CEO Elon Musk has told employees about Tesla’s financial situation and announced a new “hardcore” cost-saving initiative. Simultaneously, Tesla is losing another high-ranking manager as head of communications Dave Arnold leaves the company.
Tesla’s recently published annual report for the first quarter documents the decline in cash and cash equivalents as well as a high loss between January and March. After two quarterly profits, the bottom line in Q1 was again at a minus of 700 million dollars. Moreover, with sales of 4.5 billion dollars, the company was unable to match the record figures of the previous quarters (6.8 and 7.2 billion dollars).
Musk commented on the liquidity cushion, which has recently shrunk to $2.2 billion due to the repayment of a bond: “This is a lot of money, but actually only gives us about 10 months at the Q1 burn rate to achieve breakeven,” he says in the e-mail. That’s why he is banking on the workforce by a neural cost-cutting initiative. He and the new CFO Zach Kirkhorn would put all future expenses to the test in order to reduce costs. “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,” adds Musk.
This is not the first time that Musk has called for an enterprise-wide effort to reduce costs. Last year, after Tesla first achieved a Model 3 production rate of 1,000 units per day, Musk focused on costs and encouraged everyone to contribute to cost reduction. In addition, Tesla had eliminated several jobs earlier this year, most notably in the production of the Model S and Model X. Specifically, the Californians announced that around seven per cent of full-time jobs would have to be cut to further reduce costs.
The most recent measure to stabilize the company’s finances was a massive $2.7 billion capital increase, which Tesla completed earlier this month. Musk also expects a loss in the second quarter, but at least wants to increase deliveries from 63,000 vehicles (Q1) to 90,000 to 100,000 cars. For the year as a whole, the Californians are sticking to their optimistic forecast of 360,000 to 400,000 deliveries – and are expecting corresponding profits again in the third and fourth quarters.
Parallel to this, it was further announced, that Dave Arnold, head of communications, is the next manager to leave the company behind. Arnold only spent two and a half years with Tesla and will leave the company in June. He will be followed by Keely Sulprizio.