Joe Skipper/Reuters
Tesla CEO Elon Musk.
- Tesla could run out of money before the end of 2018, as it ramps up production of its Model 3.
- In a recent filing with the Securities and Exchange Commission, Tesla said it wouldn't need to raise additional funds, but it has said that before and gone on to raise billions.
- CEO Elon Musk, however, has some fundraising options.
Tesla has officially declared that it won't need to raise any additional funds in 2018, but market observers and close followers of the company aren't buying it.
After all, back in 2016 CEO Elon Musk said Tesla wouldn't need to raise capital to get the Model 3 sedan rolling off the factory floor, and then in 2017 Tesla not only raised money twice, to the tune of about $3 billion in mixed equity-debt offerings, it also saw 5% of its stock bought up by China's Tencent.
Tesla burned through over $2 billion last year and is on track to spend that much or more in 2018, with just about $3 billion in cash currently on the balance sheet.
The carmaker is counting on cash flow from the ramped-up Model 3 to cover the gap, along with ongoing revenue from the Model S sedan and Model X SUV. But that's a major league bet, and with the Model 3 production lagging targets, Tesla is right on the edge. The company nearly went bankrupt once before, in 2008, and there's a distinct possibility that it could face insolvency again.
But Musk has options, and they don't entail raising new capital through issuing equity, which would again dilute existing shareholders, or debt, which could set off alarms in the high-yield bond markets if Tesla can't command the same low rates it did when it sold junk debt in 2017.
Let's run through the ways that Tesla can keep the lights on.
Get the latest Tesla stock price here.