Aaron P. Bernstein/Reuters Elon Musk said Tesla is using too many third-party contractors during the company's first-quarter earnings call.
- Tesla CEO Elon Musk said the company will begin to restructure in May in an effort to increase profitability during the company's first-quarter earnings call.
- While Musk didn't give many details about what the reorganization would look like, he mentioned the company's overreliance on third-party suppliers.
- "The number of third party contracting companies we're using is out of control," he said. "We're going to scrub the barnacles on that front."
Tesla CEO Elon Musk said on Wednesday that the company will begin "restructuring" operations in May in an effort to meet its profitability goals.
While Musk didn't give many details about what the effort would look like, he mentioned the company's overreliance on third-party suppliers.
"The number of third-party contracting companies we're using is out of control," he said. "We're going to scrub the barnacles on that front. We've got barnacles on barnacles. So there's going to be a lot of barnacle removal."
Musk has said the company will become profitable in the second half of the year and won't need to raise money for the rest of the year, despite skepticism from some investors and analysts. Tesla has been known to spend cash quickly and post consistent losses in the 15 years since its founding. The company posted an adjusted loss of $3.35 per share on revenue of $3.41 billion during the first quarter. Analysts had predicted an adjusted loss of $3.42 per share on revenue of $3.32 billion, according to Bloomberg.
Musk criticized the company's third-party suppliers in an April letter to Tesla employees obtained by Jalopnik, in which he expressed frustration with the number of contractors the company had used.
"I have been disappointed to discover how many contractor companies are interwoven throughout Tesla. Often, it is like a Russian nesting doll of contractor, subcontractor, sub-subcontractor, etc. before you finally find someone doing actual work," he wrote.
Musk said contractors would be reevaluated to ensure they meet Tesla's production standards.
"All contracting companies should consider the coming week to be a final opportunity to demonstrate excellence. Any that fail to meet the Tesla standard of excellence will have their contracts ended on [April 23]," he wrote.
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