Tesla’s problems: take away the position of Elon Musk and fire the two directors!

Tesla’s problems: take away the position of Elon Musk and fire the two directors!

May 28, 2018 0 By autotimesnews

Experts Institutional Shareholder Services (ISS) recommended that Tesla shareholders exclude two members from the board of directors, and Elon Musk be deprived of one of the positions held.

According to the experts of the ISS consulting agency, Elon Musk, who combines the positions of the general director and the chairman of the board of directors, one should abandon the second position, focusing on production tasks and strengthening Tesla’s positions in the market. As for the applicants for the flight from the board of directors of Tesla, they were Antonio Gracias and James Murdoch – each of them ISS experts put forward individual claims. In the case of Gracias, this is a “payment that does not correspond to the level of efficiency” and its affiliation: in 2017, Valor Management Corp., owned and managed by Gracias, provided consulting services to Tesla, for which it received 34 thousand dollars. Obviously, this case is not combined with his position of “an independent member of the board of directors”. James Murdoch, son of media tycoon Rupert Murdoch, in addition to his position in Tesla, is the CEO of the media holding 21st Century Fox, which includes the famous 20th Century Fox film studio. This “congestion”, according to experts, does not allow him to work effectively in Tesla.

However, the circle of claims to managers of Tesla is wider. Among other things, they are responsible for the actual failure of the technological preparation of the Tesla Model 3 production – a strategically important model for the Tesla model. It was with the launch of Model 3 that the company had to reach the annual output of 500 thousand pieces, which would be a prerequisite for reducing the losses of Tesla’s automobile business and further transition to the profitability zone. Recall that in addition to the production of electric cars, the company is engaged in (and very successful) production of solar batteries and solutions for the storage and transmission of electricity. As for the assembly of Model 3, while its volume is far from planned. As of March in the US, the company sold 3,680 Model 3, 3,200 Model S and 2,500 copies of Model X. Note that as of March, the three most popular electric cars in the US are followed by Chevrolet Bolt (1774) and Nissan Leaf (1500 ).

“In the current circumstances, it is important that the board of directors and management team focus on overcoming production difficulties, and that the CEO and top management are not distracted by secondary business interests and quarrels on Twitter,” concluded in ISS, adding that the company needed an independent chairman of the board of directors .

Despite the growth in production, the break-even point is still far away, so the losses are increasing. If in the first half of 2017 the loss of Tesla was $ 330 million, then by the end of the year it had grown to $ 675 million, and in the first quarter of 2018 it had reached $ 710 million. Moreover, the company as well as the investors place great hopes on the Model 3 , which should become the most massive electric car and start generating profits.

Meanwhile, the first wave of orders for Model 3 long ago was over and “low tide” began. The fact is that the demand for electric vehicles in the US is actively stimulated by the government, which offers a returnable subsidy for electric vehicles of up to $ 7,500, which can be issued after the purchase. However, this subsidy is valid until the company sells 200 thousand electric vehicles in the US market, and this frontier Tesla can overcome already this year. Thus, those to whom this subsidy is more important and most necessary – buyers of inexpensive Model 3 remain without state support. Yes, there is still a subsidy from the state government, but it is often temporary, depends on the state policy, and in some states, for example, in Michigan it does not exist at all. At the same time, in California – the main US automobile market, including for Tesla, the discount on the electric car is $ 2500. By the way, that’s why recently Elon Musk actively promotes an expensive all-wheel drive version of Model 3.

According to various estimates, the inability to set up production at the right level against the backdrop of the loss of the above-mentioned discount can take Model 20 from 20 to 40% of pre-orders. Recall that for each order will have to return $ 1000, thus already a thousand departed buyers who, by the way go to the Chevrolet showrooms for the hatchback Bolt already bring a loss of $ 1 million …

But that’s not the point. As reported by Reuters, ISS is not the only company where Tesla shareholders applied for advice. And if the nearest board of directors, which takes place on June 5, can cost to Elon Musk the post of chairman, then the next one will easily leave him without a job in Tesla. How can I not remember the history of his service in PayPal: Mask was dismissed from the post of general director following the results of an emergency meeting of the board of directors.