Elon Musk has warned Tesla employees the company needs to curb its spending. (Reuters: Shannon Stapleton)
Tesla chief executive Elon Musk told employees that he will increase scrutiny of the company’s expenses in his latest initiative to cut costs at the electric carmaker.
- Tesla raised more than $USD2.7 billion in a stock offering earlier this month
- But chief executive Elon Musk warns the company is spending $USD200 million per month
- It is not the first time Tesla has made moves to cut costs, having laid off staff in the last 18 months
Tesla earlier this month closed a $US2.7 billion ($3.93 billion) offering of stock and convertible notes, giving it much needed cash as it ramps up production.
Mr Musk in an email to employees, seen by Reuters, said its net proceeds from the offering gave Tesla only 10 months to achieve break-even at the rate it was burning cash in the first quarter.
“It is important to bear in mind that we lost $US700 million in the first quarter this year, which is over $US200 million per month,” Mr Musk wrote in the email.
“That is why, going forward, all expenses of any kind anywhere in the word, including parts, salary, travel expenses, rent, literally every payment that leaves our bank account must (be) reviewed.”
Mr Musk said he would be reviewing and signing every 10th page of outgoing payments.
“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.”
Tesla’s attempts to cut costs are not new.
In April 2018, in an email sent to employees, Musk said he had instructed his finance team to “comb through every expense worldwide” to find possible cuts.
In June 2018, Tesla laid off 9 per cent of its workforce, and in January this year it laid off a further 7 per cent.
The new initiative comes after a tumultuous year for Tesla that has seen analysts and investors cast doubt on its ability to produce, sell and deliver enough cars to make a sustainable profit.