Bloomberg reports Tesla burning through $6,500 every minute.
Tesla has achieved staggering growth over the past several months. Working to ramp up Model 3 production, the electric car maker and its founder seems able and willing to pay the price to see the company through to success. And it’s a heavy price at that. Bloomberg recently crunched the numbers, and came to the conclusion that Tesla burns through $6,500 every minute. That’s $108.33 every second. In larger terms, it amounts to $390,000 an hour, or $9,360,000 a day.
Now, of course, everyone is familiar with the adage, “you have to spend money to make money.” Elon Musk raised billions and billions of dollars for Tesla, so much that the company dominates the EV marketplace. But eventually, the company needs to make money to survive, and that’s where Tesla could potentially be in trouble. At this rate, there’s a real chance the company could run out of cash on hand by the end of this year. The company is burning through billions of dollars, and production hasn’t caught up to the point where Tesla will see black anytime soon.
Despite that, there’s no attempt to raise capital in the pipeline, as Elon Musk assures shareholders the company will bring in more than it spends this year. While Tesla reportedly has $3.5 billion in cash, it also has $9 billion in current outstanding debt. Moody’s also downgraded Tesla’s credit rating on the back of more delays in Model 3 production. That hampers the company’s ability to issue debt to raise capital to fund further production.
Model 3 production – make or break moment?
It’s no secret that Tesla Model 3 production needs to ramp up to pull Tesla out of its current debt cycle. While Tesla has several other ambitious projects going, including the bonkers Roadster and an electric semi truck, the company’s overhead may lead it to insolvency. In 2010, Tesla had fewer than 1,000 employees. Now, the company has 40,000 employees. The company’s “revenue per employee”, or how much that employee actually boosts the company’s bottom line, is also significantly lower than other automakers.
As it stands, Tesla needs to raise a massive amount of capital, or get Model 3 production back on track quickly. That way, the company can work toward pulling its way out of debt. While stock prices have risen since earlier this month – most notably after Elon Musk tweeted Tesla was bankrupt as an April Fool’s joke – it’s still among its lowest points this year. It’s well down from the $383 share price from June 2017, as confidence wanes in Tesla’s ability to ramp up Model 3 production.
Stay tuned to TFLcar.com for more updates!