Blog Report: Musk Orders Company to Cut Costs

Tesla Chief Executive Officer Elon Musk told employees on Thursday that the company will run out of cash in 10 months if it can’t cut costs.

In a letter seen by Reuters, Musk explained that every expense will receive review in an effort to hit breakeven.

Tesla closed earlier this month a $2.7 billion offering of stock and convertible notes. That came a week after the carmaker said it lost $700 million in the first quarter, and is now down to about $2 billion in cash.

This isn’t the first time the company has sent out a red alert about expenses. An April 2018 memo also mentioned cost-cutting measures including a more thorough review of expenditures. Musk said the plan was to “cut everything that doesn’t have a strong value justification,” and any expenditure above $1 million for the next year was to be personally approved by him.

He echoed that financial diligence in the note reported by Reuters.

“That is why, going forward, all expenses of any kind anywhere in the word, including parts, salary, travel expenses, rent, literally every payment that leaves our bank account must (be) reviewed,” Musk said in the letter.

Unfortunately, cost-cutting has impacted the Tesla team in the past year. Tesla laid off 9 percent of its workforce in June 2018, then 7 percent of its team in January.

 

[MichaelP90DL]

Let me ask you:

- What’s the basis of a company and what is more important Product or Marketing?

IMO, the most important for a business is not marketing, advertising...It’s the product

In today’s society in which the customer has the power in his pocket
(the money and a mobile phone to connect with any other customer),
a company need to focus more on the product than on the marketing.

Marketing is not a long-term solution for poor product development. Marketing/advertising will not keep a company afloat if the product keeps torpedoing the company.

Marketing/advertising is a very effective way to present the product's benefits and features to the buying public. And when Wall Street analysts and over-critical journalists shoot broadsides at the company (for whatever, possibly malicious reasons the buying public may be unaware of), it's a great way to offset the negative messages and minimize damage.

Fortunately, Tesla builds an amazing and highly original product. All I'm saying is don't hurt your own cause.

 

[Ostrichsak]

Let me ask you:

- What’s the basis of a company and what is more important Product or Marketing?

IMO, the most important for a business is not marketing, advertising...It’s the product

In today’s society in which the customer has the power in his pocket
(the money and a mobile phone to connect with any other customer),
a company need to focus more on the product than on the marketing.

Nobody said they can't do both. You can have the most amazing product ever but if nobody knows about it or knows why it's better... it doesn't matter. That summarizes Tesla in it's current iteration.

People like us will actively seek out new innovations and news from Tesla but for the other 99% of the population they see the MSM headlines and assume Tesla is a fly-by-night joke that is scamming people out of their hard-earned money.

If Tesla wants to continue being a disruptor they owe it to humanity to try to harder to convey this message to the average consumer rather than expecting less than 1% of consumers to do the job for them. Hanging their hat on "we make the best car so it will sell itself" just doesn't fly in modern day business. Hell, that sort of approach barely worked when Henry Ford rolled the first Model T off of the line which is the last time we saw innovation on this level.

The bottom line is they need someone to better present these amazing innovations to the public in a more palatable manner. This just throwing them out in passing on a social media platform that is ONLY followed by those who are already seeking the info is stupid. No other way to put it. It lends zero legitimacy to these advancements in the eyes of the MSM and the other 99%.

Instead, all Tesla is getting is negative publicity with no plans to defend or discredit and it's becoming perception with years of backing which is going to eventually be impossible to shrug off.

Soon we're going to see Tesla sales dip in relation to production and they're going to wish they tried harder to position themselves better in the eyes of the 99% via marketing but that many years of FUD is going to be nearly impossibly to unwind.

Tesla owes it to future humanity to make their marketing and PR even 10% as good as their engineering.

Nobody says you can't do both.

 

[Watts_Up]

Nobody said they can't do both.
You can have the most amazing product ever but if nobody knows about it or knows why it's better... it doesn't matter.
That summarizes Tesla in it's current iteration.

People like us will actively seek out new innovations and news from Tesla but for the other 99% of the population they see the MSM headlines and assume Tesla is a fly-by-night joke that is scamming people out of their hard-earned money.

If Tesla wants to continue being a disruptor they owe it to humanity to try to harder to convey this message to the average consumer rather than expecting less than 1% of consumers to do the job for them. Hanging their hat on "we make the best car so it will sell itself" just doesn't fly in modern day business. Hell, that sort of approach barely worked when Henry Ford rolled the first Model T off of the line which is the last time we saw innovation on this level.

The bottom line is they need someone to better present these amazing innovations to the public in a more palatable manner. This just throwing them out in passing on a social media platform that is ONLY followed by those who are already seeking the info is stupid. No other way to put it. It lends zero legitimacy to these advancements in the eyes of the MSM and the other 99%.

Instead, all Tesla is getting is negative publicity with no plans to defend or discredit and it's becoming perception with years of backing which is going to eventually be impossible to shrug off.

