On a High: When Elon gets Stoned, so does Tesla.

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Since day one, Tesla has faced much criticism. Their mass market approach to electrified vehicles was not for everyone and was arguably ahead of Its time. Even today, a decade and a half into the company’s life, they’re still the only mainstream manufacturer who is fully electrified. Yes, there’s mainstream companies who offer electric cars; the Nissan Leaf, for example. However it’s Tesla whose identity is electric. In the same way when you think of a burger, you think of a Big Mac, when you think of an electric car, you think of a Tesla. They’ve solidified themselves as the electric car people. And while that’s got them this far, if they want to stay in the game then they’ll have to think fast, because this past week has raised three very apparent issues which [independently from each other] could act as a catalyst to the company’s demise.

 

ISSUE #1: MERCEDES

 

 

In the long run, the issue which will affect not just Tesla but the whole auto industry the most will be the Mercedes EQC SUV. It’s the very first car in the new Mercedes all-electric “EQ” range. And here’s the killer: it starts from £55,000, and for that you get a base model which is capable of a remarkable 280 miles of range. If you want a Tesla Model X which can match that, you’ll have to splash out a substantially larger £91,350. That’s getting on for twice the price. We don’t even know yet if it’s possible to spec the Mercedes to such a mark.

This means that for the first time, Tesla has real competition, and it’s price point makes it so much more available than the Model X – a price point which goes beyond people choosing the Mercedes to save money, and verges into people buying the Mercedes because they genuinely cannot afford the Tesla.

If anything, you can bet a limb that the Mercedes will be better built too. Expect a review of the EQC in the coming months as more information becomes available.

ISSUE #2: LEADERSHIP SKILLS

 

 

The whole weed argument is a complicated one, and one that’s not relevant to this article so I’ll stay away from that. However I will say that Elon Musk has three whole companies laying on his shoulders. (Tesla Inc. SpaceX, & SolarCity.) He has many tens of thousands of people working under him who need leadership by example. If he’s going to take any form of narcotic, no matter how socially acceptable it is, he can’t afford to let himself be conducted with impaired judgement regardless. At the very least, if he’s going to do it then at least have the decency to do it in private – where he can’t bring everyone else down with him in both leadership, and stock prices.

A very dumb decision from someone who shouldn’t be making dumb decisions.

ISSUE #3: LOSING STAFF

 

 

Beyond Musk smoking weed and Mercedes, their biggest issue is how unorganised they currently are in terms of who’s who within the company. Musk is known to fire people on the spot before even hearing them out. Gaby Toledano, their head of HR, took holiday leave for a month and just never bothered to come back. She officially quit five days ago. And worst of all right now, their financial director – Dave Morton has just left after a mere month with the company because he didn’t want to be associated with them. In his words, the level of negative publicity brought to the company recently has forced him to “reconsider [his] future.” As kind as he tried to be about it, when you’re on the board of directors for a NASDAQ company, in order to leave so soon into the job, you have to know something that everyone else doesn’t about where the company is headed.

IN SUMMARY

The hard hits they took this week are put into perspective by their stock prices. -17.71 at market close on Friday (7.9.18 16:00 GMT). That’s 6.3% of the company, gone.

If Tesla want to ensure their future, they have to recognise that an electric image and gimmicks will only get them so far. Yes, being the electric car company which was fresh and different worked in this decade, but in the next decade and beyond it – in a time when everyone will be electric – they need to come up with a new unique selling point. They need to ask themselves what will make people continue to buy Teslas when the rest of the industry’s premium brands are also offering electric cars with just as much range, and even better build quality for a fraction of the price. Because whatever it is, it won’t be zero-to-sixty times and autopilot – two things they’ve prized themselves on.

They also need to separate the brand from Elon Musk. He’s the company’s biggest shareholder, its chairman, and has been essential in getting the company going. However if they want to keep moving forward, they can’t be brought down with him every time he says or does the wrong thing. There have been many successful huge companies who have found themselves linked to one person’s image, (Apple & Jobs, Microsoft and Gates, McDonald’s & Ronald Mcdonald) but the people who have found themselves in that position have always acted accordingly, and not as an independent “celebrity” party. That’s where Musk falls short – it would seem at times that he does not realise that his actions have direct ramifications to Tesla, it’s shareholders, and most importantly it’s 37,500 employees.

Additional information: while Tesla love to flaunt their zero-to-sixty times, it’s worth keeping in mind that this kind of acceleration is useless in any kind of sports driving because the batteries overheat so fast that fun driving becomes impossible as the car just goes into “limp home mode.” (This only makes a small fraction of the car’s power available to the driver.)

They also make a big song and dance about the self-driving capabilities of their vehicles. And while that sells many cars for them, it’s definitely worth bringing to the consumer’s attention that Volvo do their own version of the system that’s much better, as it won’t kill you. (Many people get that confused with the Uber interface which was set up on an XC90 and did kill someone – though it was a completely different system.)

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