More Bad News for Tesla Rolls In

It's been an incredibly intriguing ride for Tesla (NASDAQ: TSLA) investors this year. It began with a significant drop in share price following a series of setbacks that included consumer backlash, an aging vehicle lineup, mounting lawsuits for its Full Self-Driving (FSD) technology, as well as a global sales decline.

Shares then soared in the following months thanks to mounting hype surrounding the company's artificial intelligence (AI), robotics, and robotaxi developments and potential. The bad news is that Tesla continues to lose critical and valuable talent, and just recently a new person was added to the growing list of departures.

Here's what you need to know.

What's going on?

After more than eight years with Tesla, the automaker's head of its Cybertruck program, Siddhant Awasthi, announced that he would be leaving. Awasthi's journey was an impressive one, from starting as an intern to seeing large-scale production of the Cybertruck, leading in product strategy, as well as taking leadership of Tesla's Model 3 program last July.

Image source: Tesla.

While the Cybertruck is often considered a commercial flop with its controversial design and disappointing price tag, which checked in higher than anticipated, the loss of someone like Awasthi is something Tesla has unfortunately become accustomed to experiencing. There's been a seemingly unending stream of executive-level talent departing the automaker at a time when the company is attempting to make a massive transition from pure automaker to more of a technology company.

Here's a glimpse at just a few of the departures of significance to investors. Piero Landolfi, Tesla's former director of service for the North American market, left Tesla over the summer, after nearly nine years. Tesla's top sales executive in North America, Troy Jones, also departed after 15 years. Raj Jegannathan, a senior executive who held roles in several IT and data functions, as well as Omead Afshar, who was in charge of sales and manufacturing operations in North America and Europe, also left the automaker. Milan Kovac, head of Tesla's Optimus humanoid robot team, Vineet Mehta, the top battery executive, and David Lau, software chief, also decided to leave the company.

Attracting talent is a key priority for companies, especially tech businesses that rely on top engineering talent to power their innovation. It's especially important for Tesla as its road ahead includes aiming toward AI, robotics, and robotaxi tech markets. One could argue the best way to achieve rapid innovation is by establishing a culture that nurtures it within the organization and attracts top talent.

Unfortunately, for investors, there is certainly evidence to suggest there's a growing problem attracting and retaining talent. In fact, back in 2020 Tesla ranked in the No. 1 spot for the most attractive companies for engineering students to work for in the U.S. market, according to Universum, which conducts extensive surveys of students around the world. Tesla has now slipped to ninth place this year, according to the same Universum report.

Broader evidence that Tesla's brand image has taken a hit comes from an Interbrand Best Global Brands annual report. The report said Tesla's brand value fell 35% this year down to $29.5 billion. That dropped Tesla's brand value ranking from 12th last year down to 25th. To make matters worse, at a time when Tesla's brand value plunged, a growing Chinese competitor, BYD, climbed into the top-100 rankings for the first time.

What it all means

While Tesla's share price has been on a sharp rebound in recent months, thanks to hype building for its tech-centric future, the company still faces numerous headwinds. It faces an aging lineup and stiff competition in China, and sluggish demand in the valuable U.S. market thanks to the tax credit's removal. Also, some consumer backlash remains from CEO Elon Musk's political activities.

But one growing problem people aren't paying enough attention to is the serious talent exodus from Tesla. It's been a problem, it continues to be a problem, and it's something the company needs to fix as it transitions from an automaker to a company with AI, robotics, and robotaxi ambitions.

Daniel Miller has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends BYD Company. The Motley Fool has a disclosure policy.