After a difficult period has Tesla turned a corner?

1 min read

It’s been a torrid few months for Tesla, with a series of mishaps, reality checks and mishandled media events. Investors have grown worried about an increasing number of problems with the company, such as concerns over car safety and a major recall earlier this year, which involved almost half the Model S cars sold to date. In March, a Model X crashed into a highway barrier in Mountain View, California, killing the driver.

The biggest issue confronting the company however, remains manufacturing difficulties with its Model 3.

The company has been criticised for having too few humans on its production lines and for relying too much on automation, which the CEO Elon Musk himself has admitted may have slowed the Model 3 production process.

Musk had assured investors and the public alike that Tesla would be producing 20,000 units per month by December last year, when that failed to happen he moved the goal posts and last month finally managed to hit 5,000 units per week.

But as it hit that milestone the company had to confirm that Doug Field, its senior engineering VP, had left the company.

Questions are also being raised over Tesla’s finances. It’s been cutting costs, but is still spending billions, and there are worries that the company might eventually go bankrupt.

In March, the rating agency Moody’s downgraded Tesla’s credit rating from B2 to B3.

Despite these problems Tesla is currently still valued at around $59 billion, and has been able to raise new funds.

Musk referred to Tesla finally becoming “a real car company”, after it hit its target to build 5,000 Model 3 electric cars in a week and tweeted ‘7,000 cars in 7 days!”

That attracted this tart response from Ford, ‘7,000 cars, circa 4 hours’.

Tesla has set itself challenging targets and is having to invest heavily. Perhaps Musk promised too much, too soon, but should the financial institutions also be asking themselves questions as to how they actually go about valuing businesses operating in the technology space.