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In a new email to Tesla employees obtained by ElectrekCEO Elon Musk says he wants the automaker to focus on profits and cutting costs.
Otherwise, the CEO warns that Tesla’s (TSLA) stock could drop drastically.
Tesla shares are currently experiencing an incredible increase, boosting the company’s valuation by more than $ 100 billion last month.
The market valuation doesn’t really match the fundamentals of the company’s financial data.
In short, the market believes that the company will continue to grow at an impressive rate and achieve strong profits in the future.
In a new email sent to Tesla employees today and obtained by Electrek, Musk warns that Tesla must work to generate these future profits:
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 profits, but if at some point they conclude that this won’t happen, our stock will be immediately smashed like a blow from a hammer!
Tesla has made profits for the past five consecutive quarters, but profits have been marginal and often dependent on regulatory credits.
Recently, the CEO has also focused on making Tesla vehicles more affordable.
At Tesla’s Battery Day event in September, Tesla announced an upcoming $ 25,000 electric car powered by its new battery cell.
Leading to the cheapest vehicle, which is still around three years away, according to the CEO, Musk wants Tesla to focus on cost savings.
He wrote in the email to employees today:
Much more importantly, to make our cars affordable, we need to be smarter about how we spend money. It’s a tough game – one that requires thousands of great ideas to improve the cost of parts, a factory process, or just the design, all while increasing quality and capability. A good idea would be to save $ 5, but the vast majority are 50 cents here or 20 cents there.
This is not the first time that Tesla has launched company-wide cost reduction efforts.
Last year, Tesla implemented a new cost-cutting initiative involving a team, which included Musk himself and CFO Zach Kirkhorn, reviewing every payment, including “parts, salary, expenses. travel and rent ”.
The pressure has led some managers to go a little too far with cost savings.
Today’s new email came as Tesla began its year-end delivery campaign with the goal of delivering a new record number of cars this quarter and 500,000 for all of 2020.
Earlier today, we reported that Tesla is looking to Cybertruck reservation holders to help achieve this new delivery record.
Here is the full email:
At a time like this, when our stock is reaching new highs, it may seem like prudent spending isn’t as important. It is certainly not true.
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 profits, but if at some point they conclude that it won’t happen, our stock will immediately be smashed like a blow from a hammer!
Much more importantly, to make our cars affordable, we need to be smarter about how we spend money. It’s a tough game – one that requires thousands of great ideas to improve the cost of parts, a factory process, or just the design, all while increasing quality and capability. A good idea would be to save $ 5, but the vast majority are 50 cents here or 20 cents there.
In order to achieve the electric revolution, we are making electric cars, stationary batteries and solar power affordable for everyone.
Thank you and thank you for working with you as always,
Elon
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