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.