http://www.thetruthaboutcars.com/2018/05/time-revive-ttacs-tesla-deathwatch-tesla-run-cash-year/
Reporters Dana Hull and Hannah Recht did a deep dive into Teslas finances, both where their money has come from and where it’s been going. They came up with some interesting data. The company is going through cash at the rate of about $6,500 a minute, a bit more than $9 million a day. Free cash flow has been in the red for over a year. That’s how much money a firm generates after subtracting capital expenses.
The company’s cash situation is closely related to employment levels. In just three years, from 2014 until last year, Tesla went from about 13,000 employees to more than three times that number and they are still looking to hire thousands more as they try to ramp up production on their Model 3. The Model 3 is unarguably vital to the company’s success.
As the payroll increased, and with sales relatively flat before the Model 3 finally started shipping, revenue per worker dropped. Musk has often spoken of showing Detroit how to do things, but GM and Ford each take in more than twice as much revenue per employee as Tesla does. In the 4th quarter of 2017, Tesla paid out as much in interest on its debt as General Motors did, with Tesla earning one tenth of the revenue of GM. The revenue per employee problem is exacerbated by what Musk himself called a “Russian nesting doll” of contractors and subcontractors at the California assembly and Nevada battery plants.
At the start of 2018, Tesla had $9.4 billion in debt and $3.4 billion in cash. Moody’s says that $1.2 billion of that debt has to be repaid next year and over and above that, to stay operating it will need another $2 billion this year.
Tesla claims that it won’t require additional financing this year, save for existing credit lines, but that’s contingent on the positive cash flow that would result in the company actually hitting 5,000 units per week production level on the Model 3, something it hasn’t yet proven it can do.
Jeff Osborne of Cowen & Co. doesn’t believe Tesla’s claims, since Musk has made similar statements in the past and then gone out to raise more cash. Osborne thinks Tesla is going to try to raise $3 billion with a stock sale late this year, and another $2 billion late next year, to cover cash burn and debt retirement while still keeping more than $1 billion in cash reserves. I don’t believe that figure would include the $854 million in (mostly Model 3) deposits, but it likely includes the substantial interest earned on what amounts to interest free loans to the company.
Reporters Dana Hull and Hannah Recht did a deep dive into Teslas finances, both where their money has come from and where it’s been going. They came up with some interesting data. The company is going through cash at the rate of about $6,500 a minute, a bit more than $9 million a day. Free cash flow has been in the red for over a year. That’s how much money a firm generates after subtracting capital expenses.
The company’s cash situation is closely related to employment levels. In just three years, from 2014 until last year, Tesla went from about 13,000 employees to more than three times that number and they are still looking to hire thousands more as they try to ramp up production on their Model 3. The Model 3 is unarguably vital to the company’s success.
As the payroll increased, and with sales relatively flat before the Model 3 finally started shipping, revenue per worker dropped. Musk has often spoken of showing Detroit how to do things, but GM and Ford each take in more than twice as much revenue per employee as Tesla does. In the 4th quarter of 2017, Tesla paid out as much in interest on its debt as General Motors did, with Tesla earning one tenth of the revenue of GM. The revenue per employee problem is exacerbated by what Musk himself called a “Russian nesting doll” of contractors and subcontractors at the California assembly and Nevada battery plants.
At the start of 2018, Tesla had $9.4 billion in debt and $3.4 billion in cash. Moody’s says that $1.2 billion of that debt has to be repaid next year and over and above that, to stay operating it will need another $2 billion this year.
Tesla claims that it won’t require additional financing this year, save for existing credit lines, but that’s contingent on the positive cash flow that would result in the company actually hitting 5,000 units per week production level on the Model 3, something it hasn’t yet proven it can do.
Jeff Osborne of Cowen & Co. doesn’t believe Tesla’s claims, since Musk has made similar statements in the past and then gone out to raise more cash. Osborne thinks Tesla is going to try to raise $3 billion with a stock sale late this year, and another $2 billion late next year, to cover cash burn and debt retirement while still keeping more than $1 billion in cash reserves. I don’t believe that figure would include the $854 million in (mostly Model 3) deposits, but it likely includes the substantial interest earned on what amounts to interest free loans to the company.
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