(Bloomberg) — Elon Musk’s subordinates at Tesla Inc. are used to chaos. This comes with working for a chief executive who sets specific goals and often abruptly changes direction – whose biographer describes his most intense moods as “demon mode”.
Most read on Bloomberg
But even by Tesla standards, this year has been undisciplined. Its stock fell more than 40% amid falling sales, confusing product decisions and further price cuts. Its once-dominant position in China’s electric vehicle market is under threat. A visit by Indian Prime Minister Narendra Modi for an anticipated investment announcement was canceled at the last minute. Meanwhile, the board attempted to reinstate a $56 billion payment to Musk that a judge overturned in January, on the grounds that the directors had acted as “sleeping servants” of the CEO.
On Tuesday, Tesla is expected to report a 40% drop in operating profit and its first revenue decline in four years. Musk ordered the company’s biggest-ever layoffs and staked its future on a next-generation autonomous vehicle concept called robotaxi. People close to his directives, who asked to remain anonymous during internal deliberations, are unsettled by the changes the CEO wants to impose.
The idea of creating an autonomous taxi service has been circulating around Tesla for at least eight years, but the company has yet to put much of the infrastructure in place it would need, nor has it no longer obtained regulatory approval to test such cars on public roads. For now, Musk has postponed his plans for a $25,000 consumer vehicle, which many Tesla investors — and some insiders — are calling for and view as crucial to the automaker’s future.
Following media reports of the strategic shift, key executives, including Drew Baglino, an 18-year company veteran who led Tesla’s powertrain and energy engineering businesses, left.
Musk, 52, has gotten Tesla out of many jams in the past. At $469 billion, the company is still valued at more than nine times the market cap of General Motors Co. or Ford Motor Co. But after losing nearly $350 billion in market cap in four months, employees, investors and analysts are perplexed and second. -guess the company’s strategy.
“The stock will face a potentially painful transition in ownership base as investors previously focused on EV volume and Tesla’s cost advantage could throw in the towel,” the analyst said last week of Deutsche Bank, Emmanuel Rosner, downgrading the shares from a buy and significantly reducing the shares. its price target by more than a third.
The stock is poised to continue its slide Monday, trading down more than 3% before the start of regular trading.
Musk reported on his social network that the recent measures amounted to activating CEO mode in wartime. He liked a post saying this after sending a company-wide email announcing that Tesla was cutting more than 10% of the global workforce, which would mean cutting at least 14,000 jobs.
The actual number of people evicted could exceed 20,000, according to sources familiar with the company’s planning. Musk’s reasoning, according to a person with direct knowledge of his executive orders, was that Tesla should cut its workforce by 20% because its vehicle deliveries fell by that much between the fourth and first quarters.
For those who are still in the ranks of Tesla after this selection, Musk has radically changed the marching order. The company is “going out of its way to achieve autonomy,” he said last week. The robo-taxi now takes priority over a cheaper car it first announced four years ago, both in terms of setting deadlines for prototypes and organizing capacity for production, said a person familiar with the planning.
Musk has been talking about autonomy for more than a decade and has convinced customers to pay thousands of dollars for a product that Tesla marketed as Full Self-Driving, or FSD. The name is a misnomer – FSD requires constant supervision and does not make vehicles autonomous – but Musk has repeatedly predicted that it is close to living up to the branding. “I’m the boy who shouted FSD,” he said in July.
Musk and top engineers are particularly optimistic about a major change in how FSD currently works. Cameras placed around the company’s cars record video and use those images to dictate how the vehicle drives, instead of relying on software code. Ashok Elluswamy, director of Tesla’s Autopilot program, wrote on X last month that this should lead to “unprecedented progress.”
But optimism around FSD and Musk’s belief that the new approach could give rise to robotaxis clouds the future of Tesla’s $25,000 car project. People with knowledge of Tesla’s plans disputed the notion that the program was canceled altogether. The company has always sought a low-cost vehicle architecture that will support several different model types, one of which will have no steering wheel or pedals.
