Yahoo Finance Former GE Exec Beth Comstock on Tesla: 'Scale is hard'
As CEO Elon Musk pushes ahead to meet Tesla’s (TSLA) aggressive production targets, a former General Electric (GE) executive expressed sympathy for the chief as he tries to meet his ambitious goals.
Musk previously told shareholders that he expects the company to deliver between 90,000 and 100,000 vehicles in the second quarter. It only delivered 63,000 in the first, which was a 31% drop from the previous quarter.
“Scale is hard,” former GE Vice Chair Beth Comstock told Yahoo Finance’s YFi PM in a recent interview.
“That's one of the things we're seeing live play out with Tesla,” she said. “Getting to scale, getting your logistics organized in these fast-growing companies is really hard.”
Comstock, who spent 27 years at various positions at the troubled industrial giant, added that she’s “been surprised [Tesla hasn’t] tried to… hire more people from traditional auto manufacturers to help get through some of those scale issues.”
Tesla has suffered a virtual exodus at its top ranks, and its unpredictable and outspoken CEO has lurched from one public relations blunder to another.
Yet even critics give Musk credit for his vision of the future, even as they hammer his volatile management style.
“… He's trying to be revolutionary here with these electric vehicles. But there's execution that he could learn from,” Comstock said.
‘You can’t push your team beyond that they can do’
After Tesla’s ugly first quarter, investors punished the stock — which drew enough blood to attract a few of the company’s longtime bears.
The “big Q1 miss... was not a surprise to anyone who’s really doing the work. The evidence was all there,” Empire Financial Research founder Whitney Tilson told Yahoo Finance in a previous interview. Tilson has long been negative on Tesla’s prospects.
“This is the beginning of the end for Tesla,” he added, predicting that the stock would sink to $100 by the end of the year.
Earlier this month, Musk sent out a leaked email to all employees at Tesla, rallying them to work hard to hit their production and delivery targets for the second quarter. He hinted that the company was on track to set an “all-time record.”
GE’s Comstock, referring to Musk’s internal email, told Yahoo Finance that “there is a point of no return, right? You can't push your team past beyond what they can do.”
Yet she added that “there is something really good about saying, let's go. Hopefully, he's backing it up with some incentives and some other feel good reasons to say, when we get there, this is why you should feel good.”
And speaking from personal experience, Comstock suggested that a Tesla may not be a great vehicle choice for a city dweller.
She explained that she briefly owned one, but using it in a city like New York was hard.
“It wasn't really set up for an electric driving kind of life,” Comstock said. “And so it ended up being a real pain. If I lived in the suburbs, I might have really enjoyed it. But I live in the city and it was really hard to navigate.”
Aarthi is a writer for Yahoo Finance. Follow her on Twitter @aarthiswami.
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