Tesla burns cash, loses more than US$4,000 on every car sold
DETROIT: It’s crunch time for Tesla Motors . The Silicon Valley automaker is losing more than US$4,000 on every Model S electric sedan it sells, using its reckoning of operating losses, and it burned US$359 million in cash last quarter in a bull market for luxury vehicles.
The company on Wednesday cut its production targets for this year and next.
Chief executive Elon Musk said he’s considering options to raise more capital, and didn’t rule out selling more stock.
Musk has taken investors on a thrill ride since taking Tesla public in 2010.
Now he’s given himself a deadline, promising that by the first quarter of 2016 Tesla will be making enough money to fund a jump from making one expensive, low volume car to mass producing multiple models, and expanding a venture to manufacture electric power storage systems.
Tesla’s shares fell almost 9 per cent on Thursday and slipped another 2 per cent on Friday as investors and analysts weighed the risks of Musk’s ambitious plans for expanding Tesla’s auto and energy storage businesses.
Tesla had just US$1.15 billion on hand as of June 30, down from US$2.67 billion a year earlier.
Automakers consume cash to pay for assembly line equipment, including metal dies and plastic molds, as well as testing to meet safety and emissions standards.
A typical new car can cost US$1 billion or more to engineer and bring to market.
Established automakers such as General Motors Co and Ford Motor Co have amassed far larger cash cushions as they’ve rebuilt balance sheets battered by the 2008-2009 recession.
GM, restructured six years ago in a government funded bankruptcy, has targeted cash reserves of US$20 billion and had more than US$28 billion in cash equivalents as of June 30. —Reuters