Burning cash at record amounts, a disastrous start to ramping up production of the Model 3, a CEO who unnecessarily stirred the pot practically at every turn. Anyone willing to look beyond the grand vision of Tesla this past year understood the company was perilously close to insolvency, even as Elon Musk tried to shoot down any suggestion otherwise. But now, he admits that everyone was right all along.
Musk said in an interview with Axios that Tesla barreled toward the brink of insolvency during the Model 3 ramp, coming within “single-digit weeks” of death.
“Essentially the company was bleeding money like crazy,” Musk said. “And just if we didn’t solve these problems in a very short period time, we would die. And it was extremely difficult to solve them.”
Here’s the clip:
Nevermind that it was obvious to industry observers not even 18 months ago that Tesla’s decision to short-circuit longstanding processes to launch production of the Model 3 seemed short-sighted. Musk gambled, wreaked havoc on his company, brought it to the edge of death, and then spent most of this past year doing everything he could to make it even more difficult—from a dumb tweet that sparked an SEC probe and his removal as Tesla chairman, baselessly calling someone a pedophile, and continuously downplaying any criticism on workplace conditions or his repeated insistence the company won’t need to raise any new funding this year.
No, what’s funny is Musk, in this interview, cops to something he flat-out said just wasn’t true only three months ago.
Per The Washington Post:
Musk reiterated that the company would “not be raising any equity at any point.” “Are we running low on money? The answer is no,” Musk said.
Musk doesn’t explicitly state when he believed the company was within “single-digit” weeks of death in the Axios interview, but the context he provides—namely, that he was working 120 hour weeks—points to the timeframe of the above quote. That’s right around when Tesla hit the elusive Model 3 goal of 5,000 units produced in a week (albeit, with a lot of caveats), and as Musk launched his bizarre, haphazard bid to take Tesla private, which ultimately failed.
There were hints that Musk actually believed Tesla was in dire straits, for instance his remark in June that critics were right to view the automaker’s inability to generate profit as a looming threat. That was his context for laying off nine percent of the company’s workforce.
But Musk has been outright insistent that Tesla wouldn’t need additional capital to achieve anything beyond the Model 3—including a new plant in China, the Tesla semi, a new Roadster, or the Model Y—all year, when estimates range as high as $10 billion may be necessary for the company’s future endeavors. He told analysts and reporters on a call that Tesla wasn’t running low on money, which he now seemingly admits wasn’t the reality whatsoever.
I’d call this annoying, a great example of someone just openly gaslighting the world. And, sure, maybe he’s justified some sort of victory lap, if Tesla manages to sustain itself going forward.
But it’s a perfect example of why it’s beneficial to have analysts or reporters covering Tesla and scrutinizing the company’s actions. What Musk says doesn’t always jibe with reality. That’s worth remembering going forward, when Musk introduces his next over-the-top claim for Tesla, like, for instance, that the Model Y will be “a manufacturing revolution.”
Production of that, he says, begins in 2020.