Tesla had a disappointing Wednesday earnings call and reported a $408 million loss. Tesla founder Elon Musk also announced that current CTO JB Straubel is stepping down and will now work in a senior advisor role. This marks the fourth departure in a series of high-profile exits since the past year, as Tesla is still struggling to prove it is profitable. Most recently Steve MacManus, the former Vice President of Engineering at Tesla, joined Apple as Senior Director. The combination of a worse-than-expected loss and losing a co-founder sent the stock plunging 11% in late trading after the announcement.
Straubel joined Tesla in March 2004 and became a member of the board. He initially served as principal engineer of drive systems and in May 2005 became head of technology. At Tesla, Straubel was responsible for overseeing the technical and engineering design of the vehicles, notably around batteries. He also took an active role in new technology evaluation, R&D, technical diligence review of key vendors and partners, IP, and systems validation testing. According to his company bio, he helped launch programs like its Supercharger network and the Tesla Energy business. In addition to his work at Tesla, Straubel was also on the Board of Directors for SolarCity. Now he will take on the senior advisor role.
“I’m not disappearing, and I just wanted to make sure that people understand that this was not some, you know, lack of confidence in the company or the team or anything like that,” Straubel said. Elon Musk thanked Straubel for his time at Tesla at the Q2 earnings call on Wednesday. “I want to thank JB for his fundamental role in creating and building Tesla. If we hadn’t had lunch in 2003, Tesla wouldn’t exist, basically,” Musk added.
Perhaps biggest personnel loss company has suffered so far
— Neal Boudette (@nealboudette) July 24, 2019
“It’s a significant transition for Tesla, as Straubel has been one of the most important members of Tesla management,” Dan Levy, an analyst at Credit Suisse, wrote in a note to clients reported by Bloomberg.
Drew Baglino, vice president of technology, will take over Straubel as CTO.
As for the earnings report, experts say they are concerned. Tesla adjusted net loss of $1.12 per share, which was worse than the $0.31 loss expected. The company’s shares have plunged by more than 20% so far this year while the Standard & Poor’s 500 index has surged by 20%. However, the overall loss of $408m was an improvement over unexpectedly large loss of $702m reported in quarter one.
“Overall, a bad report that will inevitably lead to more questions about its ability to stabilize and turn a profit,” Clement Thibault, a senior analyst at financial markets platform Investing.com said.
Tesla initially promised to be profitable in the third quarter of 2018 and has now pushed back that target multiple times. Musk said in the earnings report, “Now profit is expected in the fourth quarter of 2019, with the current quarter to be break-even, as the company’s focus is less on profit and more on volume growth, capacity expansion and cash generation.
$TSLA posts another loss of $400MM in Q2 after loss of $700MM in Q1.
— Deepak CFO (@TezzlaCFO) July 24, 2019