Big investment not enough for long term at Tesla, Musk says: report

2017 Tesla Model 3, in photo tweeted by Elon Musk on July 9, 2017

Tesla may have only enough money to survive another 10 months, CEO Elon Musk told employees in an email on Thursday.

The email was first reported by Reuters, which was shown a copy.

In response, Musk told employees he will review “all expenses of any kind anywhere in the world, including parts, salary, travel expenses, rent, literally every payment that leaves our bank account” going forward.

READ MORE: Tesla turned a profit at the end of 2018; Model Y coming by end of 2020

The reviews could further increase pressure on the company’s famously overworked employees. Tesla went through two rounds of layoffs last year, a 9 percent cut last June, and another 7 percent in January. Despite that, it raised more money than anticipated on the stock market earlier this month and sold another $2 billion in emissions credits to Fiat Chrysler Automobiles last month.

Musk’s 10-month projection is based on the company’s financially disastrous first quarter, when it reported a loss of $702 million with a little less than $2.2 billion in cash, even while producing almost 63,000 Model 3s (4,844 cars per week.) The company blamed delays in delivering its top-selling Model 3 to Europe and China for the problems. All Model 3 production in January and February was dedicated to overseas markets.

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The slow deliveries in the first quarter, however, followed Tesla’s first two consecutive profitable quarters as it ramped up Model 3 production through the fall. It made $312 million in the third quarter, and another $414 million in the fourth.

In a move reminiscent of one last year, while the company was trying to ramp up production of the Model 3, Musk said he instructed his finance team to comb through every expense worldwide. Last April, Musk famously fired all of Tesla’s contractors, calling them “barnacles” that had grown on the company, and demanded that their internal Tesla contacts justify renewing their contracts.

CHECK OUT: More cars, fewer workers in Tesla’s latest layoffs

After reports showing that almost 15 percent of battery production from Tesla’s jointly-owned Gigafactory in Nevada is wasted, Tesla also said that battery supplies there have been a constraint on Model 3 production. Tesla said it would continue investing in improving efficiencies at the Gigafactory.

Tesla hadn’t yet responded to a request for comment regarding whether this affects the timing of future products. The Model Y SUV, the second-generation Roadster, and the Semi are due out by the end of next year, and the Tesla pickup is due sometime after that.

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