Elon Musk, chairman and chief executive officer of Tesla Motors, SpaceX and Boring Co. (Photographer: David Paul Morris/Bloomberg)

Tesla Probing `Extensive' Sabotage by Rogue Employee, Musk Says

(Bloomberg) -- A disgruntled Tesla Inc. employee broke into the company’s manufacturing operating system and sent highly sensitive data to unknown third parties, according to an email Elon Musk sent to staff.

The worker, who had been denied a promotion, did “quite extensive and damaging sabotage” to Tesla’s operations, Musk wrote in the memo late Sunday, which was reported in full by CNBC. While a spokesman declined to comment, an employee who asked not to be identified confirmed he received the email.

Tesla is conducting an in-depth investigation into the matter, including whether the worker was acting alone, with others at the company, or with any outside organizations, Musk wrote. The electric-car maker’s shares fell as much as 2.3 percent in early trading Tuesday.

“As you know, there are a long list of organizations that want Tesla to die,” Musk said. He referenced Wall Street short sellers “who have already lost billions of dollars,” oil and gas companies that “don’t love” to see solar power and electric cars advancing, and automakers that produce gasoline and diesel vehicles. “If they’re willing to cheat so much about emissions, maybe they’re willing to cheat in other ways?” he said.

Musk’s email comes as Tesla races to ramp up production of its critical Model 3 sedan to 5,000 cars a week. Last week, Musk announced that he was reorganizing the company and shrinking Tesla’s workforce by 9 percent in a bid for profitability. More than 3,000 workers lost their jobs, and notices filed with the state of California revealed that over 500 employees in Fremont and Palo Alto were dismissed.

Fremont police didn’t receive or respond to any calls for service at the Tesla plant over the weekend, according to a spokeswoman.

‘Strange Incident’

In a Monday email, Musk invoked a late tech titan in urging workers to keep an eye out for any funny business after a fire briefly halted car output. In a “strange incident that was hard to explain,” Musk wrote that a small fire on a manufacturing line had stopped production for several hours.

“Could just be a random event, but as Andy Grove said, ‘Only the paranoid survive,’” Musk wrote Monday, referring to the late chairman and CEO of Intel Corp. “Please be on the alert for anything that’s not in the best interests of our company.”

Tesla can ill afford manufacturing setbacks now. It’s racing to meet a target to build 5,000 Model 3s a week by the end of this month, a goal Musk told shareholders on June 5 that the company was “quite likely” to achieve. The company’s forecasts for generating profit and cash in the third and fourth quarters of this year are based on this objective, and falling short would reignite concerns about whether the company may need to raise more capital.

Read more: How Musk has raised, and then spent, billions of dollars

A Tesla spokeswoman confirmed the authenticity of the Monday email, which CNBC reported first. Smoldering in an air filter in the welding area of Tesla’s body line was extinguished in a matter of seconds, she said. Production has resumed and there were no injuries or significant equipment damage, she added.

Tesla stock has climbed for seven consecutive days and more than $19 billion has been added to the automaker’s market capitalization in the past month, in part due to the confidence Musk has expressed in achieving the Model 3 production target. In a tweet Sunday, Musk warned that those betting against the company “have about three weeks before their short position explodes.”

Tesla is no stranger to concerns of sabotage. The company sued a former oil-services executive in 2016 for impersonating Musk in an email to former Tesla CFO Jason Wheeler. In the lawsuit, Tesla said the email was part of an oil-industry effort to undermine the company’s push for energy-efficient transportation.

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