GOOG Alphabet Inc

By Tim Higgins 

Tesla Inc. will undergo a restructuring to flatten its management structure, Chief Executive Elon Musk told employees Monday.

Mr. Musk made the announcement following news that his engineering chief, Doug Field, was taking a leave of absence, and that senior executive Matthew Schwall was departing the company for Alphabet Inc.'s driverless car division Waymo.

"To ensure that Tesla is well prepared for the future, we have been undertaking a thorough reorganization of our company," Mr. Musk said in the memo reviewed by The Wall Street Journal. "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."

He added that the company will continue to hire workers. In early May, Mr. Musk alluded to a reorganization when he discussed cutting down on the number of contract workers.

Mr. Musk didn't mention any names in the memo or provide more details about any changing positions.

The management moves come at a critical juncture for Tesla as it tries to produce enough of its mass-market Model 3 sedans to generate cash to fund the business and instill confidence in investors that the company can move beyond being a niche-product maker.

The company is under pressure to meet a twice-delayed goal of building 5,000 Model 3 cars a week by around the end of June. Analysts say Tesla can start generating cash once it meets that milestone.

Excitement about Tesla's ability to bring electric vehicles to the masses and then to develop autonomous vehicle technology helped push the company's stock to record levels last year and give it a market value that rivals that of General Motors Co.

Tesla's stock is down more than 5% so far this year. The shares were recently trading up about 0.6% at $302.83 in morning trading.

Mr. Field, a key leader at the auto maker since joining in 2013 from Apple Inc., oversees the engineering of Tesla's vehicles, and last year he was also given oversight of production to better align those efforts. That changed this spring, when Mr. Musk said he retook control of production.

Mr. Schwall was the company's main technical contact with U.S. safety investigators as the Silicon Valley auto maker races to develop driverless-car technology. His departure comes as the National Transportation Safety Board has been investigating multiple crashes.

Write to Tim Higgins at Tim.Higgins@WSJ.com

(END) Dow Jones Newswires

May 14, 2018 11:31 ET (15:31 GMT)

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