By July 6, 2016 Read More →

Opinion: Tesla pressure clouds Elon Musk’s solar gambit


Tesla, Elon Musk’s electric-car company, missed delivery targets and is now under scrutiny from regulators following a fatal crash in May involving a Tesla where the driver had engaged the Autopilot feature. REUTERS photo by Rashid Umar Abbasi.

Elon Musk’s pursuit of SolarCity a “corporate-governance nightmare”: Anthony Currie

By Anthony Currie

July 5  (Reuters) – Tesla pressures are clouding Elon Musk’s solar gambit. The $32 billion electric-car maker he founded and runs has missed its delivery target again. That’s bad news for a company aiming to quintuple production in short order. A fatal crash also has invited scrutiny of Tesla’s Autopilot feature. These concerns further undermine an already questionable effort to buy SolarCity.

Some 14,370 customers received keys to their new Tesla in the three months to June, 15 percent below Musk’s stated goal. There is a silver lining: about 5,000 Model S and X vehicles also were on their way to new owners.

The inability to get close to short-term objectives when building just two types of car is jarring, however. It also does not augur well for Musk’s bigger goal of making 500,000 vehicles a year by 2018. That looks ambitious as it is, requiring big investments in staff and technology as well as essentially perfect execution of the kind that has eluded production of the Model X. It has been dogged by parts and quality problems.

Meanwhile, U.S. authorities are taking greater interest in Tesla. Its Autopilot feature is designed to allow drivers to hand over much of the operation of the vehicle to computers – once they have agreed to switch on the system and be ready to resume control.

It’s not yet clear what caused the deathly collision in May. The transition to assisted and autonomous driving, though, promises to have such a profound effect on the industry that regulators like the National Highway Traffic System Administration are likely to spend far more time investigating such crashes than automakers might expect.

Throw in growing competition for electric and self-driving capabilities from deeper-pocketed rivals like Daimler, BMW and General Motors, and Musk ought to have more than enough to keep him busy at Tesla.

That makes all the more unpalatable his pursuit of SolarCity, the solar-energy company he also helped start and where he serves as chairman. The proposal is a corporate-governance nightmare. And it would soak up management attention just when it’s needed elsewhere. Musk has not yet presented a financial or business case to convince even his usually giddy shareholders. Meanwhile, reasons not to do the deal are piling up.

Anthony Currie is a Reuters Breakingviews columnist. The opinions expressed are his own.

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