Morningstar | Musk Gets Some Help With Creation of President of Automotive Role
We are not changing our Tesla fair value estimate after a tumultuous day of news on Sept. 7. The day started with the announcement of the resignation of the chief accounting officer, who joined Tesla on Aug. 6, and video of CEO Elon Musk smoking marijuana on a podcast. What we suspect is isolated legal marijuana use does not concern us from a valuation perspective but we do think Musk used poor judgment. There has been much talk, including from Musk, that he is overworked and we think an executive who can run Tesla day to day and take pressure off Musk is needed.Tesla moved in that direction late on Sept. 7 by announcing several promotions, most notably Jerome Guillen as president of automotive, reporting directly to Musk. Guillen, a former Freightliner truck executive, joined Tesla in 2010 and was the first Model S program manager. He's also led all vehicle engineering and sales and service, has extensive Tesla auto manufacturing experience, and worked on the Tesla Semi. We hope that Guillen can be the point person on manufacturing bottlenecks going forward, which will in turn reduce Musk's stress levels and allow him to get more rest. To do that Musk will need to not live up to his self-described reputation as a nano-manager. Musk's actions have troubled us the past few months but we reiterate our view that he is effectively Tesla and without him Tesla is just a capital-intensive automaker burning cash with too much debt due soon. Perhaps Guillen's role is the beginning of Musk stepping back but it's far too early to say so for sure.
CAO Dave Morton's resignation so soon after resigning as CFO of Seagate Technology is not ideal and we suspect the problem was more around Morton not being comfortable with the Aug. 7 going private Twitter debacle and Tesla's culture. In an 8-K filing, Morton said the public attention placed on Tesla and the pace within the company surpassed his expectations and that he had no problem with Tesla's financial reporting.
Tesla designs, develops, manufactures, sells and leases electric vehicles and energy generation and storage systems, and provides services related to its products. The company operates as two reportable segments: automotive, which includes the design, development, manufacturing, sales, and leasing of electric vehicles as well as sales of automotive regulatory credits; and energy generation and storage, which includes the design, manufacture, installation, sales, and leasing of solar energy generation and energy storage products, services related to such products, and sales of solar energy system incentives.
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