Tesla (TSLA) Crashes 19.3% as Two Key Executives Depart
Last Friday, shares of electric automaker Tesla Motors (TSLA: Charts, News) crashed 19.3% in the last half hour of trading, on news that two of its top engineers had left the company a mere months before the release of its highly anticipated 2012 Model S. Peter Rawlinson, the company's vice president and chief engineer, announced that he had resigned his position in order to "tend to personal matters in the U.K." In addition, senior engineer Jack Sampson, the brains behind vehicle and chassis engineering, also announced his departure, also citing "personal issues".
Rawlinson had been employed by Lotus, and Sampson had worked for both Lotus and Jaguar. Together, Rawlinson and Sampson's Lotus-inspired designs have become the trademark aesthetic of Tesla's electric luxury sedans. For most investors, these designs were as iconic as those of Johnathan Ive, Apple's (AAPL
) chief designer, and the loss of Rawlinson and Sampson changed their long-term expectations for the company drastically. Daily Chart
Tesla's CEO Elon Musk has criticized the media response as "way overstated" and has stressed that both positions have been restaffed. Rawlinson and Sampson's positions will be respectively filled by Jerome Guillen from Daimler and Eric Bach from Volkswagen. However, the practical aesthetics of Daimler and Volkswagen are a far cry from the sleek sexiness of Lotus and Jaguar. Guillen and Bach would "help in the final stretch of bringing Model S into production," Musk explained. Musk downplayed the untimely departure of his two key engineers, stating that the Model S is complete and ready for mass marketing. The company also stressed that in particular, Sampson was no longer working on the Model S at the time of his departure. Meanwhile, Rawlinson had stated that engineering the 2012 Model S was "difficulty cubed", due to the engineering challenges and tight deadlines. Tesla's Model S has been eagerly anticipated by investors. The company released its final prices last year, in three tiered flavors. The entry level 40 kWh model, priced at $49,000, has range of 160 miles with a top speed of 110 miles per hour. The mid level 60 kWh model, which costs $59,000, has a range of 230 miles and a top speed of 120 miles per hour. Finally, its top-tier Model S, priced at $69,900, is powered by an 85 kWh battery, which travels 300 miles on a single charge. Musk claimed that the Model S has been sold out for 2012, with 6,500 vehicles ordered. Deliveries are scheduled to start in July, and analysts are watching closely to see if Tesla can deliver on its promises in a timely fashion. "There is no question in my mind that we will start delivering vehicles in July, if not sooner," Musk stated confidently. Tesla is also cutting the prices on its flagship Roadsters, reducing the cost of its entry level 2.5 model by over $14,300 to $191,888 and its top-range 2.5 Sport by $21,450 to $220,488. Although these prices are still squarely aimed at the affluent, Australian regional manager Jay McCormack stated, "Our main objective is to relentlessly drive down the cost of electric vehicles." These steep discounts were implemented in order to make way for newer models between 2012 and 2014. In addition to the lower price tags, the Roadster will receive extra equipment, such as satellite navigation, premium seats, improved air conditioning, revised windscreen seals, a rear snow cover, an improved motor system for cold weather and xenon headlights. In 2013, Tesla plans to follow up its Model S with the Model X, an all-electric SUV "similar in size and configuration" to BMW's X5. The company plans to expand the Model X to Australia by 2014. In 2015, Tesla plans to finally unveil its successor to the Roadster, a next-generation flagship electric sports car. With the loss of Rawlinson and Sampson, auto industry watchers believe it will no longer resemble the Lotus Elise, but rather return with a completely new chassis. Tesla still isn't profitable, and the stock is being propped up by future expectations. Bullish analysts believe that the stock's current crash, which resets the price by five months, offers aggressive investors with a longer investment horizon an attractive entry point. Tesla's partnerships with Mercedes-Benz and Toyota also provide it with secondary sources of revenue until its own electric sedans can become more mainstream. In addition, rising oil prices and government subsidies will turn the tide in the company's favor over the next decade. However, for investors looking for faster growth reliant on emerging markets, traditional automakers such as General Motors (GM
), Ford (F
) or Toyota (TM
) may be more attractive investments for the time being. Other News About TSLA Tesla's electric supercar discounted
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Published on Jan 17, 2012
By Leo Sun