Elon's big plans at Tesla could bankrupt the company unless he finds some very generous investors
Elon Musk may soon wish that he didn’t joked about the company going under on April Fool’s Day as recent data from Bloomberg shows that Tesla is burning through money at an alarming rate. Massive expenditure generally indicates that a lot of important things are being done behind the scenes but without a correspondingly high income to go with it, such an outflow is not sustainable for long. After conducting a financial analysis on the inner workings of Tesla, Bloomberg concluded that they are spending almost $10 million every single day.
To put that into perspective, while the Tesla Model S P100D may be able to get to 60 mph in a supercar-smashing 2.5 seconds, the company will have gone through $270 in that same amount of time. Elon’s big plans including a new super-fast roadster, an electric truck and a Model Y crossover all surely putting a strain on the existing financial resources and that is before the troublesome Model 3 production issue is taken into consideration. Low or even negative cashflow is nothing new at Tesla but the recent increase in expenditure will require even more funds to be raised before year end to avoid adding to the substantial debt that it has already accrued.
Securing additional funds may be that much harder since Moody’s recent downgrading of Tesla’s credit rating. While the average share price has been on a downward trend since last September’s peak, there are still those that believe in the company and its quirky founder. After all if he can launch a car into space surely it is only a matter of time before Model 3 production woes are resolved. Upping the build rate is seen by many as the key factor in restoring investor faith and increasing revenues. As it stands the weekly production rate is now at 2000 units per week, 500 short of Tesla’s own first quarter target but well above what has been achieved up until now.