August 25, 2018 / 4:09 PM / 3 months ago

Breakingviews - Musk flip-flop makes job harder to do - and keep

SpaceX founder Elon Musk pauses at a press conference following the first launch of a SpaceX Falcon Heavy rocket at the Kennedy Space Center in Cape Canaveral, Florida, U.S., February 6, 2018. REUTERS/Joe Skipper

NEW YORK (Reuters Breakingviews) - So Tesla isn’t going private after all. Chief Executive Elon Musk has pulled the plug on taking the $55 billion electric-car maker private, the company said late on Friday. The abysmal handling of the half-baked idea caps Musk’s long record of overpromising and underdelivering.

It’s now clear that his Aug. 7 tweet about taking Tesla off the public market at $420 a share with “funding secured” was pie in the sky. He did not have the financing locked up, opening the door for the Securities and Exchange Commission to crawl all over the company.

The man who has spent chunks of the past few months living in the Tesla factory helping to ramp up production evidently had not considered how difficult it would be for both institutional and individual investors to keep a stake in a delisted enterprise - yet he assumed many of them would do so.

More basic considerations eluded him, too. The process, he wrote on Friday, “would be even more time-consuming and distracting than initially anticipated.” It would have taken only a quick chat with a friendly Wall Street adviser to work that out.

The recent stress of his job undoubtedly plays a role. He’s not sleeping well, he relies on Ambien and his emotions are running riot, a recent New York Times interview revealed. But his history of grandiose statements stretches back years; he first started making unrealistic pledges about Model 3 sedan production in 2016. He has routinely had to backtrack.

Even for a person of Musk’s capabilities, he has taken on too much - and Tesla’s board, packed with his family, friends and business associates, has allowed it. He is in sole charge with no obvious top lieutenant at Tesla, which has lost dozens of key employees in recent months. He is also chairman and CEO of rocket launcher SpaceX and runs the recently established Boring Co tunneling venture.

The consequences are now on display. Musk’s judgment, epitomized by the buyout fiasco, looks increasingly faulty - just as Tesla needs cool heads to drive it to profitability. He and his board need a reality check. This kind of flip-flop makes his job harder to do – and should make it harder to keep.

Breakingviews

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