Millionaire entrepreneur Elon Musk, the largest investor and principal owner of Tesla Motors, today announce he will take over the role of CEO at the electric car startup. Musk, who co-founded PayPal and went to make a $328 million fortune, has ousted Tesla Motors CEO Ze’ev Drori, announced major layoffs, and confirmed delays in the Model S sedan project.
Musk, who also hold the titles of Chairman of the Board and Product Architect, says these though financial times require strong leadership and a sound business model for a company like Tesla to survive. Accordingly, he has made it is goal to be cash-flow positive within six to nine months.
To accomplish this, the company has to focus on ramping up production of its profitable $100,000 Roadster model, while also reducing operating expenses. The latter will be achieved in part by layoffs. Musk has not said how many workers will leave the company, but various internet reports indicate as many as 100 jobs might be cut — that’s about 50% of Tesla’s workforce.
Tesla will also increase efforts to build components for other companies. “Our powertrain business is profitable today and is also growing rapidly,” Musk said in a blog post on the company’s website.
The company’s former CEO, Ze’ev Drori, will stay on the board of directors as vice-chairman. Drori replaced Michael Marks, who served as interim CEO after co-founder Martin Eberhard was ousted in August 2007.
On the product side, production of the $60,000 Model S sedan is expected to be delayed by roughly six months to mid-2011.
“Tesla is absolutely committed to development of our next generation vehicle, to be unveiled early next year,” explained Musk. “However, we are going to reduce activity on detailed production engineering, tooling and commitments to suppliers until our Department of Energy loan guarantee becomes effective.”
Despite the delay, Musk sees an upside. “We will spend the extra time refining the vehicle design and powertrain technology, so the car will end up being slightly better,” he said.
Musk didn’t mention how the pullback will affect the planned $30,000 Bluestar family sedan, though it’s safe to assume there will be a delay on that project as well.
