The executive keeping Tesla rolling isn’t Musk

Mr. Kirkhorn hasn’t done much to raise his profile since, despite having helped make the electric carmaker into a profit machine. While Mr. Musk, who also runs SpaceX and Twitter, blasts his pronouncements to more than 137 million Twitter followers, Mr. Kirkhorn keeps his account, with 63 followers, locked from public view.

Mr. Musk is now leaning on Mr. Kirkhorn as he tries to transform Tesla into the world’s largest carmaker. Tesla is aiming to sell 20 million electric vehicles a year by 2030, which would amount to about a quarter of all new auto sales worldwide. Last year, the company delivered 1.3 million EVs. Among the roadblocks ahead are a cooling car market and more competitors.

Tesla, valued at around $50 billion when Mr. Kirkhorn took over the CFO job, is now valued at more than $500 billion. He is credited for pushing manufacturing efficiencies that have helped the company deliver 15 consecutive profitable quarters and amass a $22 billion war chest. The company generated a 16.8% operating margin last year, far ahead of its Detroit rivals. Tesla margins have slipped of late in a price war intended to expand market share.

Those who have worked with Mr. Kirkhorn credit his success to firm yet collegial management, as well as his ability to connect and communicate with Mr. Musk, two skills that dozens of former executives struggled with since Tesla’s early days. Mr. Kirkhorn is comfortable implementing Mr. Musk’s vision from behind the scenes, former colleagues said.

“He doesn’t take the limelight from Elon," said Kurt Kelty, a vice president at battery-materials company Sila and former senior director of battery technology at Tesla.

Messrs. Kirkhorn and Musk studied overlapping disciplines a decade apart at the University of Pennsylvania—Mr. Kirkhorn, engineering and economics, Mr. Musk, physics and economics—giving the men a common language. Mr. Kirkhorn’s technical training, as well as a Harvard Business School M.B.A., provided him tools to advance the company’s goal of selling more cars by lowering production costs and chasing efficiency, former employees said.

The ratio of Tesla’s sales expenses and overhead to revenue—a measure of efficiency—improved to about 5% last year, from above 13% in 2018. The efficiency ratio at Ford Motor was nearly 7% in 2022.

The relationship between Mr. Kirkhorn, 38 years old, and Mr. Musk, 51, echoes the dynamic between Apple’s Chief Executive Tim Cook and his visionary predecessor, the late Steve Jobs. While Mr. Musk revolutionized the auto industry by taking often risky bets that upended the status quo, Mr. Kirkhorn earned a reputation for fine-tuning operations.

“Predictability is everything with a CFO," former Tesla board member Steve Westly said. “What you can’t do is surprise people, and he has not surprised people."

In 2021, Mr. Musk said there was no succession plan for him at Tesla. Investors took a greater interest after the billionaire purchased the social-media company Twitter last year, taking on what has turned out to be a time-consuming management challenge.

While Tesla has no clear second-in-command, Mr. Kirkhorn handles many day-to-day duties in the manner of a chief operating officer, former company executives said. Tesla board members have discussed Mr. Kirkhorn as a possible successor to Mr. Musk as CEO, a person familiar with the matter said. His name came up ahead of a trial last year over Mr. Musk’s compensation package at Tesla, the person said. The lawsuit was brought by a shareholder challenging the chief executive’s pay deal approved in 2018—worth around $44 billion at recent stock prices. The case has yet to be decided. Some board members have expressed doubts that Mr. Musk would step aside in the foreseeable future, the person added.

Robyn Denholm, who chairs Tesla’s board, didn’t respond to questions about the matter. In January, she said, “Succession planning is an important topic for the board at all times." Mr. Musk didn’t respond to requests for comment.

Mr. Kirkhorn was master of ceremonies at a recent investor gathering where Tesla highlighted the executives working under Mr. Musk. Mr. Kirkhorn used the moment to describe how Tesla has managed overhead expenses and cut production costs for its Model 3 sedan, in part by creating more efficient supply chains.

“In this industry, in this business, you survive or you die based upon the ability to manage your costs," he said at the March event at Tesla’s factory outside of Austin, Texas.

Mr. Kirkhorn, who drives a top-of-the-line Model S, is at the center of a broad push to transform Tesla into a mass-market automaker, which includes introducing a vehicle the company says it hopes will cost half as much to produce as the Model 3. Tesla hasn’t released a new passenger vehicle in three years, a long time in the automotive industry. Its least expensive offering, the Model 3, starts at around $40,000 in the U.S.

“As we improve affordability, the number of customers who have access to our products dramatically increases," Mr. Kirkhorn said in his remarks at the event.

‘Incrementally better’

Mr. Kirkhorn, who grew up in the suburbs of Washington, D.C., was a leader of the solar-car team at the University of Pennsylvania. The students built a one-seater named Keystone, which looked like it was inspired by a flying saucer. During Mr. Kirkhorn’s senior year, the team entered the vehicle in the 2006 “Tour de Sol," an open competition run by the Northeast Sustainable Energy Association. Keystone finished last in its category.

For a college project, Mr. Kirkhorn and a classmate redesigned a remote-control toy truck, incorporating a propeller system to make it amphibious. Their “Amphibot" project won a $1,000 prize from the university.

