After a rocky start to 2019, Tesla will examine every penny heading out the door to ensure its long-term survival.
In a leaked email to all Tesla staff obtained by Electrek and Reuters, Musk said the company would embark on a “hardcore” cost cutting drive to ensure it is "financially sustainable and [able to] succeed in our goal of helping make the world environmentally sustainable".
Every expense "no matter how small" is up for review, and this extends to salaries, parts, travel and rent.
Zach Kirkhorn, Tesla's recently appointed chief financial officer, will review and sign off on every page of outgoing payments, while Musk will do so for every tenth page.
Although Tesla successfully raised US$2.7 billion ($3.9 billion) in May, and had US$2.2 billion ($3.2 billion) in cash at the end of the last quarter, Musk said this “only gives us about 10 months at the Q1 burn rate to achieve breakeven”.
Tesla lost US$700 million ($1 billion) during the first quarter of 2019, a massive turnaround from the two quarters of profitability it achieved after working through “production hell” to hit the desired production rate of 5000 Model 3 sedans per week.
Thanks to pent up demand and a massive order book, the company sold 140,317 Model 3 sedans in the US last year, well ahead of the Mercedes-Benz C-Class (54,829) and just behind the Chevrolet Cruze (142,618), despite only hitting full production speed half way through the year.
The company's bumpy first quarter of 2019 included the unveiling of the Model Y crossover, and introducing and then the virtually withdrawing the US$35,000 entry-level Model 3.
It also planned to cut 7% of its workforce, close most of its stores, move to an online sales model, before deciding not to close many of those stores, and scaling back its headcount goals.