IT IS hard to work out what is going on at Tesla. Elon Musk, who is a cult hero to 25 million Twitter followers, seems hellbent on undermining the faith that his disciples have in him.

His recent announcements are leading commentators to believe that Mr Musk has been worn down by the extraordinarily demanding complexity of not only making cars, but supporting a sales network and its owners in the market.

Observers have started saying that it appears he would like nothing better than to be asked by regulators to stand aside from an operational role at Tesla so that he can play with his toys like space transportation linking up with the International Space Station, going to Mars, building 1200km/h hyperloop trains, populating the world with batteries, populating rooftops with solar tiles and digging tunnels under cities with The Boring Company.

And even if he is not secretly seeking to be freed up from Tesla to play with his other toys, maybe he should step back from operational matters anyway.

Using the Tesla brand, Mr Musk has made a name for himself as the man who will save the planet. Along the way he has undoubtedly orchestrated some wonderful innovations.

Elon Musk

But he has taken on a monumental task which he is only just starting to discover.

Running a car company making the Model S and the Model X at a rate of 100,000 units a year is a very different proposition to ramping up production to 500,000 a year with an additional “people’s model”, the Model 3. The production nightmare in the ramping up of that car is well documented.

And now he is adding into the mix the complication of building a crossover called the Model Y, opening a car factory in China, plus a planned pick-up in the wings and then electric trucks.

The thing is that it is not enough to have an idea about a great car powered by electricity and controlled by sophisticated software, nor is it enough just to build one.

The thing about the car industry is fulfilment. It is here that Tesla struggles and it is here that Mr Musk is finding that the world’s car-makers might actually know a little more about the car game than he does, in spite of his constant taunting to the contrary.

Tesla’s future relies on faith in Mr Musk and goodwill towards the Tesla mission to carry the company forward. But buyers and owners also need to know that their purchase makes good business sense and they are likely to be seriously spooked by a company that, frankly, seems at the moment to be displaying such an inconsistent and unnerving direction.

I personally know people who bought EVs other than Tesla recently and believe they have dodged a bullet.

Tesla Model 3

In a rash of recent announcements, Tesla has brought about an air of desperation by announcing major decisions, apparently on the run, and then, within days, reversing direction.

What can you say about a car company that royally shafts the current owners of Teslas, especially those who have bought the high-priced Model S and Model X versions, by slashing the new-car prices and literally carpet-bombing their resale values? Then, within days, it says, “Scratch that, we are increasing prices again”.

What can you say about a car company that, in spite of rolling out new Tesla showrooms in the months leading up to Christmas and signing up new leases as little as a month ago out to 2025, then announces it is closing all but a few showrooms to save money – and then within days says, “Scratch that, we are only going to close some of them”?

What can you say about a car company that says that all its sales will be online from now on but, suddenly, finds itself on the wrong side of its owners and shareholders and says the stores (they really are dealerships) that are remaining will have demo cars and showroom examples on hand?

All this is about getting the price of the Model 3 down to $US35,000 which is the price he promised when he announced the car.

Mr Musk has admitted that the cost of running his own showrooms was six per cent of the transaction price and he thought that by eliminating that overhead he could get the Model 3 under his benchmark price.

Tesla Model S

His problem is that he treads a fine line on delivering a $35,000 Model 3 so late in the day. Mr Musk took $400 million in deposits on an electric car he promised to the masses but so far he has sold nearly 200,000 Model 3s at much higher prices and has not, until now, even offered a version at $35,000.

The industry sees that as a classic case of “bait-and-switch” which is offering a car at a low price but only having higher-priced versions available. The industry cannot understand why Tesla has not been prosecuted when any other car retailer (Tesla elects to be a car retailer) would have been taken to the cleaners by the regulators years ago if it had tried the same thing.

It is also relevant to suggest that the $35,000 target seems contrived in that it has been achieved by closing dealerships and saving money by selling online.

But would you buy an electric car that was closing its stores, the very places you can get to know the brand and the technology and get reassurance that you were making the right decision, because it was trying to save money?

The Model 3 starting price means two-wheel drive only, smallest battery pack and lowest range and only one colour (black), but you pay more for others. The price includes government subsidies which end in June and, apparently, a calculation on how much you save compared with a petrol car has been rolled into numbers as well.

As if this is not enough to go on with, even though Tesla has yet to get its arms around meeting promised production levels for the Model 3 for which it took 400,000 orders several years ago, Mr Musk is announcing a Model Y crossover which will require even more production capacity than he has now and distract the company from ramping up and sustaining the Model 3 on long-promised volumes.

Tesla Solar

And, as if there is not enough to do, Tesla is building a $US5 billion factory in China to make 200,000 cars for which he intends to fund from Chinese debt.

Are you keeping up?

On other fronts, Mr Musk has shocked the autonomous vehicle industry by saying that the AutoPilot feature in the Tesla will be so good this year that drivers will be able to safely sleep at the wheel. The AV industry fears the statement is likely to lead to overconfidence in drivers and more crashes and the inevitable bad publicity would be a serious setback to the measured adoption of autonomous vehicle systems.

The retiring CEO of AutoNation, America’s biggest car retailer, said the statement was bordering on being unethical.

And then Mr Musk continues to taunt the Securities and Exchange Commission, whose job it is to protect shareholders from companies misleading shareholders, by Tweeting shareholder-sensitive pronouncements without clearing them first with a company lawyer.

He was on a good-behaviour agreement with the SEC from last time when the company was fined $US20 million and he was stripped of the role of chairman.

Having told the world Tesla would make 500,000 cars this year and then hours later said actually it was make cars at the rate of 500,000 a year by the end of the year, without checking with a lawyer who would no doubt have flagged the error, he was in clear breach of his settlement with the SEC and now faces potential removal from an active role in the company.

Mr Musk’s unconventional running of the company, it seems like management by whim, has already had serious backwash for shareholders who saw the share price fall by a massive $US100 since December.

The shares are now hovering at around $US280. But bears on Wall Street are predicting the stock will fall under $100 this year. They fear that Tesla will never see a quarterly profit again.

All this comes at a particular moment in time in Tesla’s progress where there is more work to do for customers as cars come off lease and, increasingly, others require smash repairs as the number of Teslas on the roads expands. There are also used cars to be handled.

Tesla is now on the receiving end of expiring three-year leases and two-year leases but with only Tesla showrooms and service operations within the brand, there is no room to accommodate all the cars coming back.

The company in the US puts the cars out to national de-fleeting and auction specialists which have the skills and the space to refurbish them for resale. Those cars not meeting the mark go to auction.

However, recently reports have surfaced that Tesla has stopped refurbishing cosmetic blemishes on many of its used cars before offering them for sale and is charging customers an extra fee to do so.

Some online used cars have warnings that they have not been refurbished although they have passed a 70-point mechanical inspection and the car will be cleaned before delivery. But any additional work not covered by warranty must be done at the buyer’s expense.

On the spare parts front, social media is reporting that because Tesla is so focused on getting Model 3 production numbers up to promised levels there are shortages of crash repair parts and that Tesla helpline operators are telling owners they have to wait.

The problem is that as the company sets its sights on making 500,000 cars a year, these aftermarket issues are going to become unrelenting.

COMMENT by John Mellor