Tesla CEO Elon Musk told employees in a companywide email Thursday that $2 billion in new funds raised this month were only enough to get through 10 months if Tesla keeps spending as it did in the first quarter of 2019. He requested that everyone at the company take "hardcore" measures to pull back on spending.
Musk wrote in the email to employees, which was obtained by CNBC, that he would take extreme action to control spending. He also urged employees to do the same. He said Tesla's CFO will review and sign every expense going forward. Musk said he will personally sign off on every 10th page of expenses.
"It is important to bear in mind that we lost $700 million in the first quarter this year, which is over $200 million per month," Musk wrote in the email. "Investors nonetheless were supportive of our efforts and agreed to give us $2.4 billion (our net proceeds) to show that we can be financially sustainable."
Tesla shares dipped Friday by more than 5% after safety regulators determined that its Autopilot (driver-assist system) was engaged at the time of a fatal Model 3 crash in Florida in March 2019.
That deadly crash was at least the third where federal investigators concluded Autopilot was engaged before impact. Their findings raised questions about the safety and integrity of its cars and semi-autonomous systems.
In recent weeks, Musk touted the company's future as a self-driving technology business that would be operating robotaxis, commercially, taking on not just other electric car makers, but money-losing ride-hailing platforms like Uber and Lyft.
Autonomous vehicle tech should grow the company into a $500 billion market-cap business, Musk said on a recent investor call. Those promises helped Tesla raise more than $2 billion to support its next stage of growth.
A Tesla spokesperson was not immediately available to comment.
Here's the full email Musk sent to Tesla employees:
From: Elon Musk
Date: May 16, 2019
As mentioned at the company talk, it is extremely important that we examine every expenditure at Tesla no matter how small, and be sure that it is critical.
When making hundreds of thousands of cars, battery packs and solar systems, even a ten cent savings could be worth over $50,000 a year. There are over 10,000 unique parts and processes at Tesla, so making small improvements across the board has a giant cumulative impact.
At the same time, we must also continue to make our products subtly better in thousands of small ways.
It is important to bear in mind that we lost $700 million in the first quarter this year, which is over $200 million per month. Investors nonetheless were supportive of our efforts and agreed to give us $2.4 billion (our net proceeds) to show that we can be financially sustainable.
That is a lot of money, but actually only gives us approximately ten months at the first-quarter burn rate to achieve breakeven. It's vital that we respect the faith investors have shown in Tesla, but it will require great effort to do so.
That is why, going forward, all expenses of any kind anywhere in the world, including parts, salary, travel expenses, rent, literally every payment that leaves our bank account must be reviewed, confirmed as critical and the top of every page of outgoing payments signed by our CFO.
I will personally review and sign every 10th page.
Please examine closely every expense where responsibility is, or probably should be, assigned to your group. If in doubt, assume it is on your plate, so that we don't have anything slip through the cracks.
This will take at least a few weeks to get right. Please don't worry if it isn't correct at first.
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.
Thanks again for your excellent work,