Tesla staff have been warned the share price will be “crushed like a souffle” if the company is unable to meet profit expectations, in an internal email from CEO Elon Musk.
The electric vehicle company’s stock price has risen nearly 600 per cent in 2020, catapulting Musk’s net worth to US$128 billion and making him the world’s second richest person.
In January, a Tesla share was worth US$62.27, while today it’s worth US$584.76. Shares also rallied after President-elect Joe Biden’s win, given Biden’s support for renewable energy.
However, in the email to staff, Musk said employees needed to ensure Tesla’s gains weren’t reversed and to remain focused on cutting costs.
"When looking at our actual profitability, it is very low at around 1 per cent for the past year,” Musk said in the email viewed by Bloomberg.
“Investors are giving us a lot of credit for future profitability, but if, at any point, they conclude that's not going to happen, our stock will immediately get crushed like a souffle under a sledgehammer!"
It comes as the US$554 billion company works to produce 500,000 cars in 2020.
"At a time like this, when our stock is reaching new heights, it may seem as though spending carefully is not as important. This is definitely not true!" Musk said.
Musk said the company needed to “get smarter” about how it spends its money to make its vehicles more affordable.
As it stands, Tesla’s cheapest car is the Model 3 which starts at US$37,900, however it plans to sell a US$25,000 car within three years. The Model 3 is America’s best-selling luxury car.
"This is a tough Game of Pennies, requiring thousands of good ideas to improve part cost, a factory process or simplify the design, while increasing quality and capabilities,” Musk said.
“A great idea would be one that saves $US5, but the vast majority are $US0.50 here or $US0.20 there."
Tesla is due to join the S&P 500 index on 21 December as it becomes the most valuable carmaker in the world, even as its rivals produce significantly more vehicles annually.
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