Model S is far more numerous here now than either. ”

      Source?

      According to GCBC, in the US last 5 years model S peaked in 2016 at 29,156. E series low was 2015 at 49,736. 5 Series has the same story with a low of of 32k in 2016.

      http://www.goodcarbadcar.net/2013/08/tesla-model-s-sales-figures-usa-canada/

      http://www.goodcarbadcar.net/2011/01/mercedes-benz-e-class-sales-figures/

      http://www.goodcarbadcar.net/2011/01/bmw-5-series-sales-figures/

      • 0 avatar

        @TwoBelugas: Model S competes with S-class not E-class. Do your research before making this kind of statements. Tesla sells more model S sedans than Mercedes S-class sedans. It is such a well known fact than I am srprised that you are not aware yet about it. Just Google it. E.g. https://global.handelsblatt.com/companies/tesla-model-s-outsells-mercedes-s-class-bmw-7-series-europe-889862

        • 0 avatar
          mike978

          He was replying to the IP who stated E and 5 models, so question him not beluga.

        • 0 avatar
          krhodes1

          Model S competes with both. The cheaper Model S are priced like the higher end 5s and Es, the more expensive ones are priced like lower end S-class and 7s. Size-wise the Model S is more like the S-class and 7, but amenities and luxury are barely up to 5 and E standards – it’s kind of a weird market position.

          Quality-wise the Model S is like a Chevy Celebrity built on a bad Monday. But on the flip side in most places a Tesla gets you solo access to carpool lanes, and cheap/free tolls. Those alone are reason enough to buy one if you live in a place where those things can save you literally hours a day. If I commuted in SF Bay I would buy one for that reason alone, and I think they are otherwise kind of stupid.

    • 0 avatar
      civicjohn

      Whatnext,

      I believe that many of the “haters” are simply tired of the Elon show. The last episode where he put the word out that he was going to create a “short squeeze” and then bought 33,000 shares on the open market.

      The ever-shifting 10-Q reports get more bizarre with every release, but in the last one, Sir Elon has 1.4 million shares pledged as collateral. Of course, 99% of the population doesn’t know that even exists, but praise him for buying 33k shares.

      Then we move forward to the dust up with Warren Buffett and starting a candy company. This s**t just gets so old that I imagine there are a few people like myself that would consider the purchase of a base Model 3, when it becomes available, but his antics are not helping close the deal. I used to be in the camp that he needed to stay in the CEO position, but not anymore. He can exert his influence and get the heck out of the limelight.

  • avatar
    jimble

    Musk’s arrogance has always rubbed me the wrong way, but part of me really wants Tesla to succeed and blow the industry wide open for innovation. Unfortunately for Musk, building a mass-market car at a profit is one of the hardest things any company can do, much harder than making expensive cars that you can afford to put a lot more labor hours into (especially when you’re losing money on them). The success of the Model S stoked his ego but it didn’t prepare him for the reality of how difficult the car business really is.

    • 0 avatar
      Asdf

      Musk has demonstrated that he’s chronically unable to build a competitive EV, in the way he’s failed to fix the problems of short range, extremely long charging times and exorbitant prices of these types of vehicles. In effect, all Teslas ever made have been, and continue to be, defective by design. And Tesla has been around for quite a while now, which can only mean that Musk is over his head in trying to run an automaker, and his mediocre efforts demonstrate that EVs are nowhere near being ready for prime time, maybe they never will be.

      • 0 avatar
        GiddyHitch

        @ Asdf

        Chronically unable to build a competitive EV? His company builds the most competitive and most successful EV ever built. Tesla is still the 400lb gorilla in this space as long as Elon keeps those plates spinning or until one of the big boys sacks up and makes a commitment to EVs (Nissan, you listening?).

        • 0 avatar
          Asdf

          You just proved my point. The most competitive and most successful EV built happens to be a car that, as far as cars in general are concerned, is neither competitive nor successful. Its only merit of significance is in extracting tax payer money and putting it in Elon’s pocket.

      • 0 avatar
        Master Baiter

        @Asdf

        It’s getting tiresome to see your same ignorant comment copied and pasted into every thread related to EVs.

        EV buyers are well aware that they take longer to “refuel” than an ICE car; they are willing to live with that tradeoff.

        • 0 avatar
          Asdf

          Someone who uses “ignorant” as a general-purpose insult is hardly someone whose opinion I care to take into account. Feel free to resume the activity that inspired your nick, if you haven’t got anything of relevance to say.

  • avatar

    All quiet on the California front. Last time I checked Tesla stock was already up 3% and on the good side of 300 USD. Obviously, Tesla shares are not considered shares in any car company (“dream on, Big Three”), but rather an investment in what can be seen as a far more structural and long-term development – energy transition and all that.

  • avatar
    Dingleberrypiez_Returns

    TTAC sure seems to like the term “unpacking” these days. Try a thesaurus, guys.

  • avatar
    indi500fan

    This is the first I’ve read about a new Tesla production plant. Is there a current nationwide scramble (a la Amazon) on the part of politicians to throw money at Musk that I’ve totally missed?

    • 0 avatar
      civicjohn

      indi500fan,

      There hasn’t been any announcement, EM said that they would probably announce something at the end of 2018, but from what I’ve read, it takes about 2 years to bring a plant on line.

      He said they were maxed out at the Fremont site, there’s no room at the GigaFactory unless they expand the building (I believe Panasonic actually occupies more space there than Tesla), and he has in past statements said that most likely any GFs would have a production line along with it.

      China makes the most sense, but not knowing where the US/ China trade talks evolve, they would face a 25% tariff for bringing in cars built somewhere else.

      EM was very dismissive during the conference call, many analysts called it the most bizarre call they had heard in years (just Google it). He basically implied that the Semi wasn’t a big deal, he had to get clarification from other Tesla staff on the call to say they had about 2000 orders in house. Roadster was not even mentioned, Model Y (the CUV) has flipped 3 times but now their thinking is that they will NOT use the chassis of the Model 3 for that product. While that sounds whack to me, I’m no rocket scientist.

      I’m assuming the Model Y unveil will happen sometime this year, but the deposit amount will likely be higher than the $1k for the Model 3, and they may have Model 3 reservation holders that will jump ship and move to the Model Y. And like it or not, the Kona and the Jaguar iPace will be shipping by the end of 2020.

      So it is starting to pile up, the different models, the lack of production lines, and the competition (beyond the Chevy Bolt). That’s why I mentioned earlier that he should step aside from the role of CEO and put someone else in that position.

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