Elon Musk is among the richest people in the world today with his company Tesla’s shares soaring through last year. Yet, it was as recently as 2018 that the company was struggling to make a profit, get its production schedule going and Musk himself embroiled in a punch up with the regulator. This dramatic turnaround in fortunes must have involved equally dramatic events behind the scenes. That is the essence of the book “Power Play: Tesla, Elon Musk, and the Bet of the Century” by Tim Higgins and this piece is an adaptation from the book, focused on those months of 2018 when Musk reportedly cracked the whip and drove Tesla’s turnaround – a period referred to internally as “Delivery Hell”.
“Personally and professionally, Mr. Musk was in tatters that September. Many of his most trusted deputies were long gone, including top sales and delivery executives who had futilely tried to avoid the very situation Mr. Musk now found himself in. He also faced the real threat of being booted from the company for what the U.S. Securities and Exchange Commission was calling a fraud against investors when weeks earlier he claimed to have funding lined up to take Tesla private.
But none of that would matter if Mr. Musk couldn’t turn things around in the next three weeks when the third quarter ended. He had promised a profit. And he was intent on doing so.
By August, Tesla’s cash on hand had fallen to $1.69 billion—barely enough for the company to function. Internally, Mr. Musk was pushing the team to deliver 100,000 vehicles in the third quarter—roughly as many as the company had sold in all of 2017. It wasn’t clear if the Fremont factory could even make such an amount, especially as it struggled to pump out vehicles free of defects.
Mr. Musk’s plan counted on the company delivering almost 60% of its vehicles in the final weeks of September.
…Instead of building out delivery centers that would perform some of the traditional car-dealer functions, Mr. Musk pushed to deliver vehicles directly to customer homes and offices—skipping the brick-and-mortar choke point all together. Mr. Musk wanted 20,000 cars in the third quarter delivered directly. In theory, it would save money on having to expand delivery centers; in practice it would require an army of people to physically take the vehicles to customers. There was no way Tesla was ready yet to do 20,000 home deliveries.
An initial plan to design special Tesla-branded car carriers was scrapped because it would have been too costly and time consuming. Instead, employees and contractors simply drove the cars to buyers’ homes and handed over the keys. Tesla’s drivers would return to the office by calling an Uber or Lyft.
… As the clock ticked down to the end of September and Tesla’s outrageous sales goal seemed out of reach, Mr. Musk turned to Twitter to make an unusual request to his loyal customers: Help us deliver vehicles.
Longtime owners showed up at stores around the country. They focused on showing customers how to operate their new cars, and explained life with an electric vehicle, freeing up paid staff to handle the overflow of paperwork. Mr. Musk and his new girlfriend, pop musician Grimes, worked at the Fremont delivery center, joined by board member Antonio Gracias. Mr. Musk’s brother, Kimbal, also a member of the board, showed up at a store in Colorado. It was truly an all-hands-on-deck moment.
…. Deliveries reached 83,500—a record that exceeded Wall Street’s expectations but that was more than 15% shy of the internal goal of 100,000…..While short of Musk’s goal, it was still an enormous achievement. It was also enough to push the company to a quarterly profit of $312 million”
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