TESLA

Elon Musk says company will go through turbulent time In an e-mail sent to employees and obtained by Reuters and Electrek, Tesla CEO Elon Musk says the company will run out of money in about 10 months, unless cutting hardcore costs (or prefer) are made. According to the executive, the reduction measures are necessary, even with the company having raised US $ 2.7 billion at the beginning of May.
Musk and the CFO of Tesla will review "all expenses of any kind, anywhere in the word, including wages, travel expenses, rent and, literally, any payment that leaves our bank account," according to the same -mail.
Tesla ended the first quarter of 2019 with $ 2.2 billion in cash. But the company lost $ 702 million in miscellaneous expenses, so Musk said in April that the automaker would have to have a "Spartan diet" in relation to its expenses. With that, she had to raise $ 2.7 billion to keep her head out of the water.
"That's a lot of money, but it actually only gives us about 10 months to reach breakeven," Musk wrote on Thursday. "This is hardcore, but it's the only way for Tesla to become financially sustainable and succeed in our goal of helping make the world environmentally sustainable."
It is not the first time Musk has announced a financial reform at Tesla, nor the first time he embraces micro-management - or the "nano" - as he told The Wall Street Journal in 2015.
Just over a year ago, Musk sent an e-mail informing Tesla employees that he was making the finance department "contain all the expenses around the world, no matter how small it was, and cut everything that did not have one justification of strong value ". He said he was "disappointed to find out" how many companies Tesla had been using to increase Model 3 production by comparing the structure to a Russian doll.
Shortly thereafter, Musk put down Tesla's organizational structure and promised to remove the "barnacles" from contractors as part of a "company-wide restructuring." The company fired 9 percent of its workforce in June last year. Musk said in an e-mail that Tesla was "making this difficult decision now so we will never have to do it again".
All of these changes were happening as a backdrop to the "production hell," as Tesla tried to increase Model 3 production to thousands per week in order to serve a portfolio of more than 400,000 advance orders. With the help of a giant tent in the parking lot of its factory in Fremont, California, Tesla finally improved its production rate enough to make the Model 3 the best-selling electric car of 2018 and win the company's first profitable period.
But these cost-cutting measures were not enough to keep Tesla profitable; the first quarter of 2018 was another loss. The company fired another round of workers - this time 7% - in January.
Tesla also announced in February that it was shutting down most of its stores and laying off some sales teams to save money. This was so the company could finally sell the $ 35,000 version of the long-promised model 3. The problem is that, originally, the automaker planned to arrive at the cheapest model through the efficiency of its manufacturing project. Musk said in May 2018 that he had delayed launching the $ 35,000 model so the company would not die, and in November 2018 he admitted that "Tesla was weeks away from bankruptcy."
The company changed its plans only two weeks later: Tesla announced that many of its stores, in fact, would remain open. Tesla also raised its car prices to compensate. These changes had their own impact internally as well - in Tesla's most recent quarterly shareholder letter, the document states that of the total loss of $ 702 million, $ 121 million came from changes in the prices of the S and X models only.In announcing these first consecutive profits last January, Musk and Ahuja wrote that 2018 was the "most crucial year" in Tesla's history thanks to Model 3. The company more than doubled its total production compared to 2017 and pulled in more revenue $ 21.4 billion - than ever before.
But while Musk predicted that Model 3 would help the company to become profitable from the third quarter of 2018, the severe loss of the first quarter in 2019 apparently triggered a restructuring. In February, prior to the announcement of the first quarter results of 2019, Musk told reporters on a call that he did not expect Tesla to make a profit in the second quarter.
Now in his latest company-wide email, Musk admits that radical measures are only needed to keep the company's cash problem in check. Tesla has burnt huge stacks of cash and even a record year of revenue and deliveries has not yet been enough to put out the fire. 2018 may have been a crucial year for the company's manufacturing efforts. But Tesla still faces an existential crisis when it comes to money, and Musk's solution seems to be the same micro-management, looking under the microscope for all the expenses
"If you're fighting a battle, it's much better if you're on the front lines. A general behind the lines will lose, "he told The Wall Street Journal in 2015. Source: The Verge / via Reuters