18:14 GMT18 April 2021
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    Tesla has announced Robyn Denholm has taken Elon Musk's place as chair of the company's board. Radio Sputnik discussed the new appointment and Tesla’s future with Paurav Shukla, Professor of Marketing and head of the Management & Marketing Group at Essex Business School, University of Essex, UK.

    Sputnik: Of course, she does go from holding one of the toughest jobs in corporate Australia to, possibly, the toughest job in the entire corporate world. So many wonder if she is up to the task?

    Professor Paurav Shukla: That is to be seen I think. But you are very right in terms of this is going to be a challenge of its own kind. Mr Musk is pretty much mercurial as we all know in a way. A single tweet on the Twitter has led to this particular set of consequences. So we all know in some sense how difficult it will be for Robyn to manage in some sense Mr Musk's personality and at the same time a kind of cajoling work with the board as a leader of the whole board at Tesla.

    Because in some sense when that tweet came out and all the consequences, board at Tesla actually supported that whole saga and in that sense kind of it seemed that this Board is not particularly kind of it's complying to many of Mr Musk's wishes. In a kind of in some sense, Robyn has been the head of strategy very recently at Telstra. So she has not established herself in a way as a head of strategy yet, I would say. But she is already has that type of experience in Silicon Valley, in automobile Toyota, in Juniper and financial networks and stuff.

    So in that sense what she brings is a lot of I think wisdom in some sense of the markets. At the same time, also I think she has been touted as a calm person who would kind of be able to show a different side of Tesla probably to the board as well as to the shareholders, and that may be helpful. She has worked in senior management rules again in very male-driven Silicon Valley enterprises. And I think even again in mobile telecommunication very similar type of agenda situation exists at board level. And so in that regard, I think she may be up to the task and she may be able to perform. It reminds me kind of when Tim Cook over after Steve Jobs at Apple.

    READ MORE: Assigning New Tesla Chair is a Little Step, Bigger Steps are Needed — Scholar

    And he came from finance and operations background if you remember. And kind of you know everyone was saying, Steve Jobs was similarly mercurial if you remember the Antennagate when iPhone 4 and antenna issues were emerging on phone, he said that ‘you need to hold the phone differently' rather than kind of initially saying ‘I am sorry'. So, in a way, Steve Jobs was in similar nature, and Tim Cook came in and kind of has driven the company very-very well.

    Apple has become the first trillion dollar market cap company and all. So in that regards bringing a different type of professional rather than an entrepreneur to lead the board and drive them forward, Robin may be able to provide a very different aid: and (more) quieter, more professional, more proficient and more market-oriented Tesla, probably.

    Sputnik: Do you think it is going to be a loss for Telstra and how have things been for Telstra? Because I believe the situation there is, well, bit off the wall.

    Professor Paurav Shukla: Again, at Telstra the head of strategy, well, if I am not mistaken, she took over that. She had been in the operation side of it and she has just taken on the rule at Telstra in head of strategy. And there also in Australia they are facing headwind. So, I think this will be a tough loss for Telstra, no doubt about it. And in that sense, again kind of in a deal be losing a very wise, probably, board member in terms of kind of and a senior member of the group.

    But very recently starting I think kind of you know I hope that Telstra has some sort of succession planning in that regard because she is going to be there still for six months. And hopefully, with that succession planning, she will be able to provide that strategic roadmap to the next person who would be able to lead that charge. But, yes, losing a senior member at the time when the company is facing so many challenges within the local market itself, this will be a fairly big loss for Telstra.

    Sputnik: Can we talk a bit about Mr Musk? Because I mean mercurial he is certainly and critics have been saying that he sometimes does too much himself. Yes, he is very ‘hands-on' sort of a leader, isn't he, whereas Denholm likes to mentor. This is going to be a big change in the way they manage everything.

    Professor Paurav Shukla: I assume so. Again, let's try and take two specific examples which probably provide us with a very interesting decision dilemma. So let's go around a senior's back and we are looking at Apple's situation as I talked about earlier. In terms of Tim Cook taking over, he is very much a corporate professional, who takes on very fast growing company and he provided a very stable hand in terms of how he changed the Apple announce product.

