Elon Musk's growth story is looking more like a fable as Tesla heads towards a cash crisis.
, with Musk saying, "We are making this hard decision now so we never have to do this again." After two profitable quarters in late 2018, it seemed the time had come for Musk to buckle down and make good on his promise to deliver a mass-market car efficiently and profitably. Then came the first quarter from hell.
"Demand has been extremely disappointing this year," Ives said. The Tesla story has shifted from "glass half full to glass half empty." Patience, he said, "is wearing thin." But he revealed a different use for that cash - day-to-day expenses - in a cost-cutting memo to employees on Thursday that prompted the stock-price smack-down. Musk wrote that the money "actually only gives us approximately 10 months at the first-quarter burn rate to achieve breakeven."Hence, his edict to "examine every expenditure at Tesla no matter how small, and be sure it is critical.
To remain an ongoing concern, Tesla must sell enough cars with a high enough profit margin to keep the lights on, never mind expanding into other product categories. Either that or raise yet more capital.
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