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More changes coming at Tesla as Model 3 production hits critical phase

May 14th, 2018 at 9:01 PM

Elon Musk has not been pulling any punches when it comes to reorganizing Tesla to finally (hopefully?) start turning a profit. Last month, Musk sent an all-hands email decrying meetings, the chain of command, Tesla’s contractors, and excessive spending, but it seems that he isn’t done.

According to an email seen by Electrek, Musk is going to “flatten the management structure,” trimming operations and combining roles to make things more efficient. Given Musk’s well-documented hatred of bureaucracy and a new-found need to actually make money, this isn’t the most surprising move, but adding to the chaos at a critical time for Tesla is a bold move.

Tesla is entering a genuinely critical phase of production for the next six months. After a difficult first year of Model 3 production, Tesla is running out of investor patience (and, more importantly, money), and Musk is gambling that the company will be cash-flow positive by the end of the year thanks to an increased Model 3 production rate. If he misses that target, Tesla will be forced to raise more cash from investors, a process that might not go so smoothly this time around.

With so much at stake, it seems that Musk isn’t taking chances with his current management structure. He announced that the company’s management would be getting a reorganization during the last earnings call, but in an email today, he outlined some more specific changes:

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.

Although this sounds like some management positions are going, this doesn’t appear to be a full-scale workforce reduction. Tesla still has dozens of open positions in everything from manufacturing to Autopilot software engineering.

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