Case #1

Tesla, Inc. is an American automotive company that specializes in electric car manufacturing. The company and Elon Musk, it’s current CEO, has been an innovator in the United States automobile industry.  Tesla has used technology as one of it’s driving factors. They provide online software updates and have open source technology, to an extent. Tesla’s production efficiency, profitability has increased the last few years and their stock price has had incredible success in the last year.

Despite of these improvements, the company has had to deal with a number of challenges. Among them:-Elon Musk is a dynamic leader; however, he is also unpredictable. For example, in 2018 Musk reported that the company may be going private. The statements were deemed to be misleading for a publicly traded company. Musk and the company were fined a total of $40 million dollars and Musk was not allowed to serve as Director of the Tesla Board for at least three years.-Although production has improved, it is still has not met expectations.

During 2022, Musk began to buy shares of Twitter and made a formal offer to acquire the entity.  The due diligence period was fraught with issues.  In October of 2022, Musk purchased Twitter for 44 billion dollars.  It is another example of a distraction from the operations of Tesla.

The company has had many issues which include, assembly line issues, battery integration, and delivery logistics. During this time, Musk has made statements regarding production which has over promised to the market.-Tesla had achieved quarterly profitability for some quarters during the last few years. Prior to that they had losses for years. Obviously, this is a problem but not unusual for a manufacturing company that takes a number of years to develop a market. The issue is that with accumulated debt, the unpredictability of production and costs have caused major concerns in the investor market place.

Operating a company the size of Tesla is a major task. It takes many teams, with numbers of functions. Address the following questions as advice for the Tesla Board of Directors

1. The leader of the company, Elon Musk, has created issues on his own for the company. What structure could be put in place to minimize negative impacts?

2. What concepts could be utilized to improve the Board’s results?

3. Tesla was founded in 2003. What factors would you consider to be critical when forming the initial board?

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