Why Tesla Needs Fresh Funding

By GEI Staff of Global Economic Intersection

The Economic Effects on Finance, Investing, Social Interactions, and Politics • May 10, 2017 at 4:40 AM EDT

Tesla announced a new funding round in an attempt to strengthen its balance sheet and reduce the risks associated with the massive investments necessary ahead of the Model 3 production launch.

Written by Felix Richter, Statista.com

-- this post authored by Felix Richter with added note by Econintersect.

Tesla (TSLA) announced a new funding round in an attempt to strengthen its balance sheet and reduce the risks associated with the massive investments necessary ahead of the Model 3 production launch.

As our chart illustrates, Tesla plans to invest $2.0 to $2.5 billion in capital expenditures, i.e. property and equipment purchases, in the first half of 2017 alone, potentially doubling last year’s cap ex spending before the Model 3’s planned production start in July.

While Tesla did hold $3.4 billion in cash and cash equivalents at the end of 2016, a little financial cushion won’t hurt considering the challenging Model 3 launch ahead and the company’s chronically negative cash flows from operating and investing activities.

This chart shows the rapid increase in Tesla's capital expenditures.

Infographic: Why Tesla Needs Fresh Funding | Statista

Econintersect note: The capital raising has not slowed TSLA stock's meteoric rise:

(Click on image to enlarge)

tsla.2010.2017

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