Tesla shares closed at the lowest level in almost 2 1/2 years after Elon Musk called for a “hardcore” review of all the electric-car maker’s expenses and an analyst warned of potentially severe fallout from a fatal crash involving Autopilot.
Musk, Tesla’s chief executive officer, wrote in an email to staff late Thursday that he and new Chief Financial Officer Zachary Kirkhorn will review “literally every payment” that leaves the company’s coffers to confirm that expenditures are critical.
Musk referred to Tesla losing $700 million in the first quarter, and said that while the company raised about $2.4 billion in capital recently, it won’t last long at the rate the company was burning through money early this year. The carmaker’s shares dropped 7.6% to finish at $211.03 on Friday in New York, the lowest close since December 2016.
The email is similar to a missive Musk, 47, sent to employees in April 2018, when he announced having asked Tesla’s finance team to “comb through every expense worldwide, no matter how small, and cut everything that doesn’t have a strong value justification.”
As was the case a little over a year ago, Tesla is also dealing with criticism of Autopilot following the death of a customer using the driver-assistance system. After the National Transportation Safety Board linked Autopilot to a fatal crash in March, Consumer Reports called for Tesla to make immediate changes to restrict drivers from using the system in unsafe conditions, and said the company needs to more effectively monitor driver engagement.
“The eventual outcome of this investigation may have severe ramifications,” Arndt Ellinghorst, an analyst at Evercore ISI, said in a note Friday. The analyst said that if Tesla were to be required to recall or shutter Autopilot until the system is modified and validated, sales will drop, sentiment will worsen, and liabilities will increase.
Through Friday’s close, Tesla shares have dropped 37% this year.