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Auto industry insiders question Elon Musk's leadership, amid bizarre rant over Thai rescue

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Auto industry insiders question Elon Musk's leadership, amid bizarre rant over Thai rescue

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Tesla CEO Elon Musk is well known to be opinionated, highly motivated, and even eccentric. But his recent Twitter commentsaccusing a British rescuer of being a pedophilemay be the beginning of his undoing, industry experts say.

Musk got into a Twitter flame war with British diver Vernon Unsworth, who had dismissed as a "PR stunt" Musk's offer to send a "kid-sized" submarine to help rescue a soccer team trapped in a flooded Thai cave. In a series of increasingly harsh-toned tweets, Musk weighed in by calling Unsworth a "pedo guy." He then compounded matters when criticized by a Twitter follower, responding, "Bet ya a signed dollar it's true."

"Your behavior is fueling an unhelpful perception of your leadership — thin-skinned and short-tempered," Gene Munster, a managing partner at the venture capital firm Loup Ventures wrote in an open letter to the Tesla CEO this week.

Musk has since apologized for his words — one of the rare instances in which he has taken back blunt and often aggressive comments leveled at investors and analysts, journalists, and regulators.

Musk wrote that despite Unsworth's initial criticism, "his actions against me do not justify my actions against him, and for that I apologize to Mr. Unsworth and to the companies I represent as leader. The fault is mine and mine alone."

While Musk's constant use of Twitter has earned a loyal following — and helped build demand for Tesla products — critics worry that he is beginning to hurt both his own and his company's image.

Fallout from the battle hasn't been limited to the Twittersphere. Investors initially pulled back on Tesla stock, and shares have continued to yo-yo this week. Of course, Tesla stock has been riding a rollercoaster for much of the past year, largely as a result of problems the company has faced getting its critical Model 3 battery-sedan into high-volume production.

That has clearly weighed heavily on the South African-born Musk, who has much of his fortune tied up in the company and has spent much of the past few months sleeping at Tesla's assembly plant in Fremont, California, hoping to get things on track — if by nothing else but sheer force of will.

The $7,500 tax credit will soon start to phase out — which will hike up the cost of a Tesla by as much as 21 percent.

Production finally hit the targeted 5,000 a week at the end of June, but Musk still has to show that's enough to deliver the profits and positive cashflow he has promised for the second half of 2018. Even then, a study released by research site SecondMeasure.com last month indicated as much as a quarter of the roughly 400,000 advanced reservations Tesla had taken for the Model 3 have been cancelled due to production delays.

Now, Tesla could see even more buyers think twice after confirming that it had reached overall sales of 200,000 vehicles in the U.S. market. That's more than a milestone. It's also the threshold at which point the $7,500 in federal tax credits buyers currently receive will begin to phase out. They'll be cut in half next January and reduced by another 50 percent in mid-2019 before vanishing entirely at the end of the year.

For buyers, losing the credits would effectively translate into as much as a 21 percent price hike, something that could further challenge Tesla's bid to become a global manufacturer.

Indeed, Musk has been getting into battles on a number of fronts in recent months:

  • The CEO has echoed Pres. Donald Trump in repeatedly questioning the accuracy and honesty of the media, even threatening to create a website to challenge reporters
  • After a Tesla Model X owner died in a March crash in California, Musk focused on the owner's behavior, rather than possible problems with the car's Autopilot system which became the subject of a federal safety investigation
  • Musk went on to attack the National Transportation Safety Board, the agency handling that investigation
  • In a letter sent to Tesla employees this past month, Musk accused one former worker of committing sabotage, ordering company lawyers to sue him in federal court. But it is unclear if the one-time employee was actually a saboteur or just a whistleblower Musk wants to discredit.

While investors have recoiled from some of these incidents, they have quickly returned, the stock rebounding. But Musk can't continue to take such risks.

"He is jeopardizing the opportunity" to become a profitable game-changer, said Munster.

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