Musk urged employees to stay focused on cutting costs and preventing a reversal of Tesla’s stock price surge in an email sent to employees on Tuesday as the Palo Alto, Calif., Based company, is striving to meet the goal of delivering half a million cars this year.
“When you look at our actual profitability, it’s very low at around 1% for the past year. Investors give us a lot of credit for future profitability, but if at some point they conclude that this will not happen, our stock will be immediately crushed like a blast under a hammer! Musk wrote in the email seen by Bloomberg News.
Tesla did not respond to a request for comment.
The automaker’s stock has soared almost 600% this year, partly on expectations to join the S&P 500 Index – which it will do on December 21 – and record a fifth straight quarter of profit , which he did in October. Musk and CFO Zachary Kirkhorn have been focused on cutting costs for several quarters even as Tesla spends billions in new factories in Austin, Texas and Berlin, to expand its global production and business footprint.
“At a time like this, when our stock hits new highs, it may seem like prudent spending isn’t as important. This is certainly not true! Musk wrote in the email.
No hostile takeovers
Vehicle affordability is an issue of growing concern to the CEO as Tesla’s sales volumes increase beyond its niche status. Musk has said he would be willing to sacrifice profitability to sell more and cheaper cars, and he has promised to launch a $ 25,000 car by 2023. Tesla’s cheapest vehicle right now is the Model Base 3, which starts at $ 37,990.
“Much more importantly, to make our cars affordable, we have to get smarter about how we spend money,” Musk wrote. “It’s a tough game, requiring thousands of great ideas to improve the cost of parts, a factory process, or simplify design, all while increasing quality and capabilities. A good idea would be one that saves $ 5, but the vast majority is $ 0.50 here or $ 0.20 there. ”
Musk was in Berlin on Tuesday, where he received an innovation award from German publisher Axel Springer SE. The award that has been presented to other billionaire American entrepreneurs, including the CEO of Amazon.com Inc., Jeff Bezos, and the CEO of Facebook Inc., Mark Zuckerberg.
When asked at the awards ceremony if Tesla is considering buying another automaker, Musk declined to rule it out, but said any future deal should be mutually acceptable. “We’re certainly not going to launch a hostile takeover,” he said. “If someone said, hey, we think it would be a good idea to merge with Tesla, we would definitely have this conversation.
Tesla is building its first European plant near the German capital as part of a major attack on the country’s auto establishment. Musk, who is pushing for the project to be up and running by July, said he would be spending the night in an unfinished factory conference room.
“When we have the opening of Giga Berlin, we are going to have a big party,” he said.
(Updates with details of Musk’s visit to Berlin from the ninth paragraph.)
– With the help of Stefan Nicola.