Tesla CEO Elon Musk recently launched a new ‘hardcore’ cost-cutting effort to bring the automaker back to profitability and we are starting to learn more about what the plan actually consists of – hint: no more toilet paper.
In an email to employees last week, Musk said that he is implementing a new cost-cutting initiative that will see all the teams examine every payment, including “parts, salary, travel expenses, and rent.”
The CEO added that Zach Kirkhorn, Tesla’s new CFO, will review and sign every page of outgoing payment while Musk himself will review and sign every tenth page.
A week later, we are starting to get a better idea of what kind of cost-cutting efforts employees have been taking following Musk’s warning and it’s indeed quite “hardcore”, as the CEO mentioned.
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.
Other more standard cost reduction methods are also being employed. For example, two sources said that Tesla is cutting down on stipends given to employees for cellphone plans.
Every expense that is not believed to be “essential” for the sale and delivery of vehicles is being reviewed and possibly frozen.
Last quarter, Tesla lost $700 million.
The automaker is currently addressing the situation on two fronts. This cost-cutting effort aims to reduce expenses and they also expect to increase revenue with a potentially new record for deliveries this quarter.
One of the bottlenecks in deliveries is the detailing of the vehicles and as Tesla’s delivery volume increased, they relied on car washing businesses.
A source familiar with the matter says that some stores are now cutting down on the expense and in order to still complete the work, some employees are bringing the cars home and cleaning them on their own time.
We contacted Tesla about the cost-cutting effort and we will update if we get a comment.
Update: Tesla didn’t respond to our request for comment, but Musk called it “complete nonsense” without any explanation:
This is complete nonsense
— Elon Musk (@elonmusk) May 25, 2019
Honestly, that’s not really what I expected when Elon called for a “hardcore” cost-cutting effort, but it’s certainly pretty hardcore.
To be fair, Tesla is not the only automaker closely looking at its expenses.
Daimler just announced that they are also doing “a sweeping cost review“, but I don’t think it involves toilet paper.
On the bright side, it’s fairly incredible that Tesla has employees who are so committed to the mission and success of the company that they are willing to bring their own toilet paper or wash cars on their time.
I don’t think there are many companies out there who can say the same.
But I think Tesla would be better off investing in the well-being of those employees who are so willing to go to extremes for the company.
In other words, it’s obvious that Tesla is not in a financial situation where it can’t buy toilet paper. It’s just that some employees are nervous about the new “hardcore” cost-cutting effort that they are going too far with it.
Tesla fans are calling me a short for posting things like that. It just goes to show how disconnected with reality they are because I actually added to my long position on Tesla this week.
It doesn’t mean that I can’t recognize when the company does stupid things and I can’t share those things with the blog’s readers.
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