News that the Securities and Exchange Commission is seeking a court order to remove Elon Musk as CEO and chairman of Tesla Motors was no surprise. Amid accusations of “securities fraud” revolving around his proposed $420 bid for Tesla there have been some heated debates of late. Some investors are concerned that removing Elon Musk from the equation will be ultimately detrimental to Tesla moving forward. However, removing Elon Musk from the frontline may turn out to be a blessing in disguise?
Product development and Elon Musk
It would depend upon the terms of a successful prosecution by the SEC but it is unlikely that Elon Musk would exit the company completely. He may well be able to take on a more product focused role as opposed to being the leading light, the face and the voice of Tesla. Elon Musk has over the years discussed his eventual move into a less public role with Tesla and a successful prosecution by the SEC may fast pace this. Taking a more positive slant, this will allow him to focus purely and simply on products as opposed to all of the other roles he currently undertakes.
Appointing a stock market friendly CEO
While there is no doubt that Elon Musk is one of the best business minds in the world he is not necessarily a “people person”. In recent times he has been accused of being abrupt and portraying a bullying nature which those close to him refute. Just a few weeks ago he insulted an array of Wall Street analysts who are asking questions about Tesla and the current situation. Therefore, appointing a new CEO with a more stock market friendly approach (with or without experience of the car industry) may not be such a bad thing.
More focused approach
It was a standing joke within the investment community that as soon as there was any “moderately bad news” from Tesla, the company would simply roll out a new idea for the future. Keeping all of these plates spinning has proved challenging to say the least and many believe the company needs to take a more focused approach. This would ensure that capital is invested in areas of the business where there will be a better short to medium term return. That is not to say the company would not invest in products for the future but the key to success is strong cash flow today.
The future
Amid rumours that the SEC offered Elon Musk a “no guilt” settlement (which he rejected at the last minute) in exchange for a significant fine have been swirling across Wall Street. This would appear to have alienated some of the company’s larger investors who are very keen that the focus turns back towards the company and not the man. As and when the SEC action has been completed surely focus will return to a company which has been groundbreaking to say the least and has put the electric car market on the map.
Elon Musk’s cavalier approach to investor relations, highlighted by his recent takeover tweet, has not helped the business in recent times. The appointment of a different “face” for the business should allow Elon Musk to concentrate more on product development with minimal interference. That is where he seems most at home – a win-win for all parties?