Ilon Musk: if you do not drastically cut costs, Tesla’s money will run out in 10 months

The head of Tesla, Ilon Musk, recently sent an e-mail to employees saying that if the company’s expenses were not cut, then after 10 months from Tesla Inc. run out of money. Thus, the manufacturer of electric vehicles will have to take action despite the fact that a few weeks ago the company received about $ 2.7 billion.

Musk and CFO of the company Zach Kirhorn will analyze the current costs of any type at all points of the company's presence. Will evaluate the costs of travel, rent, staff salaries and other budget items.

The company finished the first quarter of 2019, the name of $ 2.2 billion in accounts. But Tesla suffered losses of $ 702, so Musk is going to put the company on a "Spartan" diet, in his own words. After this statement, the company managed to get $ 2.7 billion of investment, which shows investor confidence. But the savings are still needed, otherwise in 10 months the company will become bankrupt.

“This is a lot of money, but only extreme measures will help the company stay afloat in 10 months,” wrote Musk. He said that only drastic changes in the cost articles will enable the manufacturer of electric vehicles to continue to produce their products.

In principle, this is not the first time when Musk applies strict measures to save money. So, just a year ago, Musk sent out an e-mail to employees in which he stated that costly articles, even small ones, would be revised. The company was going to cut everything that was not critical. He reported that he was "disappointed" by the number of Tesla contractors, intermediate links in the production and sales chain of electric vehicles. He even compared the company with a matryoshka.

Musk simplified the organizational structure of the company and did much to restructure the production and sales process. Last June, Tesla cut about 9% of staff. Then the head of the company said that the decision on mass layoffs is difficult, but it is the only one of all possible.

All changes are needed in order to continuously increase the volume of production of electric vehicles, including Model 3. This is necessary in order to deliver 400,000 electric vehicles to customers. To increase production, Tesla even launched an additional production line, turning parking into one of the assembly shops. Little by little the company goes to the planned level of production, but financial problems remain.

But all this was not enough to significantly reduce costs and bring the company to profit. Therefore, Tesla has reduced another 7% of employees, this time – in January of this year.

The company also announced in February the closure of most of its outlets with reduced staff – this is also done to save money. Only after that Tesla will be able to start selling the Model 3 at the price promised earlier – $ 35,000 for the base model.

Then the company said that many outlets will continue to work, but the cost of electric cars will rise. But it affected the demand – as it turned out, the company suffered losses of $ 121 million due to the price change. However, last year was nevertheless successful for Tesla – it managed to double the production of electric vehicles and earn an income of $ 21.4 billion – more than ever.

Tesla even in one of the quarters made a profit. But then losses went again – quite predictable and predicted by analysts, but still losses. Mask has already said that in the second quarter of this year, he does not expect to reach profit.

Measures to be taken in the near future will reduce the company's financial problems, but will not solve it. The company continues to burn cash, continuing to increase production volumes. But so far, Tesla has succeeded in everything, so one can hope that everything will be fine in the future.