Facing a
severe cash crunch, Tesla Motors Inc plans to raise additional money this year
to help fund development and production of its new Model 3 sedan and build out
a
giant battery factory, the company said on Wednesday.
The electric
carmaker plans to raise money through either an equity or debt offering, it
said in a registration statement filed with the U.S. Securities and Exchange
Commission.
Tesla Chief
Executive Officer Elon Musk had warned the company might need "a small
equity capital raise" in 2017.
Earlier this
month, Tesla said it closed the second quarter with nearly $3.25 billion in
cash, but in July it repaid $678 million on a revolving credit line and planned
to redeem $422 million in convertible notes.
That would
leave the company with $2.15 billion in cash. But it also told analysts earlier
this year it planned to spend $1.75 billion in the second half on plants and
equipment, primarily to get the $35,000 Model 3 ready for production next year
and finish construction at the Reno "gigafactory."
As a result,
Tesla would be left with around $400 million in cash at a time when the company
has been burning through cash and is in the process of acquiring and absorbing
its money-losing sister company, SolarCity Corp.
"Tesla
will need many, not-so-small capital infusions to stay on its development plan
and more as it takes over Solar City, a virtual sinkhole for capital,"
said Erik Gordon, a business professor at the University of Michigan.
Tesla has
posted operating losses in 14 straight quarters and negative cash flow since
early 2014.
The company
said its main source of revenue is the sale of vehicles, but deliveries fell
below projections in the first half, to 29,222.
Tesla shares
dipped 0.4 percent to $210.35 on Wednesday.
Source: Reuters
Follow Solenzo Blog on
0 Comments