    Apple came out with the product life cycles and product changes, all that was very interesting. Similarly, when you think about Google, it had a different problem at a very early stage. Then all the young CEOs Larry Page and Sergey Brin they brought on a mentor from a professional CEO perspective. And in that kind, it provided Google a very different direction. I think Tesla has taken on a very interest area of the company till date with Elon Musk, and his own style and leadership, and decision-making.

    READ MORE: It Would Be Surprising if Musk Tried to Continue Really Run Tesla — Prof.

    But I think Robyn Denholm would provide now this stable set of a mindset and especially a kind of market-orientedness in terms of what the Wall Street or the shareholders would like to listen: the kind of language you speak, the kind of issue would manoeuvre herself. She has been trained in that type of aspect. She has been touted again as a very calm person, a non-impulsive. And so I think those traits are kind of that would help.

    Again she is an accountant. She has been in finance operations. She gets the BDNF test line in some sense because that's what the companies are about operations, about innovations. But she will bring these different way of looking at the market situation. And that in some sense, probably, Tesla needs right now, that stability, that somewhat lesser level of impulsiveness and more focus on stability and bringing a new strength to the fundamentals.

    Sputnik: Before I let you go I wanted to ask you a question about Tesla's future, how do you see it? Any interesting twists in its fate in the near future, what do you see happening with Tesla?

    Professor Paurav Shukla: There are several strategic things that are happening with Tesla which is in some sense going to increase the challenge for Robyn big time, beyond the so-called board level politics. The first is, is that Tesla is highly dependent on kind of batteries. So, and what is happening on that front is that raw material, one of the major raw material for these batteries is cobalt. And a big market for cobalt is the Democratic Republic of the Congo (DRC) which is really volatile right now both economically and politically. I have been there personally a few times already and I can feel that kind of volatility in the market itself.

    And Glencore, the largest miner in terms of cobalt in DRC, has just found uranium in its cobalt and so has halted sales for its cobalt. Now that has increased the prices by almost 11 per cent for the basic raw material. Moreover, more companies are going into the electrical market and that means that the price for this cobalt, a lot of supply and demands is going to come into place, and the price at which cobalt has been sold is going to go up.

    Now Tesla is moving into low-end cars or I would call mid-range cars with model 3 for 35 thousand dollars. So the margins are going to be affected because the raw material prices are going up, competition is going up and Tesla is trying to get into mass market instead of luxury market. And so it is probably going to face a squeeze in a very short or medium-term. And then there is what we have is this Department of Justice investigation going on. There are these several claims, a lawsuit happening from shareholders.

    READ MORE: Tesla Appoints Board Member Robyn Denholm to Replace Elon Musk

    And if that fine comes through, if Mr Musk is fined into that, right now he has a 22 per cent market share. His market share is just, the fines are large enough, and he may not have the cash to pay for it. And that means his overall shareholding in Tesla, which is right now of 22 per cent, would go down possibly less than 20 and then the veto power related effects would come into picture. So there are lots of changes happening at Tesla and if we had time, I don't know, I would like to point out on the innovation front also.

    Sputnik: Yes, please.

    Professor Paurav Shukla: The Tesla has reduced its R&D cost (Research and development expenses — ed. note Sputnik) by 9 per cent. R&D cuts were in quarter two, I think: about 3000 jobs were lost at Tesla. While Tesla is focused on creating a new innovative pipeline and a lot of people hate that pipeline, Tesla has cut its R&D by 9 per cent. And so in kind of raw material prices, innovation issues, competition, and kind of Mr Musk and the Board — all these are going to create quite a few challenges for Robyn in terms its medium and long-term profitability and better prospect.

    The views expressed in this article are those of the speaker and do not necessarily reflect those of Sputnik.

    The views and opinions expressed in the article do not necessarily reflect those of Sputnik.


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