Tesla must control costs or the stock “will be smashed like a blast under a hammer!” Elon Musk would have said



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Tesla CEO Elon Musk speaks at the unveiling of the new Tesla Model Y in Hawthorne, Calif., March 14, 2019.

AFP via Getty Images

Tesla Inc. CEO Elon Musk has warned employees that the electric car company must focus on sustaining profits and reducing costs or else its stock will be crushed.

That’s according to internal emails obtained Tuesday by Elektrek and CNBC. While Tesla has been profitable for five consecutive quarters and has seen its stock skyrocket this year, Musk has reportedly said that future earnings should be a top concern for everyone.

“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! his email would have said.

Tesla did not respond to comments on Tuesday when asked about the email.

Musk’s comments came close to what he said in October, following Tesla’s earnings report for its “best quarter in history.”

“We continue to grow as fast as possible while focusing on cost control and quality,” Musk said at the time.

The buzz-worthy Tesla’s share price has far exceeded its financial fundamentals, with even Musk himself tweeting earlier this year that “The Tesla share price is too high.” Shares have continued to climb ever since and are up 599% year-to-date and 770% in the past 12 months. Tesla’s market valuation surpassed $ 500 billion on Tuesday.

Tesla’s profits have been aided significantly by “green” regulatory credits. But these credits may decline in the years to come, as rival electric car companies grow and start collecting their own credits.

Tesla is also building expensive new factories in Berlin and Austin, Texas, and revamping its facilities in Fremont, California.

The company took a number of steps to cut costs earlier this year, as the coronavirus pandemic forced most of its showrooms – and its Fremont plant – to temporarily close.

Musk didn’t mention a specific cost reduction in Tuesday’s email, according to Elektrek, saying, “In order to make our cars affordable, we need to get smarter about how we spend money ”, and noting that the majority of possible solutions will save small amounts of money here and there as opposed to any lump sum savings source .



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