Tesla Inc. Chief Executive Officer Elon Musk warned in an internal e-mail his company’s rallying shares could get “crushed” if investors begin to be concerned about the electric-car or truck manufacturer’s capability to provide on profit expectations.
Musk urged staff to remain focused on cutting fees and avert a reversal in Tesla’s soaring stock cost in an e-mail sent Tuesday to staff as the Palo Alto, California-primarily based business performs to meet a target of delivering half a million vehicles this year.
“When looking at our actual profitability, it is very low at around 1% for the past year. Investors are giving us a lot of credit for future profitability, but if, at any point, they conclude that’s not going to happen, our stock will immediately get crushed like a souffle under a sledgehammer!” Musk wrote in the e-mail viewed by Bloomberg News.
Tesla did not respond to a request for comment.
The carmaker’s stock has skyrocketed nearly 600% this year, in component on expectations it could join the S&P 500 Index — it will on Dec. 21 — and also helped by the fifth consecutive quarter of profit posted in October. Musk and Chief Financial Officer Zachary Kirkhorn have been focused on expense reductions for numerous quarters even as Tesla spends billions on new factories in Austin, Texas, and close to Berlin to expand its worldwide production and sales footprint.
“At a time like this, when our stock is reaching new heights, it may seem as though spending carefully is not as important. This is definitely not true!” Musk wrote in the e-mail.
No Hostile Takeovers
Vehicle affordability is an problem the CEO has come to be increasingly concerned about as Tesla’s sales volumes develop beyond its onetime niche status. Musk has stated he would be prepared to sacrifice profitability to sell much more and more affordable vehicles, and he has promised to launch a $25,000 model by 2023. Tesla’s least expensive automobile at the moment is the Model 3, which begins at $37,990.
“Much more important, in order to make our cars affordable, we have to get smarter about how we spend money,” wrote Musk. “This is a tough Game of Pennies, requiring thousands of good ideas to improve part cost, a factory process or simplify the design, while increasing quality and capabilities. A great idea would be one that saves $5, but the vast majority are $0.50 here or $0.20 there.”
Musk was in Berlin Tuesday, exactly where he received an innovation award from German publisher Axel Springer SE. The prize that has been provided to other billionaire American entrepreneurs like Amazon.com Inc. CEO Jeff Bezos and Facebook Inc. CEO Mark Zuckerberg.
When asked at the award ceremony if Tesla would take into consideration purchasing a further automaker, Musk declined to rule it out but stated any future deal would have to be mutually agreeable. “We’re definitely not going to launch a hostile takeover,” he stated. “If somebody said, hey, we think it would be a good idea to merge with Tesla, we’d certainly have that conversation.”
Tesla is constructing its 1st European factory close to the German capital in a key attack on the country’s auto establishment. Musk, who is pushing to get the project up and operating by July, stated he would commit the evening in a conference space in the unfinished factory.
“When we have the opening for Giga Berlin we’re gonna have just a big party,” he stated.
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