Last week Tesla (NASDAQ:TSLA) achieved Elon Musk’s stated milestone of building 5000 Model 3’s in a week. After an initial burst of enthusiasm which saw the stock price jump upwards, the market was unimpressed: the stock turned down on the day, and is now down $41.3 since 29 June (that’s almost 12 percent).
The company only hit the target (well, in actual fact it missed by a few hours) by making extreme–and I mean extreme–efforts. Putting a new assembly line in a tent. Cannibalizing spare parts. Cutting production on higher margin Model S vehicles. Jettisoning quality tests. Dragooning people into overtime without warning contrary to previous company policy.
Thus, the market’s reaction is not surprising. Tesla didn’t prove that it could meet a production target under normal conditions: it proved absolutely that it couldn’t. That is, it proved exactly the opposite of what Musk had intended.
After the “achievement,” Elon Musk tweeted that Tesla had proved that it was finally a real car company. No, it hadn’t: a normal car company would never been in the situation of behaving like some Soviet enterprise in the 1930s rushing and cutting corners to meet The Plan, lest everyone wind up in The Gulag.
Which is perhaps an especially apt analogy, given Elon’s behavior during this period, and the cult of personality that he has cultivated.
When Musk tweeted about “a real car company” the thought that came to mind was Pinocchio, who wanted to be a real boy. Given Elon’s propensity to stretch the truth–well, lie, actually–in a way that would shame Pinocchio, that’s an apt analogy too.
There will no doubt be a serious hangover as a result of the rush to meet Musk’s self-imposed target. Labor relations at Tesla were already poor–they are no doubt awful now. The company also has had serious build quality and service issues. I shudder to think of the build quality of the cars thrown together in that last minute frenzy. Musk’s already crumbling credibility has taken a hit.
For the last, Elon has no one to blame but himself. His repeated failures to achieve any of the lofty predictions he has made (failures that would have brought the SEC down on pretty much anyone else) meant that failure to meet the 5000 cars or bust pledge would have been devastating. So Elon had to pull out all the stops, even though by doing so he in fact revealed the emptiness of his boastful prediction, and could well have produced 5000 busted cars.
For Tesla to become a real car company, Elon will have to become a real boy–or at least a real CEO, rather than a cult leader impersonating a CEO. Alas, I doubt that will happen, because of one difference between Elon and Pinocchio: Pinocchio realized he wasn’t real, but I don’t think Elon has the same self-awareness.