Elon Musk Announces a ‘Through Reorganization' at Tesla

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【Summary】Tesla chief executive Elon Musk told employees on Monday morning the company is undergoing a "thorough reorganization," as it works to solve its production problems with the Model 3.

Eric Walz    May 14, 2018 12:26 PM PT
Elon Musk Announces a ‘Through Reorganization' at Tesla

Tesla chief executive Elon Musk told employees on Monday morning the company is undergoing a "thorough reorganization," as it works to solve its production problems with the Model 3. The announcement comes after another senior staff departure and two additional crashes involving its Autopilot autonomous driving system.

Musk said in an email Tesla was "flattening the management structure to improve communication," combining functions and trimming activities "not vital to the success of our mission" in the reorganization. The company confirmed the note, which was disclosed by the Wall Street Journal.

Musk 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. You've got barnacles on barnacles. So there's going to be a lot of barnacle removal."

Tesla will "continue to hire rapidly in critical hourly and salaried positions to support the Model 3 production ramp and future product development," he added.

Tesla shares fell 1.3 percent to $297 on Monday.

Executive Departures

Over the weekend, Alphabet's self driving unit Waymo announced the hiring of Matthew Schwall, Tesla's director of field performance engineering.

Schwall was the main point of contact at Tesla in the ongoing NHTSA investigation into a fatal crash involving a Tesla Model S in California in March. Tesla stated publicly that the driver was using Tesla's Autopilot system at the time of the high speed crash when the car collided with a highway safety barrier.

Also last week, Tesla said Doug Field, the company's senior vice president of engineering, was taking time off for personal reasons. "Doug is just taking some time off to recharge and spend time with his family. He has not left Tesla," a Tesla spokesman said on Friday.

Two More Crashes Involving Tesla Vehicles

In the latest crash involving a Tesla vehicle, a Model S sedan was travelling at 60 miles per hour when it collided with a fire truck stopped at a red light in Utah on Friday, according to police. The Tesla driver suffered a broken ankle and was taken to a hospital while the firefighter was not injured, the police said.

National Transportation Safety Board spokesman Keith Holloway said on Monday "at this point it doesn't appear that NTSB is investigating" the Utah crash.

Witnesses to the crash said the Tesla sedan did not brake prior to impact, police said in a statement, adding it was unknown if the Autopilot feature in the Model S was engaged at the time.

"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 another Tesla accident in Fort Lauderdale, Florida, on May 8 that killed two teenagers. This latest incident is the agency's fourth active probe into crashes involving Tesla vehicles.


The Tesla Model 3

Autopilot is Tesla's advanced cruise control, which handles some driving tasks, such as keeping the car in the lane on the highway. The system warns drivers they are always responsible for the vehicle's safe operation and requires a driver's hands to be on the steering wheel, Tesla has said.

A U.S. traffic safety regulator on May 2 contradicted Tesla's claim that the agency had found that its Autopilot technology significantly reduced crashes.

Tesla has been burning through billions in cash as it struggles to ramp up production of the Model 3 sedan. Tesla ended its first quarter with $2.7 billion in cash, down from $3.4 billion at the end of 2017.

In an email last month, Elon musk said that Tesla aims to produce 6,000 Model 3's per week by June. The company is still well short of its goal. Tesla is currently producing about 2,662 Model 3 sedans each week, according to Bloomberg's Tesla Tracker.

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