Tesla expected to embark on fresh funding round as debt pressure grows
Tesla is beggining to feel the pressure of a growing debt pile and may soon need to embark on a further funding round to stay afloat.
The electric car maker today published a 10-Q filing with the Securities and Exchange Commission (SEC) stating that it could seek “alternative financing” in the coming months.
“We expect that the cash we generate from our core operations will generally be sufficient to cover our future capital expenditures and to pay down our near-term debt obligations, although we may choose to seek alternative financing sources,” the SEC filing read.
Its debt pile now totals at around $10 billion (£7.75 billion) and is due to grow significantly in the coming months, with a $556 million (£430 million) debt repayment falling due in November.
This is just the tip of the car maker’s debt iceberg, with two additional payments over 2021 and 2022 requiring it to pay out a total of $2.8 billion (£2.17 billion) just to service its debt obligations.
Not only is Tesla’s debt pile growing, but its cash reserves are being whittled away rapidly, seeing its cash reserves drop $1.5 billion (£1.16 billion) to $2.2 billion (£1.7 billon) in the previous quarter alone.
This comes after Tesla posted one of its most disappointing quarterly results in years last week, revealing a loss of $702 million (£543 million).
Analyst at Wedbush Securities Daniel Ives said: “The writing is on the wall that they need to raise capital.”
“We believe $3 billion is probably the minimum amount … six months ago we thought the chances of a capital raise were 30 or 35 per cent, today we believe they are significantly higher. It’s a matter of when, not if, they raise capital.”