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Musk cuts off questions about Tesla's first quarter losses

NEWSWATCH: On Wednesday's quarterly conference call with analysts, Elon Musk didn't seem too keen to talk about Tesla burning through about $1bn during the first quarter as the Model 3 sedan production struggles continue.
According to a report on The Wall Street Journal, Musk "wanted to talk about the future of Tesla Inc. - self-driving cars, its next all-electric sport-utility vehicle and opening a factory in China".

The Wall Street Journal's Tim Higgins reports that Musk "sparred with analysts over their 'boring, bonehead' questions, cutting off two of them after they asked about Tesla’s capital requirements and Model 3 reservations."



After Musk began diverting questions, Tesla’s stock fell more than 5% in about a 20-minute span.




Christian Stadler of Warwick Business School, is professor of strategic management and researches the car industry. He says if Tesla carries on the way it is going it will not survive - investors are right to be worried.

"One of the ways out of this is for Tesla to partner with a tier one supplier like Magna, who have experience in the mass production of cars. Magna already works with OEMs like BMW on producing a model for them. It is more efficient and cheaper for the OEMs and gives them some flexibility if demand drops," says Stadler.

"Tier ones might not be so well versed in producing electric cars, but this is where Tesla can work with them and form a partnership to overcome any problems. It will take time to find a way to co-operate, especially around any technology secrets leaking, and there are risks, but Tesla has found mass production is more difficult than it anticipated. It has a great product, but its marketing has created a lot of demand that it can't meet, which may well damage its brand in the long term.

"The tier one suppliers don't have a brand or R&D facilities, and I think somebody like Magna would be a good fit for Tesla to get over its production problems. Of course, these problems are well documented so Tesla might be at the mercy of the tier one suppliers, which might eat into their profits, but the tier one suppliers need the car brands as well, they will want to make any partnership work - they need each other and electric cars are the future," he continues.

"On the one hand, I think Tesla would have broken down long ago if it wasn't for Elon Musk driving this great excitement around the brand. He is prepared to take on great risk, and he has already had a near corporate death in 2008 so he is used to this sort of panic about finances. But investors are getting more and more worried, the hype is starting to wear off for them and Tesla needs to find solutions quickly," concludes Stadler.

Read about Musk's comments to the analysts' questions here.

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About Ilse van den Berg

Ilse is a group editor at Bizcommunity.com, the first-choice B2B news site in Africa. She is the former editor of Marketing & Media Africa at Bizcommunity.com and is also a contributing lifestyle and travel writer. In her spare time, she also does some blogging and freelance writing & editing (when she's not surfing, hiking, or travelling). Email or find her on Twitter.
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