Tesla acts to expand borrowing capacity
TESLA Inc. boosted its ability to borrow for the second time in about six months, as chief executive Elon Musk spends heavily to bring his cheapest electric car yet to market.
The company expanded credit agreements by a combined $800m to $3.825bn, according to a regulatory filing last Friday. Tesla boosted its credit lines in December and raised money with equity and debt offerings in March to bolster its balance sheet before starting production this summer of the more affordable Model 3 sedan.
After burning through cash the last two quarters, Tesla flagged it intends to ramp up capital expenditures in the three-month period ending in June.
With plans to price the Model 3 close to $35,000 before incentives, the vehicle looms as the linchpin in Musk’s ambitions to manufacture at high volumes and achieve the profitability that’s largely eluded the company.
Tesla shares slipped about 0.2 percent from its closing share price Friday to $382.81 as of 4.38pm in New York. The stock has surged 79pc this year.
Meanwhile, Tesla took a step closer toward establishing an electric-vehicle manufacturing plant in China with its announcement last Thursday that it is in exploratory talks with the Shanghai municipal government. Tesla has said it wants to build electric cars in China to avoid a 25-percent tariff on imported vehicles.
The company did not provide a timeline for setting up a China plant, but said it expects to “more clearly define” its China production plans by the end of the year.