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Elon Musk announces ‘a thorough reorganization’ at Tesla, will be ‘flattening the management structure’

Tesla CEO Elon Musk briefly mentioned a restructuring of the company during their quarterly conference call.

It already started with a cleansing of Tesla’s contractors, but Musk now announced a more “thorough reorganization’ at Tesla, which will include “flattening the management structure.”

During the call earlier this month, Musk said:

We are going to conduct a sort of reorganization, restructuring of the company this month, and make sure we’re well set up to achieve that goal.

He then talked about third-party contractors getting “out of control” at Tesla and looking into fixing the situation.

Less than a week later, we published an email from Musk about Tesla starting a brutal review of contractors and firing everyone that is not vouched for by an employee.

We thought that it might be the reorganization that Musk was referring to, but it now looks like it’s going to be much more significant than that.

In a new email sent to employees today and obtained by Electrek, Musk announced “a thorough reorganization” of the company:

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.

While it sounds like some people will lose their jobs, Musk also mentioned in the email that Tesla is still hiring “hourly and salaried positions” for Model 3 and future programs.

Electrek’s Take

What does it mean exactly? To me, it sounds like a nice way to say that a wave of departures is coming.

Musk has made clear that Tesla is pushing hard to be profitable during the second half of the year and tightening their belt is likely going to be part of their plan to make it happen.

It could also simply be more aimed at making the management hierarchy more efficient.

For a CEO of a somewhat major company with close to 40,000 employees, Musk has a surprising number of people reporting directly to him. He is known for being directly involved in solving several specific engineering problems and taking deep dives into departments when problems arise.

Over the past two months, he has been deeply involved in the Model 3 production ramp at the Fremont factory after taking over the direct responsibilities from SVP of engineering Doug Field, who recently took a leave of absence from the company.

Musk might have seen some inefficiencies in the management structure from his deep dive into Model 3 production at Fremont and he is now looking to restructure management.

However, the email was addressed to everyone at Tesla, so it doesn’t seem to only affect Fremont.

We will keep a close eye on the impact of this reorganization over the next few weeks and keep you updated. If you hear anything, let us know.

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