A little background on Tesla: Tesla Motors is a silicon valley automobile startup company, and has promised an electric car that goes 0-60 in 4 seconds, gets 135 mpg equivalent, has a range of 200+Miles and has the top speed of 125 mph.
Total investment so far – about $105M. A prototype was unveiled in 2006 and production is expected start in the first part of 2008. The company has about 250 employees. As of August, there were 500+ roadster reserved, each paying anywhere from $5k to $100k to reserve the car.
The company was started by engineer Martin Eberhard and others in 2003, and Eberhard served as the CEO till very recently. Amid production delays, Eberhard was given a new title and in December 2007, Ze’ev Drori took over as the new CEO.
Tesla also announced that they were seeking $40M of additional funding and are experiencing transmission problems. A one speed transmission system, that will deliver max speed of 80 mph is available but since the expectation is to have the top speed of 125 mph, they are looking to get a two speed transmission. The company claims that it is a “logistical” problem and not a technology problem.
It is no secret that Eberhard was less then pleased with the way he was treated during the transition to the new CEO.
In his blog, Eberhard claims that there is a stealth bloodbath going on at Tesla and that 27 people that he knows of, have been let go, including some people in the transmission team, a few very knowledgeable engineers and several vice president.
Ze’ev Drori (CEO) and Elon Musk (Chairman of the board) sent an email to customers saying:
Tesla is a company of many extraordinary individuals. To succeed, we must continuously develop a top performing team. Since resources are very precious, this also means that we must make hard decisions where need be and part ways with those whose performance has not matched expectations. These actions were taken after careful analysis by the leadership team, and not by a shotgun approach.
At the same time, we continue to look for extraordinary people, with or without automotive experience, to join our team. If you know such people please send them our way.
I have no information about the inner workings of the Tesla Motors; but I do know that at times, you want to go in and you are so angry at the state of affairs at a company, you want to fire everybody who had any hand in getting to that stage.
When I moved to NoCalifornia during the tail end of the Internet boom, and join a business incubator, one of my first tasks was to close down two of the companies. Some of it was related to the general state of the investment and some of it had to do with the people involved. Sometimes, you need to let the whole team go, so that the new team is not contaminated with the old way of thinking that did not work and precipitated the need to get a new team! Yes, I have been there.
In 2006, when the prototype of Tesla motor was unveiled, the company was ahead by at least 2 years compared to other competitors in the field of electric vehicles. To lose that precious time and not having a car on the road even in the early part of 2008, is something that probably troubled the investors and possibly called for drastic measures.
The company is not in the start-up phase any more; right now the focus of the comp may is in getting the production effectuated and increased. The needs are different, the skill set required is different, and I am not surprised that the new CEO wants to start with a new team.
Tesla says that these are not layoffs, they are ‘firings’; the whole team was probably in some sort of funk and certain mode of thinking that was holding them back in getting the car on the road and having “logistical” transmission issues.
The new CEO has even taken the bold step of suggesting that in order to get the car on the road, he might consider putting in an “interim transmission” in the car that will be swapped out after a few months when the production for new transmission is moving at the full throttle.
Transitions are always difficult, this one seems even harder. But I do not see anything other than a “transition” here; for ex-CEO who was forced out, to suggest that there is a “blood bath”, and obliquely suggest that the project might not survive, is not in the best interest of the company.
Tesla motors has great plans, they want to produce an electric car that is further enhanced by solar power, they want to produce a sport sedan and they are ahead in terms of technology. Let us give the new CEO time and lee way to get the system in place to focus on production.
True, the layoff or the transition has not been handled in the best way, but at times, when the participants are reluctant, there is no good way to handle transitions.