May 16, 2019 / 10:19 PM / 10 days ago

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

FILE PHOTO: Tesla CEO Elon Musk leaves Manhattan federal court after a hearing on his fraud settlement with the Securities and Exchange Commission (SEC) in New York City, U.S. April 4, 2019. REUTERS/Brendan McDermid/File Photo

(Reuters) - Tesla Inc Chief Executive Officer Elon Musk told employees on Thursday that he will increase scrutiny of the company’s expenses in his latest initiative to cut costs at the electric car maker.

Tesla earlier this month closed a $2.7 billion offering of stock and convertible notes, giving it much needed cash as it ramps up production.

Musk in an email to employees, seen by Reuters, said its net proceeds from the offering gave Tesla only 10 months to achieve breakeven at the rate it was burning cash in the first quarter.

“That is why, going forward, all expenses of any kind anywhere in the word, including parts, salary, travel expenses, rent, literally every payment that leaves our bank account must (be) reviewed,” Musk said.

Tesla’s attempts to cut costs are not new. In April 2018, in an email sent to employees, Musk said he had instructed his finance team to “comb through every expense worldwide” to find possible cuts.

More recently, Tesla laid off 9 percent, and 7 percent of its workforce in June 2018, and January, respectively.

The new initiative comes after a tumultuous year for Tesla which has seen analysts and investors cast doubt on its ability to produce, sell and deliver enough cars to make a sustainable profit.

Reporting by Uday Sampath in Bengaluru; Editing by Shinjini Ganguli and Cynthia Osterman

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