On May 13, in Tesla Can't Spare a Dime, the Wall Street Journal commented "Elon Musk’s electric-vehicle pioneer is running out of cash and out of time, even after a recent capital increase."
The full extent of that article became readily apparent on Friday in an Email that Elon Musk sent to all employees. MSN posted the Full Email to Employees.
- 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.
- 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.
Tesla is so desperate for cash that every part, salary, travel expense, "literally every payment", no matter how trivial, needs to be signed off by the CFO, with Musk reviewing every tenth Item.
How much time will CFO and Musk spend approving parts, salaries, pencils, and even toilet paper? Shouldn't salaries be set?
Taken literally, but that was Musk's word, no toilet paper will be approved unless it's critical. Presumably, Musk will sign off on every tenth roll.
By phrasing the memo the way he did, Musk shows how desperate Tesla is for cash despite a $2.4 billion cash infusion.
What about the prior lies? Didn't Musk pledge to make money every quarter going forward?
Instead of a profit, Musk is reviewing and approving office supplies including pencils, pens, and toilet paper, literally.
Unless its stamped "critical" there won't be any. That is how the memo actually reads.
Mike "Mish" Shedlock