Opinion: Tesla is an easy fix — if Elon Musk’s ego allows it

Tesla’s problem is so simple even cheerleaders can solve it, or begin to:

“Hey hey, ho ho,’’ they might cry. “Elon Musk needs a COO.’’

The electric-car maker’s stock has slumped 16% since its closing peak this year at $357.42 on Feb. 26 through Tuesday, compared to the S&P 500’s  4.5% loss, and talk is getting ugly ahead of Wednesday’s first-quarter earnings report. It’s remarkable how negative hype mounts when you’re running the world’s hottest car company, and can’t seem to hit production targets for your best-selling — actually, that is the most-ordered, since Tesla can’t sell them until it builds them — model, the $35,000-and-up Model 3 sedan.

Orders that 400,000 people have been waiting years for Musk to fill. Unfilled orders that made Tesla miss production targets for the first quarter, and will lead to yet another missed earnings forecast. And it’s halting Tesla’s ascent from niche auto maker to the global giant its early-2018 valuation conjured.

The pressure is apparently so intense that CEO, co-founder and unquestioned Tesla boss Musk was moved to absent himself from the couch he’s been crashing on at Tesla’s factory to tweet this:

What?

What Tesla needs is discipline, and discipline is exactly what Musk has spent the last few months proving he can’t provide. That’s what a chief operating officer does, and it’s what Tesla needs.

Musk’s vision and technical genius aren’t in most of us, yet he lacks something lesser executives generally have — the ability to shut his mouth and keep promises, lest they undermine his credibility. Because the bear case for this stock is based on nothing besides the idea that Musk will talk himself out of a fortune.

Selling vision is plainly what Musk likes to do. It’s why the “production hell” of the Model 3’s stumbling launch has been interrupted by launching a Roadster into space on a rocket, or by the boss traipsing off to the SXSW conference 1,700 miles from headquarters to muse about life on Mars. His heart isn’t in making cars, even though he took over responsibility for production in March, and he’s not fooling anyone. At his SpaceX rocket company he has a COO, and he had a chief operations office at SolarCity before it merged with Tesla. It’s not a new or novel idea, even for this micromanaging boss.

So do it.

Hiring a COO at Tesla would, hopefully for shareholders, stop giving credence to bears bearing math-challenged stories about how Tesla will run out of cash and/or go down the chute in a few months, which induced Moody’s Investors Service to cut Tesla’s already-low bond rating to B3, indicating a “higher risk of default and inadequate cash reserves.”

All of these stories depend on the narrative Musk feeds — that he’s not into details, doesn’t care if Tesla keeps its short-term promises, and that long-term screw-ups on which short sellers are counting are just a series of short-term messes the boss is already too proud to clean up.

Tesla’s problem isn’t math. It’s leadership. It’s the smell of BS, juvenilia, and indiscipline wafting from the world’s largest producer of emissions-free cars.

Looking at Moody’s downgrade, Musk has multiple ways to solve his financial-engineering problem. Headlines emphasized that Moody’s thinks Tesla will have to raise more money — about $2 billion — to subsidize losses and prepare to make the Model Y small SUV, due in 2020.

But the report says that’s true only if Tesla continues to invest at a multibillion-dollar yearly rate, as it did when retrofitting its California factory to make Model 3s and building its giant Nevada battery factory, jobs that are now done. Musk can ramp up to push Model Y production and other projects. Or he can wait, if he needs to conserve cash until the Model 3 delivers profitability, and not have a cash crunch.

But, Moody’s says, nothing works unless Tesla builds Model 3s in quantities that matter. And things work well if it does.

“Tesla continues to benefit from solid market acceptance of Models S and X, which collectively hold over a third of the U.S. luxury market,” Moody’s says. “The [bond] rating could be raised if production rates of the Model 3 meet Tesla’s current expectations.”

In other words, Tesla will be fine if it shows it can take care of business. (The company also says it expects an operating profit for most of this year, but it has been dismissed since Musk talks so much).

Then, credibility restored, Tesla will easily raise cash to build the Model Y. For all the triumphant bear fuss lately, Tesla went public at $17 a share and remains a 17-bagger at $295 — and, as Moody’s notes, fundamentals like battery cost, public acceptance of electric cars and regulatory support are stable or improving. The markets aren’t cutting Musk off unless he makes them.

To give investors confidence again, someone needs to be empowered to run Tesla’s factory as a full-time job they actually like — not one they’re willing to do between building high-speed trains, or rockets, or riding a roadster to Mars on an intergalactic road paved with comet cocaine, while talking themselves out of a fortune.

Because the bear case is based on the idea Musk will do just that — and it’s not based on much else. The cars work, and the batteries that make EVs costly are getting cheaper. They’re a better mousetrap.

Announcing a new COO on the earnings call won’t likely happen. But it would be a start. For all the recent fuss, all Musk has to do is get out of his own way. Even a rally boy can see it.