By CCN: Tesla's extreme cost-cutting measures have hit Tesla employees where the sun don't shine. To keep costs low the electric vehicle company is holding back on purchases of new office supplies, including toilet paper for employee bathrooms. Elon Musk did mention this week that…
By CCN: Tesla’s extreme cost-cutting measures have hit Tesla employees where the sun don’t shine. To keep costs low the electric vehicle company is holding back on purchases of new office supplies, including toilet paper for employee bathrooms. Elon Musk did mention this week that the budget cuts would be “quite hardcore.”
Elon Musk wasn’t joking. Sources told Electrek that several facilities have drastically cut back toilet paper purchases, leading some employees to start bringing their own to the office:
“Sources familiar with the matter told Electrek that teams at several Tesla facilities are going to some extremes in attempts to cut costs, including skipping on ordering office supplies – even toilet paper.”
“A source even said that some employees are bringing toilet paper from home to the office in an attempt to reduce their overhead.”
Such cost-cutting measures follow Musk’s May 16 letter emphasizing the urgency of a drastic pullback on spending. He said in the letter that two people — he and Tesla’s new Chief Financial Officer, Zach Kirkhorn — must sign off on every penny the automaker spends to control costs.
“As mentioned at the company talk, it is extremely important that we examine every expenditure at Tesla no matter how small, and be sure that it is critical.”
“When making hundreds of thousands of cars, battery packs and solar systems, even a ten cent savings could be worth over $50,000 a year.”
The bizarre lengths to which some Tesla employees appear to be going to cut cost brings to mind a hilarious Seinfeld episode.
Sorry Elaine, but Elon Musk can’t spare a square.
Even with a massive capital infusion of $2.35 billion for Tesla stock and junk bonds this month, Tesla has less than a year before it runs out of cash.
But cutting out toilet paper might be a bit on the melodramatic side. It does show the company is taking its debts and its cash flow situation seriously.
Still, the no toilet paper policy, however widespread, might be a more of a show for investors than a serious approach to tackling Tesla’s financial woes.
It’s not toilet paper that Tesla’s burning through, it’s dollars for research and development into the transportation and electrical technologies of the future.
As well as servicing the interest payments and playing catch up with the massive amount debt Tesla has already stacked.
This is where all that investor cash is going:
“Tesla currently makes three vehicles: the Model S sedan, the Model X SUV, and the Model 3 sedan. In the next year or so, it wants to start building the Model Y, a compact SUV. It also has a pickup truck, a new Roadster sports car, and a semi truck on the drawing board. The pickup could cost a billion to develop. The Roadster might be cheaper, so call it half a billion. The semi could be a billion or more.”
Elon Musk’s grand strategy is to keep raising and spending on research and development to remain the market leader on product offerings and innovative technologies in its industry.
But if the electric automaker can’t even spare its employees some basic creature comforts, maybe Tesla needs to slow down and consolidate.
This article was edited by Josiah Wilmoth.
Last modified: January 10, 2020 3:21 PM UTC