Elon Musk, CEO of Tesla, speaks with media representatives on September 3, 2020 at the Tesla Gigafactory construction site in Grünheide near Berlin.
Julian Steels | Image alliance via Getty Images
Tesla CEO Elon Musk emailed employees Tuesday warning them that they must control their spending in order to continue generating quarterly profits despite Tesla’s shares prior to the company’s inclusion in the S&P traded at all highs 500.
That year, Tesla began building a new factory near Austin, Texas, and another near Berlin, among other things. The company also began an overhaul of its paint shop, which is part of its US vehicle assembly plant in Fremont, California.
“Investors give us a lot of credit for future profitability, but if at some point they decide that this isn’t going to happen, our stock will be instantly crushed like a casserole under a sledgehammer!” Musk wrote in the email received from CNBC.
Electric vehicle news site Electrek previously reported the content of Musk’s email.
In early 2020, in sluggish auto sales around the world, Tesla temporarily cut wages for some employees, cut contracts with agency workers, and laid off an unknown number of workers after an annual performance review. Since then, new contractors have been hired and employee pay has been restored.
Tuesday’s email picks up on earlier statements from Musk, but doesn’t specify how Tesla plans to meet its budget.
On the company’s third quarter earnings call, Musk told analysts and shareholders, “We’re trying to spend money as quickly as possible without wasting it.”
At the call, Tesla CFO Zachary Kirkhorn said Tesla plans to increase its capital spending by $ 2 billion from the aforementioned plans to $ 2.5 billion in 2021 and 2022. Among other things, the increased spending would enable Tesla to “in-source” things like manufacture some of its battery cells.
Tesla raised $ 5 billion through a capital increase in September but will have to repay approximately $ 1 billion related to conversions this quarter (Q4 2020).
Tesla shares traded above $ 580 before the close of trading on Tuesday.
Here is the full email from Musk, transcribed by CNBC:
From: Elon Musk
Subject costs are extremely important!
Date: December 1, 2020 [time redacted]
At a time like this when our stocks are reaching new heights, it seems like it isn’t that important to spend carefully. This is definitely not true!
If you look at our actual profitability, it is very low at around 1% last year. Investors give us a lot of credit for future profitability, but if at any point they decide that this isn’t going to happen, our stock will be instantly crushed like a casserole under a sledgehammer!
More importantly, to make our cars affordable, we need to get smarter about how we spend money. This is a penny hard game that requires thousands of good ideas to simplify part cost, factory process, or design while improving quality and skills. A great idea would be one that saves $ 5, but the vast majority is $ 0.50 here or $ 0.20 there.
To make the electric revolution happen, we need to make electric cars, stationary batteries and solar affordable for everyone.
Thank you and good work with you as always,