Tesla CEO Elon Musk managed to beat back an attempt from activist shareholders to rearrange the electric automaker’s board of directors as the company struggles to mass produce inexpensive vehicles.
Directors Antonio Gracias, James Murdoch and Elon’s brother, Kimbal Musk, were re-elected Tuesday to stay on Tesla’s nine-member board. They withstood an onslaught from CtW Investment Group, an activist shareholder group that sought to oust the trio on the basis the three men were out of their element in the automotive industry. Tesla has faced stiff headwinds lately.
A “supermajority” of shareholders also rejected a proposal to force Elon Musk to step down as Tesla’s chairman, according to Tesla. The move to push him out was destined to fail, as Musk holds a 22 percent stake in the 15-year-old Silicon Valley company. He sought to reassure those at the meeting that Tesla is on its way to profitability.
Musk told shareholders that Tesla will be “cash flow positive” during the second half of this year, which would require Tesla to bring in more cash than it spent in both the third and fourth quarters. The company will have to meet Musk’s manufacturing goals for its Model 3, a sedan with a starting price tag of $35,000 that represents the company’s attempt to reach a mass market.
Tesla initially planned to produce 5,000 Model 3 sedans a week by the end of 2017, but that number was quickly revised as the inexpensive vehicle’s production began faltering.
Concern is growing over the Silicon Valley company’s poor production performance.
It managed to build a mere 260 Model 3s between July and September of 2017. That number is well below the 1,500 Tesla promised before the end of the fourth quarter of said year. Total orders for the wallet-friendly vehicle tumbled from a high of 518,000 to 455,000. (RELATED: Moody’s Downgrades Tesla’s Credit Rating As Model 3 Slips Into Obscurity)
Production on the highly touted vehicle was expected to expand from 100 cars in August to 1,500 in September then plateaued to 20,000 per month in December 2017. Musk promised to eventually produce 20,000 cars per month. (RELATED: Elon Musk Is Increasing His Stake In Tesla. What Could Go Wrong?)
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