Teslas Engineering Chief Is Out After Taking Leave of Absenc

Tesla’s Engineering Chief Is Out After Taking Leave of Absence

Link: https://www.wsj.com/articles/teslas-chief-engineer-is-out-after-taking-leave-of-absence-1530561319

Summary: Tesla’s engineering chief Doug Field won’t be returning from his leave of absence. This is a crucial period in the company’s movement towards production of their Model 3 sedan’s and they will be going down that road without their top dawg at the reigns. These sedans are said to be priced lower than its other luxury vehicles as part of the companies plan to transform into a mainstream auto maker. Tesla announced on Monday that while their goal has been delayed, they will be aiming for producing 6,000 units per week by as early as August. In addition to ramping up production, Tesla plans to develop several new products including the Model Y which is a compact sport-utility vehicle. In addition to Mr. Field departing, Tesla has had over 50 vice presidents or higher ranked executives leave in the past two years.

Discuss:

Does a high employee-turnover alarm investors and how crucial is it that top management stay in place when heading in a new direction?

Do you approve of Tesla’s goal to become a more mainstream auto maker? Why?

Solution

High employee turnover means that the employees are leaving the company. As an investor one starts wondering about the reason due to which employees are leaving the company. Beyond that the investors would worry about the impact of the loss of experienced employees on the business functioning. Certainly when employees leave the organisation there would be an impact on the business. This would be due to loss of valuable manpower and human resources as well as additional burden on the business to hire new employees. Moreover, the trade secrets are lost with the loss of employees.

Top management changes can be extremely impactful to the organisation. Especially when the company is heading in a new direction the stability of top management is important because they are the ones who would be leading the change and would have been involved in giving the direction to the company. With a change in the top management the plans of the company would also change since the new leaders of the company would bring in a new insight and new philosophies which would change the course of action.

I approve of Tesla\'s goal to become a more mainstream automaker. This is because given the experience of the company they would be able to reap success as a mainstream automaker. The revenues of the business would increase due to high demand for lower priced cars. Since the business is already into auto manufacturing there would be a less burden on the overheads required for manufacturing the low priced cars and the company can reap the benefit of economies of scale.