While these people confirmed that the robotaxi was a priority, one of them described the next generation vehicle project as an effort to reduce the costs of components and production methods, then apply these innovations to cheaper iterations of the Model Y and Model 3, the company’s two models. most popular electric vehicles. The teams are placing particular emphasis on achieving these cost savings with the Model Y, the world’s best-selling vehicle last year.
It’s unclear how much comfort this might provide to investors who have been spooked by reports that Tesla’s answer to affordable options like the Toyota Corolla has been abandoned entirely. Many fear that the only new model the company will offer consumers in the half-decade following the Model Y’s debut will be the Cybertruck, an expensive and difficult-to-build pickup. Last week, the company recalled nearly 3,900 trucks it sold to repair faulty gas pedals.
“Investors, especially institutional investors, are losing patience,” said Steve Man, an analyst at Bloomberg Intelligence. “The initial hype around fully autonomous driving and robotaxis has waned and the pendulum has swung in the opposite direction.”
Reorienting Tesla around robotaxis is risky. While federal agencies have taken a permissive approach to regulating technologies that could make roads safer, the scrutiny at the state and local level has proven difficult to manage.
Former Gov. Doug Ducey welcomed Uber Technologies Inc.’s autonomous vehicles to Arizona “with open arms and wide open roads” in 2016, only to ban them after a fatal collision with a pedestrian in 2018. Uber sold its autonomous vehicles. vehicle unit two years later.
Most recently, GM Cruise has spent the last six months returning to robotaxi testing after one of its cars hit and dragged a pedestrian in San Francisco. California is also delaying the expansion of Alphabet Inc.’s Waymo after several incidents, including one of its vehicles hitting a cyclist.
Musk is nevertheless betting that Tesla can make robotaxis a reality by making FSD accessible to more consumers and reducing prices. It offers test drives and 30-day free trials to promote the feature, increase revenue, and ingest more camera footage.
Tesla is building data centers in Buffalo, New York and Austin, where its headquarters are located, to process images captured by its vehicles and train its driving systems. The Buffalo site is further along, while the Austin site is struggling with cost overruns, people familiar with the projects said.
The rationale for Tesla’s layoffs was not to reduce savings in parts of the company and shift spending toward robo-taxis, according to a person with direct knowledge of how the job cuts were elaborated. Teams across the organization — including those working on autonomy — have been given equal targets for downsizing, this person said.
According to interviews with more than a dozen affected employees across the United States, the layoffs were poorly organized and poorly executed.
Emails beginning with “Dear Employee” were sent to home addresses after midnight. At the Tesla battery factory in Nevada, many employees started their workday with a traffic jam at the front door. They were directed to a parking lot where security guards scanned badges to determine who still had work and who had been laid off. One person who found out she had been fired this way said it was the coldest and most humiliating experience of her career.
“Many people found out they were no longer employed in the middle of their shift or after arriving for what was thought to be just another Monday,” wrote Jordana Hernandez, a former manager at service in Virginia, on LinkedIn. “That’s the part that hurts. Literally giving sweat and tears to a company that has shown zero humanity for people who have sacrificed more than anyone outside of Tesla can imagine.
On the Saturday night before the layoffs began, Musk struck dramatic poses on the red carpet and joked about who should play him in an upcoming biopic.
Days later, Tesla Chairman Robyn Denholm criticized a Delaware court for rejecting the board’s compensation package for Musk and urged shareholders to approve it again. Around this time, the CEO learned that the company had skimped on what it offered to staff whose jobs had just been eliminated.
“I noticed today that some severance packages are incorrectly low,” Musk wrote in an email to other Tesla employees. “My apologies for this error. This is fixed immediately.
Most read from Bloomberg Businessweek
©2024 Bloomberg LP
News Source : finance.yahoo.com
Gn bussni
