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Tesla chief Elon Musk warns he will run out of money for 10 months unless he cuts costs



Updated

May 18, 2019 14:06:24

Tesla CEO Elon Musk told employees he will increase the company's cost control in his latest initiative to reduce the cost of electric car makers.

Key points:

  • Earlier this month, Tesla raised more than $ 2.7 billion in stock offerings
  • But CEO Elon Musk warns the company is spending $ 200 million a month
  • This is not the first time Tesla has taken steps to cut costs by cutting staff down the last 18 months

Tesla Earlier this month closed $ 2.7 billion ($ 3.93 billion) offering shares and convertible banknotes, which gives him a great deal of money, while increasing production.

Mr. Musk in an employee email, seen by Reuters, said the net income from supply had given Tesla only 10 months to break even at the rate he burned in the first quarter.

"It is important to bear in mind that we lost $ 700 million in the first quarter of this year, which is over $ 200 million a month," Mr. Musk wrote in the letter.

"Therefore, going forward, all costs of any kind in the word, including parts, salary, travel costs, rent, literally any payment leaving our bank account, must (must) be reviewed."

Mr. Musk said he will review and sign each 10th page of outgoing payments.

"It's hardcore, but it's the only way Tesla can become financially sustainable and succeed in our goal of helping make the world environmentally sustainable."

Tesla's attempts to reduce costs are not new.

In April 2018, in an email sent to his employees, Musk said he had instructed his financial team to "search every expense in the world" to find possible cutbacks.

In June 2018, Tesla dismissed 9% of its workforce, and in January this year it cut another 7%.

The new initiative comes after a tumultuous year for Tesla, which has seen analysts and investors question its ability to produce, sell and deliver enough cars to achieve sustainable profits.

Reuters / ABC

Topics:

business-economy-in-finance,

automotive,

industry,

United States

First published

May 18, 2019, 13:51:41


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