Earth to Tesla: Elon Musk Has Few Ideas Beyond Begging for Government Money

Tesla is burning, but it doesn’t look like anyone is rushing to put out the flames. Over the past few weeks, Tesla stock dropped nearly 10 percent, and currently hovers around $190 a share. The company’s value has slumped to levels not seen since 2016, and analysts arepredicting that this recent drop is only the start. In mere months, three years of market growth was eviscerated. Investors, once eager to embrace the company, are now mourning Tesla’s precipitous decline.

Tesla’s collapse serves as a stern warning to Congress which, only a month prior, had proposed increasing subsidies and tax credits for electric vehicles. With the hopes of increased government assistance, Tesla’s stock jumped upward, only making the electric car company’s fall from grace all the more painful. But while government intervention has undoubtedly warped the electric vehicle marketplace, Congress isn’t primarily to blame for Tesla’s volatility.

At the heart of the crisis stands Elon Musk, the fabled visionary businessman and CEO of Tesla. If compensation is any indication, it’s crystal clear that Tesla values Musk as the leader of their company. In 2018, Tesla awardedits CEO a package valued at $2.3 billion—about 18 times larger than that of the second-highest-paid CEO. Obviously, that level of yearly compensation is absurd on its face. It could only be justified if Musk was a singularly unique business savant. Unfortunately for Tesla, that’s just not the case. In fact, Musk’s visionary direction has led Tesla to the brink of collapse.

In truth, Musk is generally considered to be a sub-par CEO. He’s erratic, temperamental, and prone to controversy. But more than that, his vision for Tesla’s future has consistently disregarded the company’s current state. Despite the company’s relatively niche consumer base, Musk envisioned Tesla as a mass-market automaker, competing with other industry heavyweights at global scales. Only recently has it become clear that Musk has no idea how to bring his company to that point.

Upscaling production is no easy feat; it requires both extensive capital and market demand. Currently, Tesla has neither. Musk has long been hesitant toward the idea of raising capital to finance expansion, preferring instead to pay down debt with Tesla’s quarterly profits. A foolproof plan, no doubt, if only the company were profitable.Tesla, of course, is not. And now, it looks like Tesla may have missed its chance. As the news of the automaker’s poor performance spreads, the pool of willing investors is drying up, and with it, Tesla’s hopes of growth.

Similarly, Tesla, once the premier electric vehicle manufacturer, has lost its step over the competition. With most major automakers set to release their own electric cars within the next year, the reasons to purchase a Tesla are becoming fewer by the minute. Musk’s company may have been top dog when it was the only major player in the EV marketplace, but as technology progresses, Tesla is struggling to retain its customer base and market demand.

Despite the obviously unfavorable business conditions, Musk is pressing forward with his vision of expansion. It’s that vision that is destroying Tesla. Indeed, the electric car company is being crushed under the weight of their own CEO’s unbridled ambition. And this isn’t the first time it’s happened either.

Musk’s other business venture, a private aerospace firm that receives most of its support from the government, called SpaceX, is facing similar struggles stemming from their CEO’s ambition-driven antics. Recently, SpaceX filed suit against the United States government, alleging that the Air Force had “wrongly awarded” contracts to a few of SpaceX’s competitors in the hotly-contested Launch Service Agreement, which will create new launch systems for national security use. Obviously, obstructing a program designed to foster competition isn’t a good look, especially when it’s because your company wasn’t the right fit for the job.

Musk’s decision to protest the LSA decision because he didn’t receive government contracts is clearly a foolhardy endeavor, but it fits the vision he has for his company. Musk wants SpaceX to be America’s preeminent aerospace contractor, and he’ll sacrifice his company’s own reputation to achieve that accolade. With SpaceX, as with Tesla, Musk’s desire for government aid blinds him to the reality of the competitive marketplace, and his businesses are worse off for it.

With some of its government incentives now expiring, Tesla must recognize that it desperately needs a course correction. Serious, systemic, lasting changes to the corporation’s business strategy must be made. Perhaps, Elon Musk, with his stubborn demeanor and aversion to change, isn’t right individual to make them. In March, esteemed NYU professor Scott Galloway predicted that Tesla would be acquired within a year. It may very well be that this prediction soon becomes prophesy.

James Lowe is a two decade radio industry veteran and now host of his own nationally syndicated radio show based in Kansas and carried on the Iheartradio App. Find out more at jiggyjaguar.com