Energy Efficiency, Industrial, Sourcing Renewables  -  May 15, 2018

Is Tesla falling apart?

Tesla Inc. announced to employees on May 14 that the company was undergoing a thorough reorganization in order to face production problems, senior staff departures and crashes involving its electric cars.

Reuters reported Tesla chief Elon Musk explained in an email to staff that the company 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 report noted Tesla is at a critical juncture as it tries to fix the problematic launch of the Model 3 sedan, a mid-market car crucial to its success and future profitability that has been plagued by early production problems.

As manufacturing glitches pile up, a number of senior Tesla executives have left the company. The most recent departures included Doug Field, senior vice president of engineering, who is reportedly "taking time off to recharge," and Matthew Schwall, the company’s main contact with U.S. safety investigators, who joined Waymo,  Alphabet Inc’s self-driving unit.

Musk announced during a May 2 earnings call that he would reduce the number of third-party contracting companies engaged by Tesla, calling them "barnacles" needing to be scrubbed off. In response, Reuters reported, "investors gave a rare rebuke to Musk after he cut off financial analysts on the earnings call, sending shares down 5 percent despite promises that Model 3 production was on track." The staff email noted Tesla expects to quickly fill critical positions "to support the Model 3 production ramp and future product development."

Other issues faced by the company include questions of safety following recent crashes involving its electric cards. A U.S. traffic safety regulator recently contradicted Tesla’s claim that the agency had found that its Autopilot technology, a form of advanced cruise control, significantly reduced crashes. Musk countered in a Twitter message that Tesla’s record of a fatality every 320 million miles outpaced last year’s national average of 86 million miles. While Tesla’s record of miles driven could not be confirmed by Reuters. Musk announced Tesla would begin reporting safety numbers beginning in the second quarter of this year.

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