Soon we're going to see Tesla sales dip in relation to production and they're going to wish they tried harder to position themselves better in the eyes of the 99% via marketing but that many years of FUD is going to be nearly impossibly to unwind.

Tesla owes it to future humanity to make their marketing and PR even 10% as good as their engineering.

Nobody says you can't do both.

My point was that a product prevail any marketing effort.

I don't really worry about Tesla future because of its products and the technological advance they have over any competitors.
But to do so they have to make big internal investments in new projects (Full Self Diving, Batteries, Supercharger network, Semi Trucks...)

I can see currently that other well established car makers are in trouble like Jaguar Land Rover,
Even the new I-Pace seems to get issues: My 1st & My LAST Jaguar


The only worry is that Tesla don't have a smaller model for targeting Europe or Asia
There is a need for a model 2 smaller in size than the Model 3, and with a hatchback like the Hyundai Kona.

Note; I think that it would be difficult to keep the look of the Model 3 to make a shorter version.
May be something like the Volvo XC40 would be cool looking to attract a new generation of customers.

 

[Ostrichsak]

My point was that a product prevail any marketing effort.

Basic economics disagrees.

You can have the best product in the world and if nobody knows about it your company will fail. Conversely, you can have a mediocre product and if your marketing is strong you will convince the average consumer to buy it.

Tesla currently resides in the former category and all the wishing and hoping in the world aren't going to drive sales. Tesla has almost all but extinguished the finances of the fanboi segment so unless they start converting consumers they're going to be disappointed by how many cars they don't sell.

To my previous point, they've got a great product and now they just need to tell people about it. This small potatoes word-of-mouth isn't going to cut it in the face of all the FUD out there and the smear campaign the MSM seems hell-bent on launching.

 

[MichaelP90DL]

Nobody said they can't do both. You can have the most amazing product ever but if nobody knows about it or knows why it's better... it doesn't matter. That summarizes Tesla in it's current iteration.

People like us will actively seek out new innovations and news from Tesla but for the other 99% of the population they see the MSM headlines and assume Tesla is a fly-by-night joke that is scamming people out of their hard-earned money.

If Tesla wants to continue being a disruptor they owe it to humanity to try to harder to convey this message to the average consumer rather than expecting less than 1% of consumers to do the job for them. Hanging their hat on "we make the best car so it will sell itself" just doesn't fly in modern day business. Hell, that sort of approach barely worked when Henry Ford rolled the first Model T off of the line which is the last time we saw innovation on this level.

The bottom line is they need someone to better present these amazing innovations to the public in a more palatable manner. This just throwing them out in passing on a social media platform that is ONLY followed by those who are already seeking the info is stupid. No other way to put it. It lends zero legitimacy to these advancements in the eyes of the MSM and the other 99%.

Instead, all Tesla is getting is negative publicity with no plans to defend or discredit and it's becoming perception with years of backing which is going to eventually be impossible to shrug off.

Soon we're going to see Tesla sales dip in relation to production and they're going to wish they tried harder to position themselves better in the eyes of the 99% via marketing but that many years of FUD is going to be nearly impossibly to unwind.

Tesla owes it to future humanity to make their marketing and PR even 10% as good as their engineering.

Nobody says you can't do both.

Thank you.

 

[ZoomsansVroom]

A) I suspect we all have our hammers, so we are looking at it a certain way. I'm a manufacturing guy/was a lawyer.

B) You don't spend money advertising a flawed product. The most important thing for Tesla's leadership to do, right now, is embrace the mundane. They are NOT A START-UP, no one with their market share, valuation, or lifespan is - and they have to start thinking that way - which means Musk needs a good COO, who can stand up to him/follow Gates example, and get a "suit" to run the company, and do what he does best.

One of the most basic tenets of business - at least in manufacturing, is "DO WHAT YOU SAY."

The most avid fan, cannot say this of Tesla.

GOOD manufacturing is boring, and cautious - building stuff in a tent, talking about "manufacturing hell" is all the thrilling stuff which drives innovators, but kills makers.

Makers like to do something, smoothly, efficiently, in a planned fashion, and know it will come out right. Then, they like to come in the next day, and do the exact same thing - and they are folks who will think about their daily tasks, and usually have, very, worthwhile input about how to make their job smoother/easier/more efficient.

All the stimulating, romantic stuff that fuels innovation, is death in a production facility - I had to grow up, and stop playing around in my ice cream plant, and continue to innovate, but in a more controlled fashion.

Tesla needs to make the same shift.

 

[nipsip]

IMO, Tesla has awoken the sleeping giants and although they have been incredibly slow to respond, late 2020 could see a scenario where the buyer of an EV has legitimate options without long waiting lines from companies who have economies of scale and vast manufacturing and distribution channels that have been serving customers for 100+ years. This is something Tesla has never had to contend with.
I suspect the coming EV war will be dirty and there is no way Tesla will emerge from this fight without being knocked about, bogged down and desperate for cash.