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Tesla CEO Elon Musk has presided over a $200 billion drop in the company's stock market value so far this year during which time the tech-heavy Nasdaq index rose 5 percent.
Tesla's latest results reveal the electric vehicle maker is falling short of its growth goals - it shipped 1.8 million cars, missing the company's 50 percent growth target. What's more, Tesla abandoned its practice of providing annual forecasts for vehicle shipments - leaving analysts to predict 20 percent growth this year, noted Bloomberg.
Here are Musk's five most urgent lessons for leaders about what not to do when your company gets into trouble.
If your business is slowing down, business leaders should examine factors outside of their control - meaning industry headwinds that are impeding growth and industry tailwinds that propel it.
In addition, business leaders must examine how their company appears to customers who usually can choose the product that delivers the most benefits for the money from among competing suppliers.
Musk's January 24 comments to investors suggest he thinks Tesla's products dictate the future of the electric vehicle industry. He said the company is "between two growth curves" -- one that began with the global expansion of Model 3 and Y, and the next, "which will happen in the second half of 2025 following the launch of the next-generation vehicle platform," noted Seeking Alpha.
Musk seems not to understand how most vehicle buyers view Tesla. With gasoline prices down and concerns about running out of power far away from a charging station, many buyers view Tesla as too expensive and too inconvenient.
Rather than take responsibility for Tesla's excessively high prices, Musk blamed the company's low profit margins on the Federal Reserve Bank. He told investors high interest rates make "lots of people who want to buy our car" unable to afford to pay the price. "If the interest rates come down quickly, I think margins will be good. And if they don't come down quickly, they won't be that good," he said, according to Seeking Alpha.
Business leaders must take risks. However, if it later becomes clear the bet will not pay off, they should cut their losses and allocate the resources to higher payoff opportunities.
Musk's effort to launch a Cybertruck is just such a bad bet. When Tesla announced the product last November -- it featured 50 percent less range (250 miles) and was priced at $60,990, noted Wired, 53 percent above the amount Musk promised in November 2019.
Rather than cut Tesla's losses Musk is doubling down on the Cybertruck. CNBC reported Musk said Tesla can make 125,000 Cybertrucks per year -- and would be able to make a quarter million per year at some undetermined point in the future. He said demand for the vehicle exceeds the company's ability to produce them. He patted himself on the back for not "dramatically raising the price," noted Seeking Alpha.
If you are facing rivals who provide customers with what they want at a much lower price, you should fight back. One way to do that is to offer a good product at an even lower price than the competition sets.
Musk is not following this strategy. Instead, he is persisting with the over-priced Cybertruck and praising his Chinese competition - most notably BYD, which leads the world in EV production - and attributing the survival of Tesla and other non-Chinese rivals to "trade barriers," reported Seeking Alpha.
To be fair, Tesla intends to build less expensive vehicles. Bloomberg reported that will not happen until the second half of 2025 in Austin and then Mexico. That would help Tesla attract buyers who cannot afford to pay $39,000 for the average U.S. EV.
Business leaders must recognize their limitations and find a successor with strengths they lack.
Musk appears to me to be over his head. He has distracted himself from Tesla with his acquisition of Twitter (now X) and his eagerness to build a Generative AI rival to OpenAI and others. He seems to be holding Tesla's board hostage -- demanding an increase in his stake from 13 percent to 25 percent of the company so he can turn Tesla into a leader in AI and robotics, according to Bloomberg.
Apply these five lessons and your business will be better off.
A refreshed look at leadership from the desk of CEO and chief content officer Stephanie Mehta
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5 Leadership Lessons From Tesla's 25 Percent Stock Plunge
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Tesla CEO Elon Musk has presided over a $200 billion drop in the company's stock market value so far this year during which time the tech-heavy Nasdaq index rose 5 percent.
Tesla's latest results reveal the electric vehicle maker is falling short of its growth goals - it shipped 1.8 million cars, missing the company's 50 percent growth target. What's more, Tesla abandoned its practice of providing annual forecasts for vehicle shipments - leaving analysts to predict 20 percent growth this year, noted........
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