It’s all about the cashflow when you have a business. What’s leaving and what’s coming in. If you have more leaving than coming in, this is when the server problems start. For the vast majority of Tesla’s life, this has been the case. The company lost a massive $700,000,000 in the first quarter of the year after proclamations by Elon Musk that they were going to be profitable or far closer to it. With about $2.7 billion in the bank, there are not many more quarters that the company can take with that kind of loss and raising money to keep the operation floating is getting harder and harder as well. So what does it all mean? It means that Elon Musk is basically going to approve every purchase or cash outlay the company makes, seem payroll decisions to someone catering an office birthday party.
Having already reduced its workforce by 16% over the last year and change, it will be interesting to see where the next cuts come from.
The whole situation is pretty wild to watch, mainly because of Musk. Companies, especially barrier breaking startups in every industry deal with these issues (perhaps not all of them at this scale) as they try to solidify their business and make a foothold for themselves. None of those companies have a guy like Musk in charge that will shoot off his mouth and say things publicly that other executives would never dream of doing.
To be clear, we are not rooting against Tesla or its employees. We’re just fascinated by what could be the last example of a “new” car company, one that mass produces automobiles trying to survive. They have defined the odds for this long. We’ll see how much longer that lasts.