Tesla Is Shrinking Management To Improve Spending Efficiency

Tesla Is Shrinking Management To Improve Spending Efficiency

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by: Elizabeth Balboa, Benzinga Staff Writer

 

Tesla Inc TSLA 0.73% spokesperson confirmed a Wall Street Journal report that the company is reorganizing and shrinking its management structure to improve efficiency.

CEO Elon Musk circulated a memo to employees early Monday morning reiterating a strategy previously expressed during the latest earnings call.

Despite the top-tier contraction, Tesla remains committed to an announced plan to expand its hourly workforce supporting the Model 3 ramp.

Here's what the memo 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."

 

Why It’s Important

Tesla’s ongoing cash burn, wavering investor confidence and ability to raise capital have come under scrutiny as the company works to ramp its Model 3.

Musk recently claimed the company could get through 2018, achieve production objectives and become cash-flow positive without another capital raise, while on a separate occasion he outlined a strategy to freeze spending and eliminate nonessential expenses.

The management changes appear part of the plan to stunt cash burn and prove its commitment to near-term profitability.

 

What’s Next

The executives or positions targeted in the restructuring are yet unknown.

Tesla's stock was teetering around the $300 level at time of publication.

 

© 2018 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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2 responses to “Tesla Is Shrinking Management To Improve Spending Efficiency”

  1. Sonia Spring says:

    Thanks for so meaningful post. I also write articles like this at writingleader.com. Perhaps you are right about Tesla’s ongoing cash burn, but with that Tesla's Company is one of the most successful companies of our time. And Ilon Mask's ideas are advanced.

  2. jenifer craig says:

    Desperate times calls for desperate measures. This is more or less applicable here in case of Tesla. The cash shortage they have been facing recently came up when their plans to raise capital for the upcoming model 3 was put up for scrutiny.AT the current situatin, Controlling the management and restructuring the production activities and personnel is their best chance to raise the funds. washington dc tour

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