CEO Elon Musk disputes the notion the company will need to raise billions of dollars.
As the latest product news from EV-maker Tesla looms, it’s the money the company will need – with estimates ranging from nothing to $12.5 billion – to meet all of its obligations that seems to be garnering all the attention.
Analysts have been furiously scouring the company’s SEC filings and looking for other clues to see what Tesla will need to spend to bring out new models, complete the acquisition of SolarCity and expand its other operations.
Additionally, Elon Musk, the company’s founder and CEO, added more to the equation with a recent tweet alerting followers about a new product announcement on Oct. 17.
Musk, who often uses social media to break news, suggested that the new battery-electric vehicle will be “unexpected by most,” but offered no other clues as to what is in store next week.
In recent months, Musk has dropped a variety of hints, along with broader indications, as to what he would like to see in the Tesla line-up in the years ahead. That includes a crossover-utility vehicle to complement the downsized Model 3, and even a battery-electric pickup. The Tesla founder has already confirmed that an all-new version of Tesla’s original product line, the Roadster, is in the works.
(Tesla set to reveal unexpected new product. Click Here for the story.)
Musk’s grand plans require big cash to bring them to fruition, but on the “nothing” end of the equation is Musk himself. He recently tweeted, “Would also like to correct expectations that Tesla/SolarCity will need to raise equity or corp debt in Q4. Won’t be necessary for either.”
Elon Musk denied that the company needs more cash for the company in a tweet.
However, in a note to investors, Oppenheimer Analyst Colin Rusch thinks Tesla will need to raise as much as $12.5 billion by the end of 2018. Much of that will be devoted to integrating the newly purchased SolarCity, which lost more than $530 million last year, with its power storage division.
Rusch isn’t alone in his disagreement with Musk, although he’s the only analyst using 11 digits in front of the decimal point. Ben Kallo, analyst for Robert W. Baird, suggests that the Tesla will need to get an additional $1.5 billion via debt or equity by the middle of next year.
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Other observers fall in between at $2.5 billion, which will be needed next year for the Model 3 launch and the build-out of Tesla’s Gigafactory in Nevada. It would seem that last estimate is the safest.
In an August filing with the Securities and Exchange Commission, the company the company revealed it will be looking to raise additional cash in the latter part of the year. The company already raised $1.5 billion in May to provide funding needed for production of the company’s mass market EV: the Model Three.
Musk tweeted about a new product reveal on Oct. 17, as well as news about SolarCity on Oct. 28.
The next tranche of funds will “used primarily for tooling, production equipment and construction of the Tesla’s Model 3 production lines.” The company will also invest in equipment for its battery producing Gigafactory in Nevada as well as building new retail locations and charging stations around the country.
(To see more about Tesla’s needs for the future, Click Here.)
The needs do not end there as the “funds would also be used to support the additional capital needs” of the company following its $2.6 billion acquisition of money-losing renewable energy firm SolarCity, according to the filing.