Musk Takes Over as Tesla CEO; Company Announces Layoffs

With the global economy in meltdown, SpaceX founder and CTO Elon Musk took over as CEO of his other major venture, Tesla Motors, and announced layoffs of at least 30 of the electric car company’s 250 employees. The San Jose Mercury News reports:

“Tesla Motors is putting its Model S sedan on hold, closing the Michigan facility that was working on some of the sedan’s engineering and laying off an unspecified number of people, the company confirmed Wednesday.

“Tesla told San Jose officials that it will focus on selling its Roadster and power trains, and that it still intends to build a plant and its headquarters in San Jose, although the schedule may slip a bit.

“Production of the Model S in San Jose will be pushed back six months, to mid-2011, said company founder Elon Musk, who also announced that he will assume the role of chief executive officer. He replaces Ze’ev Drori, who becomes vice chairman and continues as a board member.”

In a blog post, Musk explained that with SpaceX’s recent successful launch of the Falcon 1 rocket, he has more time to devote to other interests.

“For this critical phase of the company, the scope of my role at Tesla will expand from executive chairman and product architect to CEO. With SpaceX now having reached orbit and about to enter its third year of profitability, I can afford to increase time allocated to Tesla.”

This is an interesting comment. Falcon 1 has only flown successfully once and has yet to put a payload from a paying customer into orbit. The much larger Falcon 9 vehicle is still in development. SpaceX is also developing the Dragon spacecraft, which is being designed to carry both cargo and crews to the International Space Station. Musk also is talking up his Mars plans.

It seems achieving all this would require the attentions of a full-time CEO at SpaceX. And with the type of investment required to build two new launchers and a human-rated spacecraft, how exactly is SpaceX entering it’s third year of profitability? How exactly is profitability being defined here?

Meanwhile, Owen Thomas of Valleywag.com believes that Musk’s new focus on Tesla will not be very good news for anyone working at Tesla.

“Musk lucked out twice, with the $300 million of a long-forgotten Internet portal, and the survival, despite his best efforts, of PayPal, the payments site now controlled by eBay. According to Elon Musk, Elon Musk was the driving force behind PayPal during his brief, tumultuous reign as CEO of the payments company. Musk’s version of events is a fiction believed by no one else. I know this because I spoke to PayPal insiders regularly while he was CEO, and they told me of chaotic management, boneheaded marketing and technology decisions, and serious turnover under Musk’s reign.”

“That is what Tesla has to look forward to. In some sense, it’s already been enduring it since Musk ousted founder Martin Eberhard and replaced him with Drori last year. Musk has been working at the company for several days a week, Darryl Siry, Tesla’s VP of marketing, tells me, in an effort to portray Drori’s beheading as some kind of smooth transition.”

An economic meltdown, layoffs….quite a come down from a few weeks ago when Falcon 1 soared into orbit. As if to add to the chaos, it looks like Musk’s marriage has broken up. His wife, fantasy novelist Justine Musk, confirmed on her blog that the couple is divorcing.

It can’t be an easy time to be the head of two entrepreneurial companies trying to break into well-established markets.

  • Nickolai_the_Russian_Guy

    Wow this is all kid of a lot to take in all of a sudden. I mean, I knew Musk was involved in Tesla and I’d heard of the divorce, but still.

    I’m just as confused as you are, Doug. After Falcon 1’s successful launch a point brought up several times was that this is where it all starts. I can’t imagine, as you note, that going forward with Falcon 9 and particularly Dragon is anything but uphill. I have heard, however, of a lot of investments into SpaceX so I’d imagine that plays a role in “profitability.”

    I was really surprised to hear about him being a poor manager at PayPal. Here I was all this time thinking this is a smart, successful person, and maybe he’s not? An engineer from SpaceX came to my school some time ago looking for hires, I’m going to e-mail him and see if he’s got anything to say about Musk at SpaceX.

  • Valleywag tends to be fairly critical of Silicon Valley execs and companies; I tend to read the site with a grain (or more) of salt. But, I have heard similar complaints about Musk’s management from another source. Being very smart, bold and successful (Musk is all three) doesn’t always go well with smart management, especially when a company starts growing.

    It will be interesting to see what happens going forward.

  • Kris Ringwood

    I have to say that I’ve been skeptical of MUSK and his doings ever since learning that unlike his independent competitors – with the possible exception of Orbital – he managed to get contracts and facilities from the USAF to get his show on the road. Other companies have all died a death because Govt and Military have put obstacles deliberately and consistently in their way, but this guy either has BIG FRIENDS in high places or the luck of the devil!
    His website is the most incredible hype considering his record: making EVERY mistake in the book of Rocket launch operations before finally achieving orbit with a test vehicle. THEN, a few days before the first paying launch, suddenly there are Payload Compatibility problems! UNBELIEVABLE. Now we find that a final pre-launch vibration load test proved Falcon 1 below spec’!
    Ye Gods! If this is the standard that we can expect in future, Yahweh help anyone flying to ISS in “Dragon”! I’ll be interested to see the excuse for Falcon 9 not being launched – according to their own schedule – in June…