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Everyone loves an underdog. Elon Musk, with his very cool and environmentally-friendly Tesla company, is just that. Against all odds, Tesla has managed to carve out a special niche in the electric car market.
However, in an alleged email sent to the entire staff, the -friendly CEO said the company will be insolvent in 10 months. Should this occur, the company would be forced to shutter, leaving Tesla owners out in the cold.
Elon Musk’s company has seen some fantastic highs and some painful lows. 2019 hasn’t had many of the former, however. The company saw its stock price get destroyed early in the year, and media reports have cast doubt on the company’s survivability. Tesla laid off seven percent of its workforce in January alone.
This news was followed by a reported loss of $702 million in Q1 2019. The company’s $2.2 billion in reserves and $2.7 billion stock raise will be gone in 10 months at that current burn ratio.
In response to the bleeding, Musk has issued a call for expense cutting throughout the company. The hope that removing expenses will right the sinking ship has led to the call for increased scrutiny. Per the letter, Musk said:
That is why, 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.
Elon Musk’s public reputation has seen its own fluctuations. Hailed as a John Galt-esque genius bent on saving the environment, Musk has built a reputation as an innovator willing to take risks.
For example, though disavowing any personal investment, Musk has hailed Bitcoin (BTC) as an innovative answer for currency. And his companies like SpaceX, Tesla, and the Boring Company have changed the way Americans view science and the future.
As the flagship business under Musk’s empire, Tesla must maintain stability and profitability for Musk to survive. Should the company shutter completely, Musk’s other ventures would likely be vacated as well.
Though his reputation with the media may have changed, the underdog may well be able to revamp the company in time. If previous results give any indication, the fact that Musk’s company has survived to this point speaks volumes about his ability to keep things going.
Do you think Musk and Tesla are doomed to failure, or will the cost-cutting efforts pay off and the company will survive? Let us know your thoughts in the comments below!
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