It reportedly had around $3.25 billion is cash at the end of the last quarter.
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Tesla Motors revealed that it needs to raise additional funding through stock and debt offer to keep development of its Model 3 sedan on target.
“Tesla will need many, not-so-small capital infusions to stay on its development plan and more as it takes over Solar City, a virtual sinkhole for capital”, said Erik Gordon, a business professor at the University of MI.
The sum would be required for its facilities and appropriate equipment, which would be needed for the Model 3, a vehicle that is planned to enter production in 2017.
Tesla Motors Inc (NASDAQ:TSLA) and SolarCity Corp (NASDAQ:SCTY) recently entered into an acquisition deal worth $2.6 billion. In July, it repaid $678 million on a credit line. The automaker has also planned $1.75 spending for the second half of 2016, on production of Model 3 and construction of a Gigafactory.
The company put investors on alert by pointing out its near-term cash situation requires adjustment.
At the same time, Tesla has always approached software and systems on its auto as having the capability to be improved over time, taking into account customer feedback. Unfortunately, the solar company, which Tesla is planning to acquire, also has a meek financial background.
Tesla has been operating in the red and has had a negative cash flow since early 2014, Reuters notes.
“Loss of Falcon vehicle today during propellant fill operation”, Musk said on Twitter on Thursday. Musk isn’t paid a salary from any of his companies, so he relies on borrowing money against his sizeable fortune in shares for personal liquidity.
Adding to the money going tout the door, the company also noted in the filing that it “received notices of conversion from holders of approximately $422 million in aggregate principal amount of Tesla’s convertible senior notes due 2018”.
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Tesla’s board took the possible deal more seriously on May 31 – just 13 days after the secondary stock offering was announced – when it directed management to assess a potential solar acquisition.
