Open Letter to Elon Musk and Tesla Board of Directors (Q2 2019)

Dear Elon and Tesla Board of Directors,

I am writing this letter to express a growing concern regarding some of the activities at Tesla. Before I address those concerns, I first want to say I am in full support of Elon’s vision for the company. I am extremely excited about Tesla’s increase of production and improved gross margin of Model 3. Tesla’s future product road map makes me, as shareholders and enthusiast, even more excited for the next several years and how that will positively impact the company’s profits and share price.

With that said, some of Tesla’s most recent business decisions have become extremely concerning. I understand from time to time a company must trim the excess head count in order to stay nimble and competitive - especially with a potential recession looming. However, layoffs in June 2018 [1], January 2019 [2], and February 2019 [3] amid growing Model 3 production gives me pause. This pause is further confirmed after speaking with a handful of employees in various positions, who rightfully so, are concerned about their future with the company. This uncertainty can and will undoubtedly have a toll on employee performance.

Tesla’s roller coaster pricing of vehicles and Autopilot/Full Self Driving [4], most recently in conjunction with the decision to close most retail stores, is another area of concern. With prices of vehicles sometimes changing on a weekly basis [5], many owners (and potential owners) are confused. A march toward continued cost reductions is certainly great for consumers. However, erratic up and down pricing leaves consumers unclear about the health of the company. Others who’ve just taken delivery of their vehicles are upset regarding the future value of their vehicles.

As if these changes weren’t enough, on February 28, 2019 Tesla announced, in correlation with the $35,000 Model 3, retail stores would be closing and the company would be moving to an online only sales model. This decision was then walked back on March 10 [6], deciding to only close 10% of stores. Again, the back and forth of layoffs takes a huge toll on staff - a staff you requested they volunteer additional time to help deliver some 30,000 vehicles by end of quarter Q1 2019 [7].

The aforementioned concerns are just on the business side. Elon’s Twitter activity have also been a point of nervousness. Over the last 9 months, he has engaged in shouting matches with journalists [8], shorts [9], a Thai diver [10], and the SEC [11]. These juvenile conversations have resulted in unneeded negative press, lawsuits, and fines [12]. Regardless of whether these activities are warranted, it is my belief that the best way to prove these critics wrong is to stay focused on executing Tesla’s Secret Master Plan [13].

On behalf of Tesla employees, owners, shareholders I would kindly ask you to consider two recommendations:

1) I would like to see Elon refrain from online taunting of any kind and focus on delivering as many cars as possible with the highest quality build quality and customer service. Not only does online taunting come across as unconstructive, it creates an out of focus view of Tesla and its CEO. This is not a request to remain off of Twitter completely - we understand there is value in Twitter as a customer feedback loop and source of future ideas - I would just like to see less of the more contentious communication.

2) I would also suggest Tesla make a concerted and intentional effort to hire a COO - similar to Gwynne Shotwell of SpaceX [14] - who can a) handle the day to day business operations of Tesla b) allow Elon to focus on product and engineering and c) ensure that before Tesla makes any major business decisions, executive operational leadership is consulted with to determine how this will impact all constituents - employees, owners, and shareholders.

I love and support Tesla. I believe in its mission to accelerate sustainable transportation and energy. I love Tesla’s products as a current Model S owner. I want to see Elon continue to be the front man, innovative archetype, and persona for change. I see a long term value in investing into the company and want to continue to increase ownership in the company’s shares. I, however, do not believe the aforementioned concerns act in the best interest of employees, owners, and shareholders, nor contribute toward Tesla’s success. I kindly ask for your consideration and attention to these matters.  

Sincerely,

Sean Mitchell

References:

[1] "Tesla has grown to 45,000 employees despite laying off ~4,000 ...." 15 Oct. 2018, https://electrek.co/2018/10/15/tesla-45000-employees-elon-musk/.

[2] "Tesla layoff details, reduced hours for Model S and Model X production." 23 Jan. 2019, https://www.cnbc.com/2019/01/23/tesla-layoffs-details-reduced-hours-model-x-model-x-production.html.

[3] "Tesla will close most of its stores and only sell cars online - The Verge." 28 Feb. 2019, https://www.theverge.com/2019/2/28/18245296/tesla-stores-closing-online-only-car-sales.

[4] "Tesla owners literally protest over drastic price cuts - Electrek." 4 Mar. 2019, https://electrek.co/2019/03/04/tesla-owners-protest-price-cuts/.

[5] "Tesla Increases Pricing On Most Cars, But Just By A Bit - Inside EVs." 21 Mar. 2019, https://insideevs.com/tesla-slightly-increases-pricing-most-models/.

[6] "Tesla not closing showrooms: Tesla raising prices on some cars to ...." 11 Mar. 2019, https://www.cbsnews.com/news/tesla-not-closing-showrooms-tesla-raising-prices-on-some-cars-to-keep-showrooms/.

[7] "Tesla asks workers to volunteer to help deliver 30K cars: Report | Fox ...." 18 Mar. 2019, https://www.foxbusiness.com/markets/tesla-asks-workers-to-volunteer-to-help-deliver-30k-cars-report.

[8] "Elon Musk's attacks on reporter Linette Lopez need to stop.." 6 Jul. 2018, https://slate.com/business/2018/07/elon-musks-attacks-on-reporter-linette-lopez-need-to-stop.html.

[9] "Elon Musk goes after individual shorts on Twitter with 3 week warning." 18 Jun. 2018, https://www.cnbc.com/2018/06/18/elon-musk-goes-after-individual-shorts-on-twitter-with-3-week-warning.html.

[10] "Elon Musk sued by the cave rescue diver he called a 'pedo guy'." 17 Sep. 2018, https://www.cnbc.com/2018/09/17/telsa-ceo-elon-musk-sued-by-thai-rescue-diver-vernon-unsworth.html.

[11] "Elon Musk is in Twitter trouble yet again - Recode." 25 Feb. 2019, https://www.recode.net/2019/2/25/18240590/elon-musk-twitter-sec-tweets.

[12] "Elon Musk Says '420' Tweet Was Worth $20 Million SEC Fine - Gizmodo." 27 Oct. 2018, https://gizmodo.com/elon-musk-claims-420-tweet-with-20-million-sec-fine-wa-1830050362.

[13] "The Secret Tesla Motors Master Plan (just between you and me) | Tesla." 2 Aug. 2006, https://www.tesla.com/blog/secret-tesla-motors-master-plan-just-between-you-and-me.

[14] "Gwynne Shotwell - Forbes." https://www.forbes.com/profile/gwynne-shotwell/.