What’s gone wrong with Tesla’s project to bring electric driving to the masses?
The past few months haven’t been kind to the inspirational Tesla CEO Elon Musk. Since our analysis of Musk’s efforts to turn Tesla into a mass-market electric vehicle maker (spring edition of Project), the news has gone downhill:
- Tesla’s revision of his tweet about car production levels itself looked punchy after the company managed to deliver just 63,000 vehicles in the first quarter of the year. It’s still claiming the run-rate will increase as overseas shipping and production issues are ironed out – but the project is clearly behind schedule.
- Tesla’s financials in the first quarter were a horror-show, with the company posting a $702m loss on revenues of $4.5bn. Musk admitted there have been both production and logistics problems in the auto division – and that fund-raising may be necessary.
- Tesla’s vaunted Gigafactory – a rechargeable battery behemoth designed to support EVs and Tesla’s Powerwall product – is suffering its own production issues (reportedly, to be fair, in the lines run by partner Panasonic) and some investment in new capacity has been suspended.
- In March the Environment Protection Agency (EPA) fined Tesla for air and water pollution.
Result? Tesla shares went down 25 per cent for the year – while the S&P 500 index went up 16 per cent over the same period. Short-sellers – investors betting on the shares heading further south – have profited hugely from this dip in confidence and remain gathered in a swarm around the company; Tesla has even taken legal action against some of them.
It still holds true that Musk’s vision and drive are precisely the qualities that attract people to project management. A demanding environment defined by engineering projects, strict timelines and a need for high levels of coordination, allied to a vision for a renewable future, are enticing.
But we might perhaps add some project management counter-lessons to reflect some of the bad news.
- First, no one defeats the iron triangle. Motor manufacture is unforgiving of deficiencies in quality. (The big Tesla story last year was poor quality control amid a ramp-up in production of Model 3 cars.) It’s a capital-intensive business that’s unforgiving of a shortage in capital and returns. And Wall Street expects the numbers it was promised, when it was promised them. Elon Musk thought he could charm, enthuse and, ahem, bluff his way through these constraints, but good project management discipline might have reminded him to allow for flex.
- Second, even the boldest project with the best leader needs to bring with it key stakeholders. Investors, manufacturing partners, customers and regulators must all be onside for the Tesla programme and its myriad projects to succeed. And that means Musk might need to work harder on diplomacy.
- And third, at some point a project needs to transition into a business-as-usual machine, allowing high-functioning project teams to move on to the next innovation. Tesla seems to be snatching at every conceivable new idea (autopilot, a truck, a 250mph sportscar, solar roofing – all of which have been overhyped and remain some way from reality) while its existing products are still, effectively, projects in development. Bed the projects in, hand over a stable situation, move your project people into the next idea – otherwise, they’re spread too thin.
Elon Musk remains an inspirational leader capable of driving incredibly ambitious projects into uncharted territory. Some project manager discipline might be just what he needs as Tesla matures.
(And just for balance: SpaceX, one of Musk’s other companies, continues to astound. Who wouldn’t want to be working on that project?)
An analysis of Tesla and Elon Musk is available to read in Project spring 2019. Project is the official APM journal that’s available (free) to all members.