Tesla nearly doubled its first-quarter loss compared with the same period a year ago, even with sales of its sedan and sport-utility vehicle continuing to climb. The company 
aims to start churning out Model 3s in the second half of next year. It has a goal of building a total of between 100,000 and 200,000 by year end. Tesla has struggled to produce its current products on time often having issues with its doors and seat latches specifically on the Model X SUV. Issues with production will now take an even bigger blow after the VP of Manufacturing and the VP of Production left the company last week. Employees have been leaving Tesla since its inception in 2003. Rival electric car companies have poached Tesla workers in an attempt to replicate Tesla’s early success. In a conference call to investors last week Mr. Musk estimated Tesla’s 2020 production would be 1 million vehicles. While Musk is confident, Tesla missed its delivery forecast in its first quarter because of production issues such as parts shortages. In the first quarter it shipped only 14,820 vehicles instead of the 16,000 it had pledged to deliver. This lack of production is not a good sign for the electric car company, especially after a huge pre-order of 400,000 cars for the Model 3. It will be interesting to watch Tesla’s production in the next quarters and how much capital they will invest in these enormous projects to try to keep up with the insane demand for its new model.
Source: http://www.wsj.com/articles/tesla-loses-two-manufacturing-executives-1462382198
Do you think it’s possible that employees are leaving Tesla for other reasons than higher pay at competing firms? It would be interesting to find out whether the VP of Manufacturing and VP of Production left for other reasons also, such as unrealistic manufacturing goals and timing.
In response to Murray – I don’t necessarily think pay would be the biggest incentive to switch firms. Tesla is new and would probably offer much more enticing stock options to upper level management than that of other manufacturers that are much older. I would only guess that employees see the faults in Tesla and realize they can take their innovation to established manufacturers that already have the capabilities to produce the cars. These top level executives may not be able to jump ship later if Tesla fails as other manufactures will already have the production teams formed.
I agree with Nate. Tesla is a promising company and having stock options in it could produce an enormous amount of wealth. I believe that these employees are getting “poached” by other companies for internal problems that may not be known by the public. After taking Organizational Behavior at W&L, I studied how insanely smart CEOs such as Elon Musk have issues working with other employees that aren’t similar to them (work schedule, vision, relationship status, etc). It is possible that there is not a good mesh within the upper levels of the company and this can be seen with employees jumping ship. It also could be that they realize that Tesla’s luck is running out and their pouring of money without seeing positive cash flows will lead to a catastrophic end to the high-tech company.
I think its really interesting that so many people in our class are fixated on news regarding Tesla and their failings considering how small of a market share they have. It surprises me that more people aren’t blogging about more important auto companies in terms of the industry as a whole. Maybe the sensationalism surrounding Tesla is part of what fuels their sales and keeps them relevant. Thoughts?
While they may have a small market share they are the main threat to the Detroit Three and other prominent makers in the industry. I agree that our blog so far has been somewhat fixated on Tesla, but news pertaining to them is crucial to the entire scope of the industry. Looking at past blogs, it is apparent what Tesla’s entrance into the industry has done to the mission of other makers. For example, GM has been gearing up through their acquiring of Lyft and their race to produce self-driving cars. Why did GM Ventures pursue this acquisition? Most likely to enter the Silicon Valley sphere and combat Tesla while innovating their band past what GM is known to do. Furthermore, Ford is building a new headquarters in Dearborn that is adopting the campus blueprint of Silicon Valley giants such as Google, Facebook, and even Tesla. Everything Tesla has done recently should be put under the microscope and examined to see how it affects the landscape of the entire auto industry. Thoughts?
I don’t think that Tesla is a threat, in any way, to the Detroit Three. They are all too well established and the brands carry reputations that have been built on for decades. Tesla is the new kid on the block.. the hot new company with new innovation that is the buzz of the media. Tesla is not the first company to aim for electric cars and will not be the last. The media attention can be credited to Elon Musk as he balances Tesla, SpaceX and SolarCity. Everyone is interested in following the story of one of the most innovative entrepreneurs in modern times. Musk’s Paypal is the forefront of online payment systems and it has crushed its competitors after eventually being acquired by Ebay. But the real attraction to the company comes from Musk vs. the auto world.
Musk is a computer scientist, an innovator, and a businessman. General Motors, Ford, and the like hire specialists with Musks qualifications in masses. They attract the best and brightest engineers and computer scientist, and have the resources to form teams that dwarf Tesla. Despite this, the general population has put their faith in Musk and that is what the media is focused on. If you look at the numbers, Tesla is bound to fail. Being one of the top 10 most shorted companies, with a valuation that is absolutely absurd, the story is only getting more comical for those within the industry and more enticing for the everyday consumer. This right here is the essence of the discussion.. The everyday person doesn’t care about the industry, but Elon Musk is a household name that attracts attention. The media reports in the eyes of the viewers and Tesla is the name that attracts eyes. This isn’t a problem, though. People want to read it so it lands on their breakfast table next to the cup of coffee. As an economic class, why shouldn’t we be heavily discussing Tesla and the faults within the brand?