Tesla Tech Chief’s Exit Is Latest High-Profile Departure


Tesla Tech Chief’s Exit Is Latest High-Profile Departure

The departure of one of

Tesla
Inc.


TSLA -14.33%

’s top executives, the latest in series from the company, marks one of the highest-profile exits from the electric-auto maker in its 16-year existence.

Chief Executive Elon Musk said JB Straubel, who helped create the company and has served as Tesla’s chief technology officer since 2005, would vacate the post and take on a senior advisory role. His responsibilities as technology chief are being taken over by Drew Baglino, another longtime Tesla executive, Mr. Musk told analysts Wednesday.

Mr. Baglino in recent weeks had taken on a higher-profile role within Tesla, triggering speculation among company observers that Mr. Straubel might be leaving.

Tesla shares fell Thursday after the company reported a bigger-than-expected second-quarter loss. Tesla reiterated its previous guidance that the company would deliver 360,000 to 400,000 vehicles this year but warned it would emphasize expanding its production capacity and model lineup over increasing the bottom line.

“The soft gross margin profile will be a gut punch to the bulls hoping for much-needed good news on this front,” Wedbush Securities analyst Daniel Ives said. The company’s reiteration of its delivery guidance “was a head scratcher since the pure math and demand trajectory makes this an Everest-like uphill battle,” he said.

Shares of Tesla on Thursday dropped $37.68, or 14%, to $227.20.

The departure of the 43-year-old Mr. Straubel follows a string of other high-profile exits at Tesla in the past few years as the company struggled to bring its Model 3 compact car to market.

In January, Tesla surprised investors when it announced during another earnings call that longtime Chief Financial Officer Deepak Ahuja was leaving the company.

Mr. Straubel outlasted Martin Eberhard, another founder of Tesla. Mr. Eberhard ran Tesla in the early years, before being ousted in 2007 and eventually replaced as chief executive by Mr. Musk, who had helped fund the startup.

Piper Jaffray analyst Alexander Potter called Mr. Straubel “probably the second-most-important person” at Tesla and said his departure is likely to rattle investors.

Gene Berdichevsky, an early Tesla employee who later co-founded a battery technology company called Sila Nanotechnologies Inc., said “there would be no Tesla as it is today without JB.”

Mr. Straubel made the decision to step down on his own as the company is maturing into a phase that needs more operational focus while he seems happiest working on new projects, said a person familiar with the situation.

“I’m not disappearing and I just want to make sure that people understand that this is not some lack of confidence in the company or the team,” Mr. Straubel told analysts.

Tesla has a long history of executive turnover. Co-founder Marc Tarpenning left ahead of Roadster production in 2008, vice president of vehicle engineering Peter Rawlinson departed ahead of Model S production in 2012, and former engineering chief Doug Field left as the Model 3 was ramped up in 2018.

Tesla CEO Elon Musk said 2019 would bring an affordable electric car built in a new factory in China. But as WSJ’s Tim Higgins reports, investors may be losing confidence in that plan. Photo illustration: Laura Kammermann

The one constant has been a small group of core executives who have counseled Mr. Musk. Mr. Straubel was in that circle.

Mr. Straubel was deeply involved in the development of the battery pack that powered the first Tesla vehicle, the two-seat Roadster. The battery architecture that the team designed, stringing together thousands of battery cells and avoiding them overheating or catching fire, was one of Tesla’s technological breakthroughs.

Mr. Straubel later helped develop the Model S sedan, the company’s bid to compete against mainstream luxury cars, and set up the network of charging stations through which Tesla was able to convince buyers that an electric car could be practical for a round trip. He then worked on several battery projects for Tesla.

Mr. Musk praised Mr. Straubel during the analysts call, crediting him for “his fundamental role in creating and building Tesla.”

Write to Tim Higgins at Tim.Higgins@WSJ.com

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