Recently, Elon Musk the Chief of Tesla Inc. came under the spotlight immediately after the Securities Exchange Commission filed a lawsuit that originated from an infamous and impulsive tweet from Elon. The tweet stated that Elon had arranged the funding for the buyout of Tesla at a staggering price of $420 per share. This caused fluctuations in the market scenario, along with confusion amidst the investors. It is also believed that the tweet was a strategy to deviate the attention of the world from the ongoing issues of the company related to its products and the delivery system.
The charges pressed by SEC
According to the New York Times, Elon Musk agreed to resign from his post and was also fined $20 million by the SEC. Currently, the charges include a three-year ban on the former chairman and a formation of an SEC-approved special committee by the Board members. They will monitor every business communication from Elon Musk for the above-mentioned tenure. The unforeseen move will require Tesla to induct two experienced directors on the Board for compensating the loss.
The changes are bound to affect the course of the company, but no changes in the behavior of the billionaire tech mogul were observed. Immediately after settling the dues with SEC, Elon Musk emailed the Tesla Employees to work hard in spite of it being a weekend.
In spite of Elon’s communication to the employees predicting profits for the upcoming quarter, Tesla has been involved in cost-cutting procedures by relieving 9 percent of its workforce in June this year. They have also reduced the color variations for Model 3 cars, followed by a delay of payments to the suppliers.
Persisting hurdles of Tesla
With Elon Musk stepping down, the ongoing problems of the company is expected to double up. Their everlasting issues with the Model 3 cars, especially the manufacturing and delivery aspects of it are taking a toll on the annual revenue of the company. The company has invested an astronomical amount in Model 3 cars, believing them to be the face of the company.
Experts emphasized the fact that Tesla, unlike other automobile industries, does not generate revenue until the product is delivered to the customers. Elon admitted facing tremendous problems with the delivery system of the company.
According to the Daily Mail, the automobile maker utilized a whopping $430 million of its $2.7 billion cash supply to compensate for the $742.7 million loss in the third quarter of the current financial year. The abrupt changes in the company were followed by an abrupt fall in its share price to $265 in a single day. With upcoming bond payments of more than a billion dollars, it is of utmost importance for the share prices to be above $360 per share.
The Daily Mail also confirms that Elon Musk will retain the position of CEO in Tesla. He is also the founder and CEO of SpaceX and SolarCity.
