Tesla Stock Hammered After Elon Musk Throws Tantrum On Conference Call

Tesla Stock Hammered After Elon Musk Throws Tantrum On Conference Call

Elon Musk has wiped billions off Tesla’s market cap since yesterday, after he petulantly refused to answer analysts and investor questions during the Q&A portion of Tesla’s Q1 2018 conference call in favor of shooting the breeze with YouTubers instead.

Tesla has been in the news for multiple reasons of late, none of them good. Elon has a history of making optimistic predictions about its own production targets and timelines. But it truly bit off more than it could chew with the Model 3, and multiple reports have detailed how Tesla has been mired in a production hell of its own creation, caused in part by an over-reliance on automation. At the same time, Tesla has been accused of falsifying injury reports to inflate its own safety record, failing to properly maintain safety standards, and its AutoPilot software has been implicated in the death of a California man. The company is still burning colossal amounts of cash on a quarterly basis, and while this burn rate is directly related to its efforts to execute smoothly on the Model 3, investors are understandably concerned about the company’s cost structure and other challenges.

Tesla’s response to these challenges has been increasingly unhinged. The company has picked unnecessary fights with the NTSB to the point that it was ejected as a partner in the Autopilot crash investigation and accused the Pulitzer Prize-finalist, non-profit Center for Investigative Reporting of launching an “ideologically motivated attack by an extremist organization.” Musk’s behavior on Wednesday will do nothing to assuage the fears of those who feel the CEO is being inappropriately distracted by challenges entirely of his own making.

The conference call started off promising. Musk’s literal first sentence of the call states: “I think we’re going to spend extra time on Q&A and try to answer as many questions as possible.” He notes that Tesla has now produced north of 2,000 Model 3’s per week for three weeks, and while that fell short of the end-of-Q1 target of 2,500 per week, it was a significant improvement over Q4 2017, in which Tesla managed to build fewer than 2,500 Model 3’s for the entire quarter.

The Q&A portion kicks off with some discussion of Tesla’s production schedule, followed by a question on how Tesla’s increased efficiency in battery assembly translates into total cost per kilowatt hour, which Musk short-circuits by declaring “We’re best, which is not a class… The best-in-class of one.” A few more analysts sound off with standard questions about gross margin, whether Tesla plans to raise capital in 2018 (Musk claims it does not and will not need to), clarifications on upcoming capital expenditures on the Model Y, and a further request for clarification on how Tesla’s plans to lower CapEx spending on the Model 3 will impact it in terms of battery and vehicle production — at which point, Musk declares:

“Excuse me. Next. Boring bonehead questions are not cool. Next?”

The next speaker asks a question about Model 3 reservations and whether Tesla is converting those reservations to sales at the expected rate. Musk then refuses to answer the question altogether and states: “We’re going to go to YouTube. Sorry. These questions are so dry. They’re killing me.”

Let’s Call This What It Is

Analyst calls aren’t the sort of thing you tune into if you’re looking for exciting entertainment, and Elon Musk has participated in dozens of them at this point in his life. Questions about CapEx discipline and the question of whether Tesla will need to raise additional capital in 2018 are not incidental to its operation. You can read a full transcript of the call above, but there’s nothing unusual, pushy, or rude about these questions. This isn’t Elon Musk being bored — these are the actions of a man who does not believe people have the right to be asking him questions.

Take, for example, the state of the Model 3. Has the vehicle’s production hell been a story? You bet. But who decided the criteria that would be used to judge Model 3 production? Why, that would be Elon Musk, both in Tweets (as below)… :

Looks like we can reach 20,000 Model 3 cars per month in Dec

— Elon Musk (@elonmusk) July 3, 2017

And in official company graphs declaring that it would be building 5,000 Model 3’s by December. Even if we dismiss Musk’s tweet as a joke, in other words, the “5,000 Model 3’s per week by December” was no joke. That was the company’s communicated target:

In 2017, Tesla said it would produce 5K Model 3’s per week by the end of the year. In February, they promised 5K per week by the end of March. Now they’re promising 5K per week by July, unless they miss.
In 2017, Tesla said it would produce 5K Model 3’s per week by the end of the year. In February, they promised 5K per week by the end of March. Now they’re promising 5K per week by July, unless they miss.

Despite what Elon Musk thinks, it is newsworthy when people die in or as a result of self-driving car technology because said technology is cutting-edge and is being evaluated for deployment in the entire vehicle fleet in coming years. Contrary to what Musk claims, journalists don’t solely focus on Tesla when discussing vehicle fatalities or even self-driving vehicle fatalities. Just ask Uber. It’s noteworthy when Tesla can’t meet its own production goals for vehicles, particularly when its failure to do so appears to demonstrate that the CEO is either cataclysmically bad at predicting the production capabilities of his own company, or has so little respect for his investors that he doesn’t feel the need to attempt to do so honestly. And it’s important to the leadership of a company many people believe could change the future of self-driving cars that Elon Musk is acting so erratically and lashing out at everyone, rather than taking responsibility for the bad press his company has earned.

Has anybody checked in with Kia? They might have some engineers to help debug the car.

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