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Tesla Seeks Fresh Funding

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Editor’s Remarks:
Tesla has announced a new round of funding as it prepares to launch its new Model 3 electric car. The Model 3 is Tesla’s first stab at a mass-market vehicle and is billed as its big shot at turning profitable, but Elon Musk’s company has a long way to go if it’s to buttress its balance sheets against the risks associated with the sheer size of the investments it must make to start production. It has now secured a $1bn injection, already covering about half of the $2bn-$2.5bn of capital expenditures that Tesla estimated it would make in the first half of 2017, on things like property and equipment purchases. Tesla will start limited Model 3 production in July before ramping things up to 5000 cars per week in 2017. The 400,000 pre-orders it has received for the Model 3 could be seen as an opportunity for the company to turn profitable and silence critics who accuse Musk of treading water, buoyed by government subsidies, or as a challenge to avoid simply blowing up its chronic negative cash flows to much bigger sizes.

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