Besides electric vehicles, Tesla is known for its executive turnover.
In 2019, AllianceBernstein released a report indicating that the company had a 44% annualized turnover rate for executives who report to Musk.
To put this into perspective, companies like Facebook (Facebook) – Get the Class A report from Meta Platforms Inc.Amazon (AMZN) – Get the report from Amazon.com, Inc.Uber (UBER) – Get the report from Uber Technologies, Inc.Lyft (LYFT) – Get the Class A report from Lyft, Inc.netflix (NFLX) – Get the report from Netflix, Inc.Airbnb (ABNB) – Get the Class A report from Airbnb, Inc. and Snap Inc. (BREAK) – Get the Class A report from Snap, Inc. had an average annualized turnover rate of only 9%.
The report also said that Tesla CEO Elon Musk tended to have more executives reporting to him.
Musk averaged between 17 and 18 executives during the reporting period, compared to CEOs at other companies who had between 9 and 12.
“While one could say that [Tesla’s] high turnover reflects its unique and demanding culture, we are concerned that such turnover not only causes instability… but could also reflect larger concerns among senior leaders about the direction of the company or the workplace practices,” said Toni Sacconaghi, analyst at Bernstein.
The problem is so pronounced that Tesla short sellers have a Dropbox file counting the departures of executives from the company.
Could Tesla’s AI chief be next?
All of this background brings us to the news on Monday that Tesla AI chief Adrej Karpathy will be taking a four-month sabbatical.
On Sunday, Musk posted a tweet announcing the sabbatical. The public reaction to the news led Adrej to explain what he will do with his time.
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For people who have followed the saga, in the past, executives who took long sabbaticals from Tesla ended up never coming back.
Doug Field, the former senior vice president of engineering at Tesla, took a leave of absence in 2018.
The fact that the two colleagues are responding to each other in public on social media may mean that Karpathy is coming back.
But based on recent history, this sabbatical could be the beginning of his end in the business.
Tesla AI is essential for growth
Tesla has put a lot on the shoulders of its artificial intelligence and autopilot division.
The EV maker dominates the current EV market landscape, but there are competitors with the capital and name recognition ready to give the upstart company a run for its money.
Tesla will need to rely on its technology to differentiate itself from these competitors, and the company has invested heavily in one technology in particular over the past few years: Autopilot.
The company’s self-driving technology is considered one of the the most sophisticated in the automotive industrybut it has also come under intense scrutiny in recent years.
Last month, Democratic Senators Richard Blumenthal and Ed Markey sent a letter to Tesla CEO Elon Musk raising “significant concerns” about the company’s Autopilot and FSD (full self-driving) systems, according to Reuters.
The price of FSD (full self driving, a system more advanced than autopilot) is increasing in the United States