Can Tesla’s Magic Survive Without Its Wizard?

A medieval king was nothing without his sage advisers. It’s not so very different in the Silicon Valley of 2023.

Elon Musk — officially, per Tesla Inc.’s corporate filings, the company’s “Technoking and Chief Executive Officer” — has just lost the man bearing the Game of Thrones-esque title “Master of Coin and Chief Financial Officer,” Zachary Kirkhorn.

In a business so indelibly associated with its chief executive’s antics, you might not think that would make much of a difference. But Tesla’s financial management under Kirkhorn since March 2019 has been crucial to its transformation from a basket case weeks away from bankruptcy into a disciplined and cashed-up manufacturer.

At any rate

Over the past year, Tesla has withstood the storm of official interest rates rising by 5.25 percentage points just as capital spending was switching into ludicrous mode. Though the company’s sky-high valuation has fallen to an almost pedestrian 74 times forward earnings, investors haven’t been spooked. The share of analysts surveyed by Bloomberg with a “sell” rating on the stock fell to 11.4% last November, the lowest level since 2015 (it was 42% in March 2019 when Kirkhorn took on the CFO role). Though it’s ticked up to 18.4% since that’s been on the back of a 28% gain in the stock price.

Their confidence has been backed up by solid financial management. Sales in the June quarter ran at 95% of working capital, outstripping General Motors Co. at 80% and Ford Motor Co. at 24% — evidence that Tesla is using its short-term assets as efficiently as any of its competitors. Return on invested capital is running comfortably ahead of funding costs, the only one of the three listed large US automakers to achieve that feat.

Panic in Detroit