“The classroom can be kind of boring sometimes but when you see the applications, it’s really a rewarding experience," Mr. Kirkhorn told the Penn Engineering magazine in its spring 2006 issue. “I can see myself running a small business someday."

Following college, Mr. Kirkhorn briefly worked for the consulting firm McKinsey & Co. before joining Tesla as a financial analyst ahead of the company’s public-market debut in 2010. During his early days at Tesla—a time when he drove a BMW E46 M3—Mr. Kirkhorn showed a knack for unraveling complex problems, said JB Straubel, who served as Tesla’s chief technology officer for more than a decade.

“It’s probably the hundreds and thousands of hours of slaving away to make things incrementally better where he left the biggest mark and is leaving the biggest mark," said Mr. Straubel, who was recently nominated to Tesla’s board of directors.

Around 2014, while Tesla was gearing up to produce its first mass-market car, the Model 3, Mr. Kirkhorn was part of a small group assigned to negotiate a deal with Panasonic—now named Panasonic Holdings—to build a jointly operated battery factory, according to Mr. Kelty. Tesla would pay for the construction, and Panasonic would contribute its proprietary know-how.

An important question was how much Tesla would pay for the Panasonic battery cells. Messrs. Kelty and Kirkhorn traveled to Moriguchi, Japan, to hammer out a deal. “Anything price related, in those early days, he was my sounding board," said Mr. Kelty, who was among those negotiating for the project. “Elon had certain expectations, and Panasonic had certain expectations, and they were not exactly the same, shall we say."

A landmark agreement was struck, and the Nevada factory—Tesla’s team at one end, Panasonic’s at the other—has produced batteries that power many of the Teslas now on the road in the U.S.

Over the years, Mr. Kirkhorn’s team has debated whether Tesla should obtain certain components from suppliers or make them in-house, former employees said. As the Model 3 approached production, Tesla flirted with the idea of getting into the business of extracting lithium, an element used in its batteries, according to people familiar with the discussions. Mr. Kirkhorn’s financial analysis helped persuade the company to pass, they said.

“The big risk or the issue you didn’t want to talk about? He’s going to find it and quickly dig into that thing," said RJ Johnson, who previously oversaw Tesla’s energy business. “He would politely pick problems apart."

Although well-known inside the company, Mr. Kirkhorn’s ascent to CFO in early 2019 took Wall Street by surprise. Tesla stock fell some 5% in late trading the evening Mr. Musk announced that the relative unknown would replace Deepak Ahuja, one of Mr. Musk’s longtime confidants.

Mr. Kirkhorn is now a mainstay on Tesla’s quarterly earnings calls, yet few on Wall Street know him well. In an industry where CFOs often schmooze with analysts, many who cover Tesla say they have never had a one-on-one conversation with him.

Unlike his larger-than-life boss, Mr. Kirkhorn’s day-to-day work doesn’t make headlines. For instance, he had a hand in a project to replace third-party software with tools that Tesla engineers developed to handle such back-office tasks as managing recruitment.

Inside and out

Mr. Kirkhorn has a reputation for skillfully navigating conversations with Mr. Musk, who is known for firing people with little warning, former colleagues said. Mr. Kirkhorn has won allies by serving as an intermediary between his staff and Mr. Musk, people who worked with him said. If Mr. Musk made a seemingly unattainable demand, Mr. Kirkhorn would break down the request into smaller pieces to get it done.

Mr. Straubel, who left Tesla in 2019 and now runs battery-materials company Redwood Materials, said Mr. Kirkhorn’s willingness to “share the bad news even louder and faster than the good news" was one of the traits that have earned him Mr. Musk’s trust. The two men also share the triumphs and scars of working together for more than a decade, he said.

Mr. Kirkhorn was frustrated by Mr. Musk’s high-profile dive into bitcoin—Tesla bought $1.5 billion worth in early 2021—and he was reluctant to hold the cryptocurrency on the company’s balance sheet, people familiar with the matter said. Tesla sold most of its bitcoin last year. The company has realized around $192 million in gains on its cryptocurrency investments, Securities and Exchange Commission filings show.

Mr. Kirkhorn knows the company inside and out, Mr. Straubel said, from Tesla’s staff to its technology. “He would almost scare people more because he was so often correct," he said.

After leaders of Tesla’s energy division met with him a few years ago to set annual goals, Mr. Kirkhorn asked each of them to sign a one-page summary outlining their targets, people familiar with the matter said.

In the months that followed, Mr. Kirkhorn pulled out the summary on at least one occasion, reminding the group that he still had their signatures, one of the people recalled him saying.

With EV rivals gaining ground, the road ahead is uncertain. Tesla once enjoyed seemingly boundless demand for its cars. The carmaker has cut prices by more than 20% this year for some models in the U.S., and investors widely believe the company needs another, more affordable car to grow at its current pace.

“Improving affordability allows us to comfortably make investments that grow volume," Mr. Kirkhorn said in March. He added, with a touch of Muskian grandeur, “We’re going to achieve unprecedented scale in the manufacturing space."

(Emily Glazer, Jessica Toonkel, Elisa Cho and Jim Oberman contributed to this story.)

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