Tesla’s restructuring hits executive bench hailed by Elon Musk

TESLA-MANAGEMENT:Analysis-Tesla's restructuring hits executive bench hailed by Elon Musk

Reuters
First Published2 May 2024
Tesla's restructuring hits executive bench hailed by Elon Musk
Tesla’s restructuring hits executive bench hailed by Elon Musk

By Joseph White, Aditya Soni and Kevin Krolicki

(Reuters) - Just over a year ago, Elon Musk shared the stage at Tesla's investor day in Texas with 16 executives who gave detailed presentations on the company's technology and growth plans, then lined up behind their boss in a show of solidarity.

"We've obviously got significant bench strength here," Musk said at the time, responding to investor concerns that the world's most valuable automaker was too much a one-man show. 

Now, at least five members of that team are gone, a Reuters analysis shows. Tesla, Musk and the 16 executives on the stage last year could not be reached for comment.

Musk in a recent email to senior managers outlined plans to lay off hundreds more employees, including two top executives, the Information reported.

"Hopefully these actions are making it clear that we need to be absolutely hard core about headcount and cost reduction," Musk wrote in the email, the report said.     

Two senior executives who flanked Musk on investor day last year are gone: Zach Kirkhorn, former CFO, resigned with a nondisclosure agreement, according to Tesla regulatory filings. Drew Baglino, Tesla's former chief battery engineer, left in the wave of layoffs Musk ordered last month. Baglino dumped $181 million in Tesla stock as he left.

Rebecca Tinucci, who headed up Tesla's charging team, was one of two women on stage for the investor day last March. 

"We have understood since Day One that a great charging experience is the linchpin to electric vehicle adoption," Tinucci said as she walked onstage. In the subsequent year, nearly all rival automakers in the United States agreed to adopt Tesla's charging standards and cut deals to let their EV buyers charge at Tesla stations.    

Tinucci and much of her team were sacked this week. In a posting on his social media platform X, Musk said Tesla plans "to grow the Supercharger network, just at a slower pace for new locations and more focus on 100% uptime and expansion of existing locations."

Another executive on the stage who left was Colin Campbell, the former vice president of powertrain engineering.

The loss of so many executives is something the Tesla board should be monitoring, said Charles Elson, founding director of the Weinberg Center for Corporate Governance at the University of Delaware.

"Lots of departures very quickly suggest a problematic leadership style," he said. "You shouldn't lose that many people that quickly."

STRATEGY SHIFTS 

With Tesla's revenue, profit and share price falling, Musk has reasserted his dominance at the company. For some investors, that is more important than the executive churn.

"Elon's not there and we have this turnover? That's very bad," said Gene Munster, managing partner with Deepwater Asset Management and a Tesla investor. "If Elon's there, he's going to draw on talent to keep things going so it really all comes down to Elon remaining a part of the story."

Musk has signaled significant strategy shifts in response to falling sales and tougher competition - changes that could leave out executives running operations no longer central to the new plans. 

Tesla's future lies in artificial intelligence and robotaxis, not conventional auto manufacturing, Musk told investors in April. 

Musk is putting action behind those words. He has ordered a 10% cut in staff and scrapped plans for a new, low-cost line of vehicles in favor of revamping existing models to develop lower-priced entries. Tesla said it will pause construction of new factories until the company's sales had reached 3 million vehicles a year - enough to fill up the automaker's existing production operations.

"If you buy the narrative that Tesla is an AI company fundamentally, it may not be cause for concern," said K.C. Boyce, vice president at data analytics and advisory firm Escalent. "It fits into the idea of sizing and resourcing the business correctly to deliver on the promise of full self-driving and robotaxi."

Other senior Tesla executives, who were not among those onstage during the 2023 investor day, have left in recent weeks. 

Daniel Ho, a former Ford executive and 10-year Tesla veteran who had been director of new car programs, is no longer with the company. Rohan Patel, a former Obama administration official who had been Tesla VP for public policy and key to expansion plans for India, said he is leaving.

Another executive to exit was Allie Arebalo, Tesla's senior director of human resources, two people familiar with the matter said on Wednesday.

Martin Viecha, head of investor relations who also was on the stage last year with Musk, announced his departure at the end of an April 24 conference call with analysts. 

Unlike most of the other departed executives, Viecha received a warm sendoff from Musk. "The reason I reached out to you was because I thought your analysis of Tesla was the best that I had seen," Musk said on the call. 

Some analysts said the executive team is critical given the challenges faced by the EV maker. 

"Having a strong bench behind Musk is important at this pivotal time given the Category 5 storm that Tesla's going through," Wedbush Securities analyst Dan Ives said.

(Reporting by Joseph White in Detroit, Aditya Soni in Bengaluru and Kevin Krolicki in Beijing; Additional reporting by Hyunjoo Jin in San Francisco, Akash Sriram in Bengaluru and Ben Klayman in Detroit; Writing by Joseph White; Editing by Matthew Lewis)

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