Musk announces ‘thorough reorganisation’ of Tesla to reach profitability
Elon Musk has said he will instigate a “thorough reorganisation” of electric automaker Tesla following both the widely publicised bottlenecks in its production of Model 3 Sedans and also recent crashes involving its vehicles.
The company has never made a profit and reported a $710m loss in the first quarter, an increase on the previous year.
Considerable investor confidence has kept the company buoyant despite the losses and Musk has pledged to get his company into the black, at least on a quarterly basis, by the end of the year.
In a memo to employees, Musk said:
"To ensure that Tesla is well prepared for the future, we have been undertaking a thorough reorganization of our company.
“As part of the reorg, we are flattening the management structure to improve communication, combining functions where sensible and trimming activities that are not vital to the success of our mission.
“To be clear, we will continue to hire rapidly in critical hourly and salaried positions to support the Model 3 production ramp and future product development."
Tesla is at a critical juncture as it tries to fix the difficult launch of the Model 3 sedan, a mid-market car crucial to its success and future profitability that has been plagued by early production problems.
On Sunday, Musk said that a “hackathon” was “going on right now” to try and fix the two worst robot production choke points. He said that initial attempts seemed “promising”.
Musk admitted last month that part of the delay in ramping up Model 3 production stemmed from its overuse of robots and automation in its factories.
Amid the manufacturing problems, senior Tesla executives have departed or cut back work. Waymo, Google’s self-driving offshoot, said on Sunday that Matthew Schwall had joined from Tesla, where he was its main technical contact with US safety investigators.
Last week, Tesla said Doug Field, senior vice president of engineering, was taking time off to recharge.
The company is developing multiple new vehicles, including a semi truck, and has registered a new car firm in Shanghai in a likely step toward production in China.
It has also changed the terms of its borrowing agreement with banks to allow it to pledge its Fremont, California, auto plant as collateral.
A US traffic safety regulator on May 2 contradicted Tesla’s claim that the agency had found that its Autopilot technology significantly reduced crashes.
Autopilot, a form of advanced cruise control, handles some driving tasks and warns those behind the wheel they are always responsible for the vehicle’s safe operation, Tesla has said.
In a Twitter post, Musk denied a Wall Street Journal report that Tesla had rejected a system that would have tracked driver eye movement when using Autopilot for cost reasons.
“This is false,” Musk wrote. “Eyetracking rejected for being ineffective, not for cost. WSJ fails to mention that Tesla is safest car on road, which would make article ridiculous. Approx 4x better than avg,” Musk said. He said Tesla’s record of a fatality every 320 million miles compared with last year’s national average of 86 million miles, per safety regulators.