Elon Musk announces reorg as Tesla engineering chief goes on leave

‘We are flattening the management structure’

Tesla is facing a sudden loss of key leadership at a critical moment when new vehicles, like the Model 3 sedan and upcoming Model Y SUV, are desperately needed to help boost the electric automaker's bottom line. According to a report in Automotive News, Doug Field, Tesla's chief engineer, is taking a six-week break from the company to "recharge" and spend time with his family. This after CEO Elon Musk stepped in and took charge of Model 3 production from Field. Furthermore, in a memo to employees on Monday, Musk announced a reorganization of Tesla management.

Musk's full memo:

"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."

While Field has technically not left Tesla — a point reinforced in this Bloomberg news update — the timing of the sabbatical comes at one of the worst possible moments for the fledgling company.

Plans to increase production to 5,000 Model 3 cars per week have now been pushed back to the middle of the summer. Although in one positive sign that Tesla is getting a handle on production, Musk said that production of dual-motor, all-wheel-drive versions of the Model 3 will begin in July. Meanwhile, the Model Y, an upcoming SUV based on the Model 3 platform, is also expected to arrive sometime next year, though details about that vehicle remain scarce.

While the temporary departure of an executive doesn't officially push the panic button for Tesla fans, or the company's investors, it continues a growing trend of uncertainty surrounding the automaker. This was compounded by a bizarre moment earlier this month, when Elon Musk refused to take additional questions from analysts. He called the questions "boring" and reinforced his belief that the company would not need to raise further cash, despite continued production delays and a high rate of cash burn. Predictably, Wall Street wasn't impressed and Tesla's stock slid quickly downward.

Somewhat lost in the reporting of that earnings call was the fact Musk said some sort of reorganization was coming:

"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."

"And in particular, 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."

Meanwhile, Matthew Schwall, Tesla's main point of contact for safety organizations like the National Highway Traffic Safety Administration, has left Tesla to join Waymo, the self-driving division of Google. This comes just as Tesla faces increasing scrutiny from federal safety regulators about whether AutoPilot, the company's driving aid, has been to blame for several recent accidents, including a fatal incident involving the driver of a Model X.

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