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Elon Musk Is Restructuring Management at Tesla

Kirsten Korosec

Tesla CEO Elon Musk is “flattening the management structure” as part of a reorganization aimed at streamlining the electric automaker’s operations as it continues to burn through capital and tries to ramp up production of its mass-market Model 3 car, according to a memo sent to employees Monday.

In the memo reviewed by Fortune, Musk writes that the move is meant to improve communication and efficiency of its operations. The memo is below:

To ensure that Tesla is well prepared for the future, we have been undertaking a thorough reorganization of our company. As part of the reorg, we are flattening the management structure to improve communication, combining functions where sensible and trimming activities that are not vital to the success of our mission.

To be clear, we will continue to hire rapidly in critical hourly and salaried positions to support the Model 3 production ramp and future product development.

Musk talked about a reorganization during the company’s first quarter earnings call that took a bizarre turn after the CEO stopped taking questions from analysts and instead turned to a YouTube blogger who was on the call to represent retail investors. Musk said that a reorganization would help the company achieve profitability.

But at the time, it appeared Musk was directing his reorganizational efforts on contractors.

“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,” Musk said on the call. “It’s pretty crazy. We’ve got barnacles on barnacles. So there’s going to be a lot of barnacle removal.”

The memo follows the departure of Tesla executives, including senior vice president of engineering Doug Field, who is taking a break from but is not leaving the company, and Matthew Schwall, who left as director of field performance engineering and joined self-driving car company Waymo.