ON THE LINE

Elon Musk sent an email warning of employee sabotage at Tesla

Tesla’s CEO Elon Musk warned employees about sabotage after two incidents this week put the company on guard. In company-wide emails, Musk said an employee had admitted to conducting corporate sabotage, and a potentially suspicious fire had broken out in its factory’s body-shop on Monday (June 18).

Musk’s first email, sent Sunday (June 17), stated an employee had conducted “quite extensive and damaging sabotage to our operation.” The message, first reported by CNBC, noted the person used false credentials to manipulate Tesla’s manufacturing software, as well as exporting “large amounts” of highly sensitive Tesla data to unknown third parties. Tesla claims the employee admitted to the acts after failing to get a desired a promotion.

But Musk added “there may be considerably more to this situation than meets the eye.” While noting most cases of corporate espionage are committed by individuals for personal reasons, he listed potential perpetrators who were motivated to see Tesla fail including Wall Street short sellers, oil and gas companies, and competing car companies (“If they’re willing to cheat so much about emissions, maybe they’re willing to cheat in other ways?”).

That preceded a second note on Monday morning (Jun. 18) in which Musk said a “small fire” broke out in the welding area of its Fremont, California, factory. The production line was halted for several hours, although a Tesla spokesperson told CNBC that smoldering was extinguished in a matter of seconds with no injuries or significant damage reported. “Could just be a random event, but as Andy Grove said, ‘Only the paranoid survive.'” Musk wrote. “Please be on the alert for anything that’s not in the best interests of our company.”

The leaked emails come as Musk has been aggressively criticizing the media on Twitter, as well as investors who have been betting against Tesla.

The alleged incidents also come at a critical time for Tesla, which has promised to produce 5,000 of its Model 3 vehicles per week starting this month. It recently began operating a third assembly line to meet the deadline. At the same time, it’s cutting back on its workforce. Tesla announced on June 12 it was cutting 9% of its 46,000-strong workforce after a restructuring to streamline the company. It claimed that none of the layoffs would affect its Model 3 assembly workers. On June 18, however, Bloomberg reported that the company was laying off 420 employees in Fremont and 86 workers at its Palo Alto headquarters including factory technicians, according to state filings. It has already removed more than a thousand open positions from its public job listings.

The news has not rattled Wall Street. The company’s shares are up about 20% since Tesla’s annual shareholder meeting on June 5 appeared to reassure investors that Model 3 production was back on track.

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