The Revolving Door Continues: Tesla Loses Two More Executives

The hits just keep on coming for Tesla. Amidst a single day period where a record number of headlines were packed into about 24 short hours for Tesla – including a Morgan Stanley downgrade, news that the company would again be shutting down production of its Model 3 toward the end of the month and a Model S crash and ensuing fatality in Switzerland – even more news broke toward the end of the day today when it was reported that (surprise) two more executives, Arch Padmanabhan, the product director for Tesla’s stationary storage unit, and Bob Rudd, from Solar City, are leaving the company.

It’s starting to feel a little bit like the movie Groundhog Day with the executive departure headlines. Reuters has noted all of the 2018 departures so far in this article. These two Tesla Energy employees join the ranks of other employees who hit the road this year:

The list of executives who have departed the company over the last few years has been running at a relatively steady clip that usually winds up chalking up a couple of names every month or so - that looks to be accelerating. Bloomberg reported on today's departures:

Tesla Inc.’s energy unit has lost two major executives as CEO Elon Musk promises to reorganize the electric-car maker’s management team, according to people familiar with the matter.

Arch Padmanabhan, the product director for Tesla’s stationary storage unit, and Bob Rudd, a former SolarCity vice president who led North American commercial and utility sales, have both left the company, said the people, who asked not to be identified because they aren’t authorized to speak publicly. Tesla didn’t immediately comment on the departures. Padmanabhan said he’s working on a new venture and declined to elaborate. Rudd couldn’t be reached for comment.

Not unlike Doug Field, one of the only four executives listed on the company's proxy who has apparently taken a leave of absence, Padmanabhan as also mysteriously left to "work on a new venture". But recently executive departures have been happening at an astonishing rate:

Matthew Schwall, Tesla’s primary contact with U.S. regulators, left to join Waymo, the self-driving-car company started by Google. Jim Keller, head of the driver-assistance system Autopilot, left last month for Intel Corp. Two top financial executives left in March, and sales chief Jon McNeil defected to Lyft Inc. in February. Musk told employees in an email on Monday that he’s “flattening” Tesla’s management structure to improve communication.

Analysts and critics of the company continue to harp on the fact that Tesla has a revolving door of executives, with some attributing it to a possible toxic tone at the top. Other guesses for all of the executive departures include the company simply not having any type of operational clue as to what it’s doing. This would certainly explain the Model 3 factory line shut down which was reported today just hours after after it was reported by Electrek that the company could be producing 500 cars per day this week.

Reuters notes that two sources confirmed that the next stoppage on the general assembly line at the Fremont, California, plant was scheduled for May 26-31.

The production-challenged electric vehicle maker previously warned of 10 days of temporary shutdowns this quarter as the company addresses manufacturing problems that have delayed volume production of the Model 3 sedan, which is seen as crucial to Tesla’s long-term profitability, Reuters adds.

This follows the previous production halt on April 17th to make "on-the-fly fixes", as well as a prior stoppage in February.  The April shutdown, combined with the upcoming one, would add up to the planned 10 days of stoppages.

Tesla has been struggling to find solutions to manufacturing bottlenecks on the new assembly line that produces the Model 3, a sedan intended for volume production. An over-reliance on robots has complicated that task, Chief Executive Officer Elon Musk has acknowledged.

Musk, Tesla’s billionaire founder, told employees it was “quite likely” the company would reach a rate of 500 Model 3s per day this week, or 3,500 a week, automotive news website Electrek reported on Tuesday, citing an internal email. Musk also told staff to alert him of “any specific bottlenecks” on the production line.

While Musk has said the planned stoppages are intended to give the company time to perform upgrades that will help it reach a goal of building 6,000 vehicles per week by the end of June, the market is becoming increasingly skeptical, especially since in order to meet the production goal of 6,000 cars per week by the end of July, Musk said last month that all Model 3 production would begin working around the clock.

This came after yesterday's news of a horrific fire in Switzerland which killed a man.

In the same week in which a Tesla Model S erupted in flames after a "horrific" crash in Ft. Lauderdale, fatally trapping the two teenagers who died inside, while a second Model S rammed a stopped Salt Lake City firetruck at 60mph, mercifully without any fatalities, the Swiss reports that yet another Tesla burst into flames after crashing on the A2 highway near the town of Bellinzona, killing a 48-year-old German driver who was trapped inside.

According to the Swiss publication, the driver, a 48-year-old German motorist from Baden-Wurtermberg, lost control of the vehicle a few meters after the Monte Ceneri tunnel, crashing into the central guardrail, an accident that was remarkably similar to an October 2017 crash in Austria, in which a Model S also burned down, however without any fatalities.

The car then overturned and caught fire, fatally trapping the driver.

At this point the rate with which negative Tesla new stories are hitting the wire is almost comical and difficult to keep up with. While the stock traded lower today again, closing near $280 per share, the company still has an insane $50 billion valuation despite its bonds trading for about $.88 on the dollar at last check.

At some point, if the company stock price catches down to the reality of what has been taking place at the company, these bumps in the road from executive departures could be looked at as the golden days.