Tesla’s Hitherto Bad Week Eventually Ends Well

Business February 27, 2019

Things ended well for Tesla after it had quite a tough week. The electric car manufacturing company successfully delivered the first Model 3 electric vehicle to a Chinese customer, and that came weeks before the scheduled date. To celebrate the delivery, a ceremony took place in Beijing.

Tesla has been in the news several times for missing deadlines and target dates and so delivering ahead of a scheduled date is definitely a praiseworthy achievement.

Tesla has plans to set up a new Shanghai Factory

China has been described as a very crucial market for the company. Even though there was a slowdown of auto sales in China in 2018 for the very first time in several years, it has still managed to retain its spot as the largest market both for car sales in general and specifically for sale of electric cars.

Tesla has reportedly started to make plans to build a new factory to be based in Shanghai. That would make the proposed factory the company’s first auto assembly line located outside its California home. Setting up this plant is an important move in avoiding the tariffs China has imposed on vehicles imported from the U.S.

However, even with its success on Friday, the whole week was much tougher for the company as there were a series of events that were not to its favour.

Tesla Loses Reliability Rating

A review magazine removed Model 3’s recommended rating regardless of the car getting a good score when it was taken on a road test by the magazine’s staff. The removal of the rating was necessitated by concerns raised as to its reliability in its yearly customer’s survey. In its response, Tesla said it had fixed a lot of the problems the customers identified since the release of the results of the survey.

Tesla Model 3’s rating was removed as a result of customers concerns as to its reliability

Inaccurate Financials

Last week, the chief executive, Elon Musk went ahead to make different bold predictions and analysts are of the opinion that the achievements of those predictions might be quite difficult. He took to Twitter to state that even though the company didn’t manufacture any car in 2011, it would make nearly 500,000 vehicles in the current year. That is a visible increase from Tesla’s position that its production target for 2019 is between 360,000 and 400,000 vehicles.

Within a few hours of the tweet, he tried to clarify his position stating that he meant the annualised production rate the company would have at the end of the year would be around 500,000 and that would mean 10,000 cars per week. It would be recalled that it is his tendency to make big claims that led to the Securities and Exchange Commission forcing him to step down from his position as the chairman of the company last year. SEC also warned the company to ensure that it has a better oversight in any statement that would likely move the stock of the company.

Musk was forced to resign from his position as Tesla’s chairman because of his tendency to make big claims

Exit Of Top Lawyer

It isn’t certain which of the company’s officials ought to be in charge of ensuring that Musk’s tweets and comments are SEC settlement compliant. However, it is now certain that Dane Butswinkas, the General Counsel of the company has left the company. Tesla announced last week that Butswinkas who became a part of the company after its deal with SEC would be exiting the company. He was with the company for just two months, and it stood as the latest instance of the revolving door of the company’s top executives.

Far-reaching Predictions

Last week, Musk made some bold predictions as to when the company’s vehicles would attain a true self-driving status.

According to him, by the end of 2019, its vehicles would have the ability to locate passengers in parking lots, pick them and also transport them to their respective destinations all without any driver’s intervention. He also added that by the end of 2020, it would be possible for a driver to take a quick nap and the car would continue driving itself.

Musk’s assertions have been described as wildly optimistic

He, however, noted that he didn’t think that Tesla would be able to activate its self-driving trips next year as regulators would likely not allow it. Experts have raised concerns about his assertions as to the company’s current standing with the self-driving technology. For instance, a director of research at an auto safety institute, Shaun Kildare noted that the claims about a Tesla’s capability were wildly optimistic.