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Musk to review all of Tesla's expenses in new cost cutting plan

reuters.com

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Re: Musk to review all of Tesla's expenses in new cost cutting plan

#101

Post by proee »

I worked for a company that had a similar take on spending. The company was extremely profitable and brought in greater than 1 billion dollar in revenue. Yet any PO that was greater than $100 needed approval by the CEO. Not only that, the PO had to be typed on a manual typewriter (this is 2007) using carbon paper, and hand-delivered to a number of people to start moving up the chain. The process intentionally took MONTHS for the approval to go through.

This resulted in engineers that would purchase their own equipment and bringing it to work to use because they couldn't wait a month for a $200 piece of equipment. It was common to have lab benches full of used equipment from ebay that engineers purchased to get their jobs done. This created an interested dynamic in the lab when it came to sharing equipment (most of it was not shared). Also, scary to know that since a lot of used equipment was being relied on, a large portion was not calibrated and could be outside spec.

There is a lot of value in creating a thrifty company culture, but sometimes it goes too far and hinders the ability for engineers to do their job. In the end, everyone is responsible for ensuring the purchase they make are wise and necessary for the success of the company.

Re: Musk to review all of Tesla's expenses in new cost cutting plan

#102

Post by fullshark »

Matt3o12_ wrote: post #62
dd36 wrote: post #12

https://www.reddit.com/r/teslamotors/comments/bq50s8/elons_a...

A bit later in the thread the poster also states a pretty good explanation: > A lot of FUD from the media said Elon stated they will only have 10 months left before cash balance is zero. No where in this letter stated such a thing and Elon just used an arbitrary number(in this case the newly raised capital) to express the point that 2.4 billion may seem like a lot of money, but we shouldn't take it for granted. In fa…

> their demand is still going strong.

This is what's not clear, and a major risk factor for them. I think Musk views 35k as the inflection point where quantity demanded sky rockets and he's not been able to get there. Seems like a lot of decisions were made based on assuming that would happen by 2019.

Re: Musk to review all of Tesla's expenses in new cost cutting plan

#104

Post by defterGoose »

aortega wrote: post #72

Traditional car companies must be damn scared to have to publish this FUD. Tesla cannot be possibly dying out. Don't you see Tesla cars everywhere in the US? yes they are spending money, buying things to grow as they are so incredibly successful they cannot satisfy demand. Dying out? you make me laugh. If you spend 10M dollars buying equipment that in a year is worth 100M dollars, you are not dying out.

When was the last time a capex on equipment increased 10x in value in a year or ever?

Re: Musk to review all of Tesla's expenses in new cost cutting plan

#105

Post by gremlinsinc »

village-idiot wrote: post #70
modzu wrote: post #64

Earlier quoted context omitted.

what happened to the delorean motor company?

Criminal prosecution of the owner because he decided that running cocaine was the best way to finance his company.

Asking for a friend, so you're saying this is a bad way to finance a company?

Re: Musk to review all of Tesla's expenses in new cost cutting plan

#106

Post by pests »

nathanaldensr wrote: post #76
sergiotapia wrote: post #66

What happens to Tesla cars on the road if Tesla the company is gone? Who do the cars phone home to? Who can perform maintenance and repairs? Edit: Why did people downvote this question lol

What happens to online-connected video games when the servers go down?

Except the game has a single player mode that always works and will never be taken offline. You just lose access to new maps and updates.

Seriously though the car will still be a car even in 100 years. It will drive.

Re: Musk to review all of Tesla's expenses in new cost cutting plan

#107

Post by unityByFreedom »

jjeaff wrote: post #97
goatherders wrote: post #46

Earlier quoted context omitted.

There is no evidence at all for the assertion that "a significant portion of the HN user" base is invested in anything.

Considering that a large portion of HN readers are technical and data driven, I would think/hope that they are not invested in individual stocks with any significant amount of their net worth and are instead taking the approach that the data bears out which is to invest in low fee index funds.

I suspect those invested one way or another will be more vocal.

Re: Musk to review all of Tesla's expenses in new cost cutting plan

#108

Post by mikeash »

gamblor956 wrote: post #29
confiscate wrote: post #19

sounds like a misleading headline The original letter says the 2.4 billion raised a few weeks ago, would be used up in 10 months at current burn rate. It's for the money recently raised, not the entire company's bank account. Headline is misleading

No, the headline is accurate. Of the $2.4 billion raised, about half must go toward servicing existing debt, and with the money they already had in the bank (about $900m), they have about $2.1b liquid cash to see them through the next 10 months, assuming the same burn rate (losing $200m/month).

Isn’t that double counting the debt service payments?

Re: Musk to review all of Tesla's expenses in new cost cutting plan

#109

Post by dang »

omarforgotpwd wrote: post #90

This is not true. What he says in the memo is "it would take us 10 months to burn through the $2.3 billion we just raised at our Q1 burn rate" They've guided for a "significantly smaller" loss in Q2, and positive cash flow in Q3 and Q4. With $2.4 billion raised, $2.2 billion in the bank, and $2 billion worth of payments coming from Fiat Chrysler cash is not as much of a concern as the headline would suggest.

The headline used to be "Tesla Has 10 Months of Cash to Burn Before Dying Out" before we changed it. That's because the article was originally a different one—see https://news.ycombinator.com/item?id=19950431.

Re: Musk to review all of Tesla's expenses in new cost cutting plan

#110

Post by ajross »

MoronInAHurry wrote: post #100
ajross wrote: post #82

Earlier quoted context omitted.

Didn't bother you when it was Amazon or Google, though.

Neither of those companies lost billions before reaching break-even or profitability.

Even buying the burn rate in the title, Tesla's losses are like 8% of revenue. That's not at all far off from where Amazon and Google were in their early years. Again, it's not that there isn't an accounting worry here, what concerns me is the... hate. Just the visceral hate about this company that wants it to fail so badly that it leads people to apply these crazy double standards.
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