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Tesla CEO Elon Musk speaks during the unveiling of the new Tesla Model Y in Hawthorne, California on March 14, 2019.
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Tesla Inc. Chief Executive Elon Musk has warned employees that the electric-car company needs to focus on maintaining profits and reducing costs, or else its stock will get crushed.
That’s according to internal emails obtained Tuesday by Elektrek and CNBC. While Tesla has been profitable for five straight quarters and has seen its stock skyrocket this year, Musk reportedly said future profits should be foremost on everybody’s minds.
“When looking at our actual profitability, it is very low at around 1% for the past year. Investors are giving us a lot of credit for future profits, but if, at any point, they conclude that’s not going to happen, our stock will immediately get crushed like a soufflé under a sledgehammer!” his email reportedly said.
Tesla did not respond for comment Tuesday when asked about the email.
Musk’s comments harkened to what he said in October, following Tesla’s earnings report for its “best quarter in history.”
“We continue to grow as fast as we can while focusing on cost control and quality,” Musk said at the time.
Tesla’s buzz-worthy stock price has far surpassed its financial fundamentals, with even Musk himself tweeting earlier this year that “Tesla stock price is too high.” Shares have continued to surge since, and are up 599% year to date, and 770% over the past 12 months. Tesla’s market valuation topped $500 billion on Tuesday.
Tesla’s profits have been aided considerably by “green” regulatory credits. But those credits may diminish in the coming years, as rival electric-car companies grow and start collecting their own credits.
Tesla is also building costly new factories in Berlin and Austin, Texas, and is revamping its facility in Fremont, Calif.
The company made a number of moves to reduce costs earlier this year, as the coronavirus pandemic forced most of its showrooms — and its Fremont factory — to temporarily close.
Musk did not name any specific cost reductions in Tuesday’s email, according to Elektrek, saying: “In order to make our cars affordable, we have to get smarter about how we spend money,” and noting the majority of possible solutions will save small amounts of money here and there, as opposed to any big lump-sum source of savings.
