What does Tesla look like without Elon Musk?

Hard decisions.
Hard decisions.
Image: Reuters/Noah Berger/File Photo
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Tesla may need to drive away without Elon Musk. Once unthinkable, the US Securities and Exchange Commission is seeking to ban Musk from serving as an officer at Tesla, or any public company, for allegedly violating securities laws while trying to take the company private, according to an SEC lawsuit filed on Sept. 27.

Could Tesla succeed without its CEO?

The market isn’t so sure. The company’s stock plunged 14% after the news of the SEC’s suit broke, one of its lowest points since 2017. For the last decade, Musk has been inextricable from Tesla. The quixotic executive transformed a tiny car startup into a $45.2 billion behemoth that is mass-producing electric cars, solar panels, and batteries, eclipsing the market cap of brands such as Ford.

Musk’s ability to conjure up funding, publicity, and demand for products ranging from flamethrowers to the $250,000 Founder Series Roadster has defied anyone’s predictions. Despite the Model 3’s production woes, it still ranks among the world’s most successful product launches, with 420,000 people depositing a collective $420 million for a car that wasn’t even manufactured yet.

But many investors, not just short sellers, might welcome new leadership at the top. Musk’s allies have been privately writing texts and openly writing letters begging the CEO to focus on building profitable cars, and lay off antics on Twitter. The SEC’s lawsuit, a possible criminal case by the Department of Justice, and a raft of class-action lawsuits lay the groundwork for his eventual ouster. As his leadership loses its luster, is there a model for Tesla to thrive without Musk at the helm?

The SpaceX model

One involves SpaceX. Assuming Musk can escape legal trouble, his other blockbuster success, now valued at $21 billion (paywall), offers a blueprint for his future. Like Tesla, the aerospace company was once dismissed as lunacy. It is now a comparatively smooth-running machine. SpaceX regularly launches rockets into orbit and is ostensibly headed for the moon and Mars soon. From a business perspective, the company manufactures a groundbreaking product at a low cost that is the envy of its competitors.

A big reason for this is Gwynne Shotwell, an aerospace engineer and SpaceX’s first salesperson who then rose to become president as well as Musk’s most-trusted employee at the company. Shotwell worked her way up at Chrysler, Aerospace Corporation, and space startups in southern California after earning mechanical engineering and applied mathematics degrees. She oversees SpaceX’s daily operations, from mission control to manufacturing to deals with NASA.

In addition to her exceptional abilities, one key to Shotwell’s success in the company is a structure in which she wields wide discretion to implement Musk’s vision, or clean up the messes he leaves in his wake. One episode at SpaceX, recounted in Ashlee Vance’s book Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future, is telling.

SpaceX’s top managers work together to, in essence, create fake schedules that they know will please Musk but that are basically impossible to achieve. This would not be such a horrible situation if the targets were kept internal. Musk, however, tends to quote these fake schedules to customers, unintentionally giving them false hope.

Typically, it falls to Gwynne Shotwell, SpaceX’s president, to clean up the resulting mess. She will either need to ring up a customer to give them a more realistic timeline or concoct a litany of excuses to explain away the inevitable delays. “Poor Gwynne,” Brogan said. “Just to hear her on the phone with the customers is agonizing.”

Vance adds that the now 6,000-person SpaceX is designed to maximize the power of the individual. He describes the ideal SpaceX employee as someone who works 16 hours a day every day, rather than multiple people who must coordinate over 8-hour shifts.

A bet on Elon Musk

But Tesla is a different beast. Scaling a startup, especially in manufacturing, means hiring people beyond those drawn to a startup’s grueling hours, submarket pay, and the hopes of a distant, uncertain payoff. For many of Tesla’s 26,000 or so employees, even those enamored with Musk’s vision, a steady paycheck and steady management is important.

That’s true for executives as well. Finding a Shotwell for Tesla may not be possible because such individuals tend to leave the company too soon. Power at Tesla has been consolidated upwards under Musk, a self-described “nano-manager” who has burned through executives like wildfire. An abbreviated list of executive departures exceeds a dozen since 2016, including the CFO and the heads of accounting, human resources, battery technology, Autopilot, and other key divisions. Tesla was always a bet on Elon Musk—and now it’s even more of one.

The style that works at SpaceX, a private company producing small-batch, high-value rockets, is anathema to mass-production. Major automakers, conservative to a fault perhaps, take years to roll out new models and modify production lines for a reason. A small error caught late in production can be amplified by the millions. Meticulous planning is needed to avoid mistakes that can bankrupt a company. “There is a long history of auto companies going out of business not because they have a bad product, but because they run out of money,” says Arthur Wheaton of Cornell University’s labor and industrial relations program. He notes DeLorean’s failure (paywall) and General Motors’ brush with bankruptcy after spending billions on failed automation attempts in the 1980s.

At Tesla, reliable lieutenants carried out Musk’s bold early plans. The Roadster, Model S, and Model X did not survive “production hell” because Musk was crashing in a sleeping bag in the factory. It was all hands on deck virtually all the time. But as the stakes and scrutiny grew, the gears began to grind.

At Musk’s behest, the Model X SUV underwent massive, costly, last-minute redesigns pushing the car far behind schedule and fueling executive departures. A “fully automated” factory in Fremont, California turned into a costly morass requiring the airlift of an entire assembly line from Germany, at eye-watering expense. Then there’s Musk’s impulsive (possibly illegal) attempt to take Tesla private. A series of unvetted and misleading statements may constitute securities fraud.

His brilliance at overcoming terrifying risks to start his company are turning into potentially lethal blunders running it. Musk has admitted to such hubris, while doing little to change it. That may be the question for Tesla: Can Musk overcome his own tendencies?

The Steve Jobs category

Jennifer Chatman, a management professor who specializes in organizational culture at the University of California, Berkeley’s Haas School of Business, says another analogy is in order. Steve Jobs founded Apple in 1976, and almost ran it into the ground before he was pushed out. After running NeXT and Pixar, he returned to the troubled firm as Apple’s CEO in 1997, making it into what it was today. But something had changed about Jobs in the interim, notes Chatman.

“Steve Jobs was known to be caustic, unpleasant to his people, and drove the company into the ground a couple of times before he was asked to leave,” she says. “But he eventually learned how to be a better leader. I think he was still narcissistic, but he learned how to channel his creative genius into organizational effort.” Jobs, crucially, cultivated a team of 13 executives with complementary skills, like current CEO Tim Cook, who stuck with him between 1998 until he stepped down in 2011. “I put Elon Musk in the Steve Jobs category,” says Chatman.

Musk himself once mused he might be a narcissist, a personality disorder the Mayo Clinic defines as a “mental condition in which people have an inflated sense of their own importance, a deep need for excessive attention and admiration, troubled relationships, and a lack of empathy for others. But behind this mask of extreme confidence lies a fragile self-esteem that’s vulnerable to the slightest criticism.”

Sound familiar? Musk could follow in the path of Jobs, stepping down from roles where a steadier hand would better serve, entrusting Tesla’s operations to talented deputies, and infusing the carmaker with the creative brilliance that made it so compelling in the first place.

But doing so would require a U-turn for Musk. For now, he seems satisfied that the value he’s creating can overcome any dark side to his genius.