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Musk says Tesla will be out of money in 10 months without ‘hardcore’ changes

Musk says Tesla will be out of money in 10 months without ‘hardcore’ changes

Elon Musk told Tesla employees the company will run out of cash in about 10 months unless “hardcore” cost-cutting efforts are made, according to an all-staff email obtained by Reuters and Electrek.
The cost-cutting measures are necessary despite the fact that Tesla just raised $2.7 billion earlier this month, Musk said in the email.

Musk and Zach Kirkhorn, who recently replaced outgoing chief financial officer Deepak Ahuja, will review “all expenses of any kind anywhere in the word, including parts, salary, travel expenses, rent, literally every payment that leaves our bank account,” according to the email.

Tesla finished the first quarter of 2019 with $2.2 billion in cash. But the company lost $702 million, and so Musk said in April that Tesla was going to have to be on a “spartan diet.” Tesla then went out and raised that $2.7 billion to help the company stay afloat.

“This is a lot of money, but actually only gives us about 10 months at the Q1 burn rate to achieve breakeven!” Musk wrote Thursday. “This is hardcore, but it is the only way for Tesla to become financially sustainable and succeed in our goal of helping make the world environmentally sustainable.”

It’s not the first time Musk has announced a financial overhaul at Tesla, nor the first time that he’s embraced micromanaging — or “nano” managing, as he put it to The Wall Street Journal in 2015.

Just over a year ago, Musk sent an email telling Tesla employees that he was having the finance team “comb through every expense worldwide, no matter how small, and cut everything that doesn’t have a strong value justification.” He said at the time that he was “disappointed to discover” how many contractor companies Tesla was using as it ramped up production of the Model 3, likening the structure to a Russian nesting doll.

Shortly after that, Musk flattened Tesla’s organizational structure and vowed to remove the “barnacles” of contractors as part of a “company-wide restructuring.” The company then laid off 9 percent of its workforce in June. Musk said in an email that Tesla was “making this hard decision now so that we never have to do this again.”

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