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Elon Musk announces a major shakeup at Tesla

CNBC logo CNBC 5/14/2018 Robert Ferris
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Tesla CEO Elon Musk on Monday told employees the company plans to "flatten" its structure as it works to improve communication and trim activities "that are not vital" to its success.

"To ensure that Tesla is well prepared for the future, we have been undertaking a thorough reorganization of our company," Musk said in a copy of the memo obtained by CNBC.

Tesla will "continue to hire rapidly in critical hourly and salaried positions to support the Model 3 production ramp and future product development," he added.

The Wall Street Journal was the first to report about the memo. When contacted by CNBC, Tesla declined to comment.

On a recent conference call, Musk warned the electric car maker would make some changes to improve its financial health. Tesla has been burning through billions in cash, and some analysts think the company will need to raise capital again by early 2019.

"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," said Musk during the call in early May, after the company reported first-quarter earnings.

"And in particular," he said, "the number of sort of third-party contracting companies that we're using has really gotten out of control, so we're going to scrub the barnacles on that front. It's pretty crazy. We've got barnacles on barnacles. So there's going to be a lot of barnacle removal."

That was not the first time Musk said he wanted to trim Tesla's fat. Prior to earnings, a leaked email revealed the company will be more rigorous about expenditures, including its relationship with suppliers and contractors.

Read the full story in the Wall Street Journal.

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