The soaring stock pricing matters like no other.
Tesla is riding high after recent market valuations placed the company's value at around $584 billion. For reference, the second-most valuable automaker, Toyota, is valued at $190 billion. Obviously, Tesla wants to keep things that way, but it won't be easy and Elon Musk knows this. In an internal email, attained by Bloomberg, that was sent by Tesla CEO Elon Musk to employees earlier this week, he warns them that the company's shares could get "crushed" if investors begin having concerns the automaker won't meet profit expectations. He urged employees to remain focused on reducing costs with the goal of preventing a reversal of Tesla's stock value.
"When looking at our actual profitability, it is very low at around 1% for the past year. 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!" Musk wrote.
Tesla, not surprisingly, had no comment because it has no PR department, but it makes sense for Musk to be so focused on profit-making. The automaker's stock increased by nearly 600 percent this year (yes, six hundred), thanks, in part, to its intent on joining the S&P 500 Index on December 21. The fact it also posted its fifth consecutive quarterly profit in October also played a role.
Musk and his financial team are now focused on cutting costs anywhere it can despite it spending billions on new factories, including the Austin, Texas Gigafactory that'll be home to the Tesla Cybertruck and a facility near Berlin, Germany that'll build the Model 3.
"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 added. Another concern Musk rightly has is vehicle affordability. Currently, the cheapest Model 3 begins at nearly $38,000 but he recently promised a new $25k vehicle by 2023.
"Much more important, in order to make our cars affordable, we have to get smarter about how we spend money," wrote Musk. "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. A great idea would be one that saves $5, but the vast majority are $0.50 here or $0.20 there."
Every little bit of savings matters even for the world's second-richest man.