Elon Musk tells staff Tesla is undergoing ‘thorough reorganisation’

The company is grappling with production problems, senior staff departures and two crashes last week involving its electric self-driving cars

PUBLISHED : Tuesday, 15 May, 2018, 2:29am
UPDATED : Tuesday, 15 May, 2018, 3:24am

The auto maker Tesla is undergoing a “thorough reorganisation,” as it contends with production problems, senior staff departures and two crashes last week involving its electric self-driving cars, the company’s founder and chief executive officer told employees Monday.  

Elon Musk said in an email that the reorganisation was about “flattening the management structure to improve communication,” combining functions and trimming activities “not vital to the success of our mission”. 

Tesla is at a critical juncture as it tries to fix production headaches that have slowed the roll-out of its Model 3 sedan, a mid-market car seen as crucial to the company’s success, and as it expands on other fronts. 

Tesla shares fell 1.3 per cent to US$297 on Monday. 

Senior Tesla executives have departed or cut back work. 

Waymo, Alphabet Inc’s self-driving unit, said on Sunday that Matthew Schwall had joined the company from Tesla, where he was the electric carmaker’s main technical contact with US safety investigators. 

Last week, Tesla said that Doug Field, its senior vice-president for engineering, was taking time off. 

The company is developing multiple new vehicles, including a semi truck, and recently registered a new car firm in Shanghai, China, in a likely step toward production in China.  

Musk said on a May 2 earnings call that the company was “going to conduct sort of a reorganisation restructuring … this month and make sure we’re well set up to achieve that goal.” 

He added that “the number of sort of third-party contracting companies that we’re using has really gotten out of control, so we’re going to scrub the barnacles on that front. It’s pretty crazy.” 

Tesla will still rapidly hire critical positions “to support the Model 3 production ramp and future product development,” Musk said in the email to employees. 

Tesla faces a variety of other issues. 

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Investors gave a rare rebuke to Musk after he cut off analysts on the earnings call who were asking about profit potential, sending shares down 5 per cent despite promises that production of the Model 3 was on track. 

The company recently changed the terms of its borrowing agreement with banks to let it pledge its Fremont, California, auto plant as collateral. 

And in the latest of two reported crashes that have drawn attention, a Tesla Model S sedan was travelling at 60 miles per hour (97km per hour) on Friday night when it smashed into a fire truck stopped at a red light in South Jordan, Utah, about 20 miles south of Salt Lake City, according to police. 

A US National Transportation Safety Board spokesman Keith Holloway said on Monday that, “at this point, it doesn’t appear that NTSB is investigating” the Utah crash. 

The Tesla driver suffered a broken ankle and was taken to a hospital while the firefighter was not injured, the police said. 

Witnesses said that the Tesla sedan did not brake before impact, police said, adding that it was unclear if the Autopilot feature in the Model S was in use at the time. 

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“Tesla has not yet received any data from the car and thus does not know the facts of what occurred, including whether Autopilot was engaged,” the company said in a statement on Monday. 

The NTSB said last week it was investigating a Tesla accident in Fort Lauderdale, Florida, on May 8 that killed two teenagers and injured another – the agency’s fourth active inquiry into crashes of the company’s electric vehicles. 

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.