Tesla chief Elon Musk just survived the first serious attempt by major investors to cut back his power in the company.
Several shareholder funds had been demanding that three of Musk’s hand-picked board members — directors Antonio Gracias, James Murdoch and his brother, Kimbal Musk — be removed from office. They also wanted CEO and chairman Musk’s authority to be softened by taking away one of his titles.
The chief executive has been under intense pressure this year with production targets being missed, debt increasing, and a series of crashes taking place involving its Autopilot system. The company has faced a series of negative analyst reports and attempts by shareholder groups to shake up the board and Tesla’s corporate strategy.
So far the attempted coup has failed to gain enough support. The three directors maintained their spots by what Tesla described as “a wide margin.”
Major shareholder funds group CtW Investment Group wants to see the voting results.
Tesla should ”release a detailed vote tally as quickly as possible. Given the substantial insider holdings, these results are not a surprise. Only once we have the specifics will it be possible to interpret the expectations of Tesla’s unaffiliated investors,” CtW said in a statement to Tesla.
Musk used the annual shareholders meeting as an opportunity to reassert Tesla’s aggressive and optimistic vision for its future. The company is ready to bring its long-promised goal of producing at least 5,000 Model 3 electric cars per week into play by the end of this month, he said.
Musk and other Tesla executives outlined other key developments in the pipeline. To hit its ambitious production targets, more Gigafactory plants need to be built to manufacture electric vehicles and the lithium ion battery packs. While the current plants are separated between the Fremont, Calif., car factory and the Nevada-based battery plant, future Gigafatories will likely produce both EVs and batteries, the company said.
Two new Gigactory plants are likely to be announced in the near future. Global sales director Robin Ren indicated that the first of them will likely be in China, probably near Shanghai. Details on the EVs to be built there weren’t given, but the Tesla executive put out a teaser.
“The cars we’ll be building in that factory will be incredible,” Ren told shareholders yesterday.
Musk indicated that Europe will be the home of the next Gigafactory after China.
News about a plant in Europe could come “maybe by the end of the year. We just need to figure out where to put it,” Musk said.
Tesla has been in talks with Chinese government officials for quite some time. The electric carmaker has paid hefty tariffs to bring in its Model S and Model X luxury vehicles, jacking up sticker prices even higher. Musk had previously compared the Chinese tariffs causing choking restrictions similar to an athlete attempting to compete in the Olympics while wearing lead weights.
Sales have been impressive in China, but Musk would like to see the tariffs eased for rolling out the Model 3 to consumers looking for an affordable electric car. Building Tesla vehicles at a plant in China would solve that import problem, but Musk has not been willing to forge the usual joint venture company with a Chinese automaker.
Tesla is likely to build an assembly plant near Shanghai, one of the Chinese government’s new free-trade zones freeing up foreign companies from the JV mandate that other global automakers have complied with in recent decades.
The electric carmaker has been barraged with bad news lately about its Autopilot semi-autonomous vehicle system. There’s been a wave of crashes where Teslas operated on Autopilot have crashed into emergency vehicles parked on the shoulder or stopped in traffic. The most recent took place in Laguna Beach, Calif., where a Model S that was allegedly driven on Autopilot crashed into a parked police vehicle. The Tesla driver suffered minor injuries and the police car had no one onboard at the time.
Tesla has received some good news from Consumer Reports, which at first had appeared to be another ding during a difficult time for the company. The consumer publication reversed course and now recommends the Tesla Model 3 after the electric carmaker sent an over-the-air update that improved the car’s braking distance by nearly 20 feet. There are still other flaws with the electric car, but it scores high enough to recommend, said Jake Fisher, CR’s director of automotive testing.
On the capital side, Tesla shareholder have faced bad news including Tesla’s record first-quarter losses. There’s been a wave of concern expressed on Wall Street that Tesla could be forced into seeking new equity in the near future. Musk has denied that will be necessary.
Musk was able to tap into the enthusiasm Tesla and its EVs are able to stir. During a wide-ranging conversation with members of the audience during the stockholders meeting, several products in the works were discussed. One of these is a Tesla Roadster supercar. Another product gaining interest has been a high-performance and more expensive version of the Model 3.
For now, Tesla fans want to know when they’ll be getting their base version of the Model 3 that starts at $35,000. There’s also much interest in an upgrade version with a longer range battery.
As for when that extended-range Model 3 may come to the market, Tesla “would do so now if it was physically possible,” Musk said, but it won’t be available until “the first quarter of next year.”
By Jon LeSage for Oilprice.com
