Tesla, Inc. is a company with extremely big dreams and ambitions. The world’s leading electric car maker has always focused on being innovative, with their goals and objectives all revolving around the man behind the whole operation, CEO and co-founder Elon Musk. Although Tesla may seem like the company of the future, they are experiencing many issues that will eventually lead to their demise in the future. I believe that there are three major issues with the company, while also believing that the company could soon fail if it does not repair and overcome these problems.
Looking beyond the recent negative publicity that Tesla has suffered from since the beginning of the year, it is arguable that there are other problems facing the company other than the flaws in their product. The first issue (not listed by importance) facing the company is the failure to deliver on their promises. Tesla has consistently talked the talk without walking the walk. They over-promise and under-deliver, and although the company still has a loyal customer base, my fear is that loyal consumers will eventually give up on the entire Tesla brand. An example of the company over-promising, and under-delivering is their latest offense. Tesla has not filled orders for the Model 3, the company’s first electric vehicle that was designed for the masses. Since Musk’s major announcement in March 2016, approximately 500,000 people have preordered the vehicle. But as of February 2018, only 30 of those people actually received their vehicle order. The company originally stated that they would be able to produce 5,000 vehicles per week by the start of late 2017, however, the company is now singing a different tune while promising customers that order deliveries would commence in late 2018 or early 2019. Tesla not fulfilling orders would eventually push away a segment of the loyal consumer base.
The second issue facing the company is the battered relationship with their workforce. Several Tesla workers have claimed to be discriminated against based on race, political affiliation, and/or sexual preference and orientation. The bigger concern is that Tesla has done a very poor job in addressing these complaints. As a result, several employees have filed separate lawsuits against the company, claiming that Tesla failed to address their complaints and hiding these incidents under the rug. In addition, the company is under fire for allegations of paying women less money for the same positions held by men, as well as deliberately selecting men over women for promotions. The company culture is deteriorating, and the workplace has become toxic. With management being known for their strong views against the formation of a union, it would be difficult for employee relations to improve at the current rate.
The third and final issue impacting Tesla is their lack of money. After ten consecutive years of losses, Tesla announced its very first quarterly profit in 2013. Unfortunately, the company didn’t continue moving on the upward trend. In February 2018, the company announced that it ended last year with its largest quarterly loss ever, $675 million. That is a very significant loss. Shareholders are becoming very concerned with the future financial status of Tesla, as they should be. It is important to also note that the failure of Solar City has also impacted the company. Solar City has caused a great amount of debt for Tesla, and although the company has yet to truly feel the outcome of the Solar City mishap, I strongly believe that this debt will negatively impact Tesla in the near future.
There are several recommendations that I believe would help Tesla overcome the issues currently standing in their way. Moving forward, the company should expand their operations in foreign markets to exploit the global growth of the renewable energy industry. Tesla also needs to continue or increase investments for product innovation and diversify the supply chain to reduce the problems they have experienced with supply chain management. Lastly, the company needs to focus on repairing the three main problems I have mentioned. They need to find ways to generate capital, while also ensuring that they will not lose the value of their consumer base.
In summation, Tesla has the potential to do extraordinary things for the world. Although there is potential, there are also many issues standing in the company’s way. Elon Musk must figure out a way to fix these normal problems that should be easy to address. With his ideas and ambitions, I believe Musk will overcome these hardships and continue to provide innovation to the rest of the world.
