Tesla CEO Elon Musk. Photo / AP
It has been a rollercoaster two-and-a-half weeks for Elon Musk after a single tweet — made when the tech maverick was on his way to the airport — sent shockwaves through the market.
The outspoken SpaceX and Tesla CEO batted off allegations he was on psychedelics when he abruptly announced he had secured funding to take his electric car company private, but ever since, things have turned even crazier than usual at Tesla.
Soon after the tweet on August 7, the billionaire revealed money wasn't locked down after all. And, two weeks later the whole deal was scrapped.
The whole debacle has forced some of his close associates to admit that it's not always clear that Musk knows what's best for Tesla.
Some say his 110-hour working weeks, inability to delegate and his hands-on approach are taking a physical and mental toll on the visionary businessman — putting the company's 40,000 employees and investors at risk.
Musk's behaviour has been cast into the spotlight several times this year as he launched a bizarre flame throwing device and made an unfounded criminal accusation about one of the rescuers who helped save a group of young boys and their soccer coach from a cave in Thailand in July.
He doubled down on his bizarre claim against cave diver Vernon Unsworth on Twitter today. "You don't think it's strange he hasn't sued me? He was offered free legal services," Musk wrote, responding to a tweet from a former TechCrunch writer criticising the "pedo guy" remark.
Earlier this month he apologised to two analysts he cut off on Tesla's first-quarter call — blaming his recent 110-hour working weeks for making him cranky. He later told reporters he was physically exhausted and emotionally drained from the job — sometimes not going outside for days at a time.
Close associates who spoke to the New York Times portrayed Musk as a troubled genius and a workaholic who zeros in on the smallest details.
They say he is a "visionary leader" who sleeps under his desk or on the factory floor and worries about rogue employees, working at the behest of short-sellers, who he believes are infecting his robots with malware.
These fears are stoked by the fact that Tesla is among the most shorted stocks, which means that hedge funds are betting against it and quick to note a missed production goal or cash shortfall.
In June, Musk even accused an employee of sabotage after Model 3 production slowed down. The paranoia, around saboteurs and short-sellers has got so bad that Musk's brother, Kimbal told the New York Times: "We feel like we are at war."
One of those short-sellers is David Einhorn, the billionaire founder of Greenlight Capital, who said he bet against Musk because he "appears erratic and desperate".
While, the colleagues who spoke to the Times didn't go that far, they said Musk was a micromanager who took any attack on Tesla "extremely personally" and spent hours each week walking factory floors, trying to fix problems on the assembly line.
"He demands personal accountability from the people that are closest to the machines," JB Straubel, the company's chief technical officer, told the Times. "This freaks people out. They are worried that he will come to their area and start asking questions."
Musk's controversial management style has forced 30 senior employees to leave in just two years, according to a list compiled by Reuters.
Among those are the director of battery engineering, the vice president for autopilot and the director of manufacturing engineering, all positions which are understood to be crucial to Tesla's future.
Board members also reportedly become concerned after Musk openly revealed on Twitter he was taking the hypnotic drug Ambien in an attempt to make his body sleep.
Those shorting Musk have pointed to a number of questionable decisions over the past few months.
One idea was to speed up Model 3 Sedan production by adding an automated machine in the car's assembly line that Musk identified as a "flufferbot".
It was supposed to grasp and apply fuzzy fibreglass mats to the car's battery packs, to help muffle their noise.
However, it didn't work. It struggled to pick up the fibreglass and, when it did, it put it in the wrong place, frequently delaying production. It was eventually replaced by factory workers.
However, Musk has batted off such failed experiments with humour and openness through social media.
Musk tweeted: "Excessive automation at Tesla was a mistake. To be precise, my mistake. Humans are underrated."
Tesla's funding episode could further erode his credibility with stakeholders who have endured multiple broken promises and years of losses as a public company.
"Prior to the go-private episode, his credibility was in question, although investors still had overall confidence in the guy," Erik Gordon, a business and law professor at the University of Michigan, said. "This whole go-private episode has taken his credibility close to zero."
It has also resulted in legal action against Musk.
At least two legal cases seeking class-action status have been filed alleging Musk broke securities laws by making it sound like financing for the buyout was lined up.
James Cox, a Duke University professor who specialises in corporate governance and securities law, said regulations prohibit companies from making misleading statements that influence the markets.
"The fact that he's now backing off so quickly, within a matter of weeks, indicates the insincerity in which the first statement was made," Cox said.
The electric car maker is facing financial pressure, with a US$230 million ($342.7m) debt payment that's due in November on top of the US$920m that must be paid off three months later. And it has only recently hit production targets for its Model 3 mass-market vehicle.
Meanwhile, Tesla's rivals are moving aggressively into the luxury electric vehicle space.
In the next few days, German competitors Mercedes-Benz and Audi, the luxury arm of Volkswagen, are both showing off production-ready electric sport-utility vehicles aimed at Tesla's Model X.
Furthermore, Jaguar Land Rover offers the I-Pace electric SUV while Porsche is taking on Tesla's Model S high performance luxury car with the Taycan, expected to reach the market in late 2019.
Experts believe this spells trouble for Tesla.
"By 2020, Tesla must stabilise itself or be overtaken," warned Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Duisburg-Essen.
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