Like many in the automotive press, I take notice when Tesla and its CEO Elon Musk generate news.
While the company doesn’t use traditional marketing and advertising to sell its cars (which is normally how I cover the auto industry,) it would be imprudent not to stay abreast of the controversial visionary.
My news alerts for Tesla have been busy the last few days. Today, Musk addressed the company’s management structure in a memo.
"To ensure that Tesla is well prepared for the future, we have been undertaking a thorough reorganization of our company," wrote Musk. "As part of the reorg, we are flattening the management structure to improve communication, combining functions where sensible and trimming activities that are not vital to the success of our mission. To be clear, we will continue to hire rapidly in critical hourly and salaried positions to support the Model 3 production ramp and future product development.”
It’s not a bad move to assure investors and future owners that money is being spent prudently.
In other news, Tesla registered a new firm in Shanghai, according to a report from Reuters.
Tesla (Shanghai) Co Ltd. was registered on May 10. The company isn't divulging if the registered company is related to manufacturing in the Shanghai region, with the filing saying broadly that it will focus on electric cars, spare parts and batteries.
“We don’t have anything new to add on this registration for now,” a Tesla spokeswoman told Reuters today. That’s par for the course with Tesla. They have a fairly strict “no comment” to all media requests. It’s somewhat aggravating, especially when Musk likes to go on at length about how journalists are “irresponsible” in reporting incidents having to do with autonomous-related accidents.
Finally, rumors have been swirling over the fate of the Tesla Semi. The automaker unveiled the prototype with much fanfare in November.
Successive press events and public test drives built the perception that the Semi would enter production in the near term; numerous large companies made preorders. Yet, during the first-quarter earnings call, the Semi received no mention except in response to questions. Musk essentially admitted the project had been put on hold.
Lack of capital to build a manufacturing plant and apparent technological challenges have raised eyebrows since the unveiling; the financing situation has only gotten worse since then. It appears increasingly certain that the Tesla Semi will never see commercial production, according to John Engle, president of Almington Capital - Merchant Bankers, and a contributor to Seeking Alpha, where he recently wrote about the Semi.
‘If the Semi looked like it could claim a significant market, then Tesla would be moving forward with it,” Engle writes. “That would not necessarily require massive capital outlays toward building a production facility – not at first, anyway. But one would expect the company to at least tout the market opportunity and continue to promise that development would be coming soon. Instead, investors have been left with a rather peculiar silence.”
Engle believes the project “has been stalled, if not canceled entirely.”
There is also the looming specter of competition, including Thor Trucking, which intends to launch its own all-electric big rig in 2019, ahead of Tesla’s original promised launch date. Nikola Motor Company, another EV startup, is also swiftly developing its own electric semi, and is suing Tesla for $2 billion on design patent violation grounds for good measure, Engle notes.
As Donn Bailey, an investor and frequent contributor to SeekingAlpha.com points out in a comment on Engle’s piece, Anheuser-Busch preordered 40 Tesla Semis and 800 Nikola One semis.
“Who do you think they have more confidence in?” he asks. “With nearly 10,000 preorders Nikola has a viable product. Tesla, not so much. We already know PepsiCo is not happy about the projected costs of the needed Megachargers and looking for others to share the chargers and costs. That’s a big nail in the coffin right there.”
Perhaps more alarming from a consumer perspective, safety is still an issue as the company continues to work out the bugs associated with autonomous vehicles. Not helping,Tesla just lost Matthew Schwall, its safety head, to Alphabet’s self-driving car unit Waymo. His exit follow’s Tesla’s announcement Friday that its engineering chief is taking a leave of absence. This comes on the heels of a story in Wired that Tesla may have been misinterpreting its autonomous safety statistics.
The National Highway Traffic Safety Administration indicated that Tesla has been misconstruing the key statistic it uses to defend its technology. Over the past year and a half, Tesla spokespeople have repeatedly said that the agency has found Autopilot to reduce crash rates by 40%. They repeated it most recently after the death of a Northern California man whose Model X crashed into a highway safety barrier while in Autopilot mode in March. Now NHTSA says that’s not exactly right—and there’s no clear evidence for how safe the pseudo-self-driving feature actually is.
Clearly, the company is hitting some bumps in the road. Growing pains are one thing, but ultimately Musk has to answer his critics or else risk losing the momentum the company has steadily gained over the past several years.