Behind every successful company is a legion of detractors trying to damage its reputation if not to bring the enterprise down. Since its inception, Tesla Motors (aka Tesla Inc.), under the leadership of enigmatic Elon Musk, has drawn fire for being way ahead of its time, its cars too expensive, perhaps Musk’s dreams too big. When sales of his high-end models have not produced sufficient profit to keep his enterprise afloat, Musk’s response had been to ramp up production on his much anticipated Model 3 sedan. Production of the Model 3, a popular-priced model for everyman, was said to be ramped up to to 5,000 weekly units by this July. On Sunday, June 16th, however, Musk and his minions have had to contend with a new foe. That night Musk emailed his staff that the company is contending from an internal threat- employee sabotage. But before we give details on this latest setback, first let’s get you up to speed about Tesla Motors.
Named for the elusive, eccentric Serbian inventor, Nikola Tesla, readers may be surprised to learn that the company was not founded by its current, high-profile CEO, Elon Musk. Instead, the organization was originally founded in 2003 and financed by Martin Eberhard and Marc Tarpenning. These men saw an opportunity to launch a successful electric car company after GM recalled its entire unsold electric car output and destroyed them. Musk took over in 2008 with the goal to create affordable mass-market electric vehicles. His strategy to infiltrate the consumer market was to first produce commercial electric vehicles, then high-end sports cars, finally rolling out affordable sedans and compacts to appeal to the mass market.
Musk has flourished in his role as Tesla Motor’s guide overseeing Operations on a day-to-day basis. The firm’s first public stock offering, brought out in 2010 was for $17 per share. At today’s closing, Tesla Motors stock sold for $355 per share. Another first, most automotive manufacturers gladly accepted the U.S. Government’s bailout funding as part of 2009’s economic stimulus package. However, only Tesla Motors fully repaid the loan in May, 2013. Throughout the years, the automaker has repeatedly drawn fire for its maverick ways of raising funding to finance production and to pay off existing loans. Which brings us to the present.
Employee Sabotage Halts Production
In that weekend late-night email, Musk stated that in response to not receiving a wanted promotion, an Operations-based staffer confessed to having “sabotaged” the output at the company’s Freemont California plant. Specifically the employee altered the computer code that governed the company’s manufacturing operating system. This system was then hacked, and that several gigabytes of company-private data were (presumably) exported to unknown third parties not in Musk’s employ. The scheme was carefully devised so that the hacking software was operating on three separate computer systems assigned to other individuals at Tesla. This action would serve two purposes: to ensure that data would continue to be exported even after the hacker left the company, and to erroneously implicate those individuals. In addition, Musk stated that ‘false claims were made to the media.’
Musk’s email read in part, “There are a long list of organizations that want Tesla to die,” Musk wrote. “These include Wall Street short-sellers, who have already lost billions of dollars and stand to lose a lot more. Then there are the oil and gas companies, the wealthiest industries in the world — they don’t love the idea of Tesla advancing the progress of solar power and electric cars. Don’t want to blow your mind, but rumor has it that those companies are sometimes not super nice. Then there are the multitude of big gas/diesel car company competitors. If they’re willing to cheat so much about emissions, maybe they’re willing to cheat in other ways?”
In addition on Sunday night production of Model 3s was halted by a small fire, whose cause has not been determined. Asked if the fire and computer sabotage were related, Musk quoted Intel’s former CEO by stating, “Only the Paranoid survive.” He then asked his staffers to be vigilant about any activities that “…are not in the best interests of our company.”
Please note that the need to for Tesla Motors to produce 5,000 units a week is not entirely in response to the public’s demand for the Tesla Model 3. Rather, producing and selling 5K units a week is said to keep Musk’s automotive division from going under. Also note that Musk’s varied enterprises each have a history of teetering on the brink of failure, and Musk’s strategies including investing his own money to purchase his companies’ stock have been implemented with success.
Another view of the latest Model 3 production delay is that Musk’s enterprises thrive on media attention. After all, everyone roots for the underdog. Therefore the public will likely rush to support Musk in his endeavour to produce an affordable electric car, no matter how long the delay. So, despite detractors in the form of internal hackers, possible arsonists, stockbrokers, yellow journalists, et.al., the Model 3 seems to be on track to defy the odds yet again, and to make Musk’s automotive empire profitable- someday. As a man who earned and lost fortunes, as well as weathered many affronts from competitors and the media, Nikola Tesla would be justly proud.