Earlier this week, Elon Musk, CEO of Tesla revealed that the much hyped mass market Model 3 will not be a mass market car after all. Conceding that the company would “lose money and die” if it were to build a $35K car, Musk admitted that even $50K price tag was out of reach and the new version of the Model 3 would be priced at $78K. Considering the Model S75 is listed for $74K, a “mass market” car priced higher than the “high end” car is a head scratcher. Pity those 500K Tesla die hards who put down $1000 deposits to secure a Model 3 that they thought was going to cost them $35K. More pity to the CFO of Tesla who now has to figure out a way to free money to pay back these refundable deposits given that these deposits make up a good chunk of Tesla’s dismal balance sheet.

And there is the thorny topic of raising money. While it is obvious for anyone who has examined Tesla’s financials that a company that is burning through a $1b a quarter and has just $3.5b in cash (as of Dec 31, 2017) will require to raise fresh capital shortly, Elon Musk has battled analysts and shareholders alike by denying that Tesla will need to raise money. Another head scratcher.

In the meantime, Musk has taken to twitter and proposed a Yelp like page to rate analysts, journalists and news organizations. Clearly motivated by the fact that he feels he is being treated unfairly by the press, Musk’s penchant for picking to fight the wrong battles is striking.

Future Wealth’s View

At a time when regulations and increasing cost of gasoline favors electric car manufacturers, one would expect Tesla, a pioneer in the electric car movement, to be a significant beneficiary and be rolling out hundreds and thousands of electric cars every week. But, instead, due to dysfunctional leadership primarily from the CEO himself, Tesla is losing key executives and losing customers as well. Shareholders will soon follow.

In an article written over a year ago ( https://futurewealthllc.com/problems-at-cult-mansion/), we had expressed concern over Tesla and its CEO. Slowly but surely the shine is coming off the stock and Elon Musk’s credibility as a capable CEO has come into question. While we do not question Elon Musk’s ability as a visionary, the nuts and bolts of running an automobile company is, perhaps, not his forte.

Holders of Tesla stock would be well advised to not wait for that day he ultimately steps down from his role as CEO of Tesla. But, much like another popular leader whose bold proclamations, pie-in-the-sky comments and use of Twitter far exceeds his commitment to the office, Musk is unlikely to go down quietly.