Musk begs Tesla staff to cut costs before company raises cash

Tesla Motors production line for Tesla Model S, Fremont, California

Tesla Motors production line for Tesla Model S, Fremont, California

Enlarge Photo

Tesla Motors CEO Elon Musk is on a mission to show positive cash flow in the third quarter of 2016.

The carmaker has yet to turn a profit, and is currently in the midst of several cash-intensive projects, including development of the 200-mile, $35,000 Model 3 electric car, which depends on the completion of a massive battery “gigafactory” in Nevada.

But Musk is apparently making raising cash a priority, and is pushing employees to help in that effort.

DON’T MISS: How Tesla may charge Model 3 owners for Supercharger access: credit-card accounts

In a recent e-mail, Musk urged employees to cut costs as Tesla embarks on another fundraising round, reports Bloomberg.

“The third quarter will be our last chance to show investors that Tesla can be at least slightly positive cash flow and profitable before the Model 3 reaches full production,” Musk said in the e-mail.

He said that Tesla is “on the razor’s edge of achieving a good Q3,” but that this will require delivering as many cars as possible while “trimming any cost that isn’t critical, at least for the next 4.5 weeks.”

Tesla Model 3 design prototype - reveal event - March 2016

Tesla Model 3 design prototype – reveal event – March 2016

Enlarge Photo

Musk said in the memo that Tesla will be in a better position to win over potential investors if the headline is not ‘Tesla Loses Money Again,’ but rather ‘Tesla Defies All Expectations and Achieves Profitability.'”

It’s hard to argue with that logic, although Musk hasn’t seemed especially concerned about the company’s lack of profitability previously.

ALSO SEE: Reactions to Tesla 100D versions less than ecstatic: here’s why

Tesla missed its first two quarterly sales targets this year, and delivered 29,190 cars in the first six months of the year.

That’s less than half the projected goal of 80,000 to 90,000 deliveries for 2016 it announced at its 2015 earnings call in February.

Tour of Tesla battery gigafactory for invited owners, Reno, Nevada, July 2016

Tour of Tesla battery gigafactory for invited owners, Reno, Nevada, July 2016

Enlarge Photo

Tesla has said it will deliver 50,000 cars in the second half of the year, according to Bloomberg, which would put it within range of meeting that target.

The company spent $611 million in cash in the first half of this year, and went through $2.2 billion last year, Bloomberg says.

MORE: Tesla ‘Master Plan’ update defends Autopilot; electric SUV, pickup, autonomous bus coming

Tesla must raise cash to support 12 to 24 more months of Model 3 development, testing, prototyping, tooling, and preparation for high-volume production right off the bat.

More immediately, it will have to pay for its planned purchase of SolarCity—which has its own financial concerns.

The merger with SolarCity—which Musk also controls—is intended to better integrate the company’s solar operations with Tesla’s energy-storage business.

_______________________________________________

Follow GreenCarReports on Facebook and Twitter

_______________________________________________

Follow GreenCarReports on Facebook and Twitter

Source link