The last time Elon Musk addressed the analysts who follow Tesla, his electric car company, he was – to say the least – rude. “Boring, boneheaded questions are not cool,” he told the analysts. “These questions are so dry. They’re killing me,” Musk complained.
Predictably, the outburst led to a selloff for Tesla’s shares – one the company can ill afford. On Wednesday he gets another chance, when Musk must once more explain to investors what is going on at Tesla.
Gene Munster, managing partner of venture capital firm Loup Ventures, has been a long-time fan of Tesla and Musk, and even he concedes another angry performance from Musk would be “a disaster”.
“Investors have made their feelings known. If they ignore that, it would be a sign that he [Musk] has gone off the rails,” he said.
And in the time since they last talked, Musk has shown plenty of evidence that he has, steering the company and his reputation into a multi-car pile-up of scandals that has left some wondering whether he can can walk away.
The low point came earlier this month when Musk baselessly accused British diver Vern Unsworth of being a “pedo” after Unsworth had the temerity to criticize Musk’s offer to provide a mini-submarine to help rescue the boys trapped in a Thai cave. Unsworth called it “a PR stunt [with] absolutely no chance of working”.
Musk has also used Twitter, where he has 22 million followers, to go after journalists. He has also attacked short sellers – investors betting on a collapse in Tesla’s share price – for what he sees as a concerted attempt to undermine the company.
Tesla has faced a series of investigations into crashes – some fatal. Musk has been in a public spat with a former employee who says he blew the whistle on dangerous work conditions. Musk calls him a “saboteur”.
The company, and Musk, have also had to come out to defend a decision to ask for rebates for funds given to US suppliers, a move critics charged shows how badly Tesla is in need of cash. None of this news has won him new friends.
“Elon Musk is a total fraud,” and Tesla is a company “best known for blowing deadlines and consistently falling short on production,” wrote the New York Post.
“Is Elon Musk too volatile to run Tesla and SpaceX?” Fortune asked this week.
Jim Chanos, an investor who has made a fortune betting on company collapses, believes Tesla is “heading for a brick wall”.
It really shouldn’t be this way. Here’s a self-made billionaire who wants to make the world drive electric cars, fund the next space race and colonize Mars. Robert Downey Jr used him as the model for Tony Stark, Iron Man’s alter ego. He’s dating Grimes and named one of his companies Boring. There’s so much to like. So why is Musk such an asshole?
The answer may well be stress. Since Tesla’s initial public offering eight years ago, it has only had two profitable quarters. And Tesla is burning through cash like a lottery winner in Las Vegas. The company lost about $2bn last year and at the end of March, Tesla had about $2.7bn in cash. Last year Bloomberg reported that the company was burning through $500,000 per hour.
While he says the company is in trouble, Munster remains bullish on Tesla and thinks there is a “low probability” of a combative performance from Musk this week.
“Musk is the most colourful, controversial CEO out there,” he said. “This is what great companies go through.”
Munster sees Musk as a CEO in the mold of Apple’s Steve Jobs – someone who is capable of transforming an industry, and with such transformational leaders “it’s normal to have these pendulum swings. But obviously he’s exaggerated his.”
Jeremy Acevedo, manager of industry analysis at Edmunds, says that Tesla is staring at the end of the runway and needs to start making a profit. But, he points out, those concerns should be set aside the scale of what Tesla is trying to do – and what it has accomplished.
“Tesla is struggling to transition from a custom, one-off car manufacturer to a mass producer,” he says. “But it has accomplished a lot.”
The company brought new energy and vision to electric cars. Tesla made them “sexy,” he says. Its latest vehicle – the mass-market Model 3 – is aimed at making a car to compete withFord and GM. There have been significant issues, as Musk has conceded. “But his competitors have been doing this for a century,” says Acevedo. “Predictably, [for Tesla] there have been hiccups.”
The success of the Model 3 is vital to Tesla. The vehicle costs about $35,000, close to the price of GM’s Chevrolet Bolt electric vehicle and less than half the price of Tesla Model X.
In May 2016, Musk estimated that the company would make 100,000 to 200,000 Model 3s during the second half of 2017. Tesla made just 1,810 Model 3s in the last six months of 2017.
Production is ramping up. In July the company announced it had finally hit its numbers, making 5,031 Model 3s during the final week of June and 28,578 during the second quarter, more than it had made in the prior three quarters combined.
But how much it cost Tesla to get there – and whether that pace is sustainable – will be key questions on Wednesday.
“I think perception will change. Two years from now I think people will see that Elon Musk has changed the way people move around,” said Munster. As long as Musk doesn’t crash it into a wall first.