UPDATED: 5/14/18 11:22 am ET - new story
SAN FRANCISCO -- Elon Musk has said the “short burn of the century” is coming soon to investors betting against Tesla Inc., but he's rapidly losing top deputies to help him deliver on that prediction.
Doug Field, senior vice president of engineering, is taking time away from the company to recharge, according to a company spokesman. His sabbatical is significant: Musk has said he regards Field as “one the world’s most talented” engineering executives. He’s one of only four executive officers named in the company’s recent proxy statement.
Field’s break follows a broader exodus of top executives, including Tesla’s primary contact with U.S. regulators, the head of its driver-assistance system Autopilot and the company’s global sales chief. On Monday, Musk announced a “thorough reorganization” in a memo to employees. Tesla will be “flattening the management structure to improve communication, combining functions where sensible and trimming activities that are not vital to the success of our mission.”
Tesla’s executive churn is among the reasons some investors say they’re wagering against shares of the company, which is valued similar to General Motors despite selling a fraction as many vehicles and burning through billions in cash. Famed investor Jim Chanos maintains a list of departures that he calls “stunning” and says the turnover is comparable to what his firm Kynikos Associates Ltd. observed at Valeant Pharmaceuticals International Inc. and Enron Corp. -- two wildly successful short bets.
'Something wrong'
“It is never a good sign when almost all your senior executives are leaving with the stock price at a high,” Chanos said on “Masters in Business,” a Bloomberg Opinion podcast released last week. “That’s telling you there’s something wrong. And I don’t know what it is, but almost all the senior executives at Tesla see something and are leaving stock option packages on the table.”
Tesla shares are down about 3 percent this year. While the stock has been a popular pick to bet against for some time, the number of shares being sold short exceeded 40 million for the first time earlier this month, according to S3 Partners LLC.
Field, 52, is taking the break just weeks after Musk confirmed a report by The Information that said the CEO had taken over production of the critical Model 3 sedan from his top engineer. Musk, 46, tweeted last month that he had asked Field about a year earlier to manage both engineering and production to better align the two departments, but wrote that recently, it was “better to divide & conquer.”
Disproving the 'haters'
Tesla’s efforts to mass manufacture an electric car for the first time has vexed the company for months. Field made headlines by rallying the ranks in March with an email urging workers to “prove a bunch of haters wrong” by boosting Model 3 output.
The carmaker came up short of a target to build 2,500 Model 3 sedans in the final week of that month. On April 3, the company reported that it produced 2,020 in the previous seven days.
Some of the blame for the slower-than-expected manufacturing lies with Tesla applying too much automation to its production of batteries and cars, according to Musk. The company has temporarily turned to semi-automated or manual processes while it works out the kinks. It also will continue to hire “rapidly” to support Model 3 output and future product development, Musk wrote in his memo Monday.
“We’re fixing it fast,” Musk tweeted on Sunday, referring to Tesla’s automation issues. “Hackathon going on right now to fix 2 worst robot production chokepoints. Looks promising.”