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Tesla Burns Through $8,000 Cash Every Minute

Tesla Burns Through $8,000 Cash Every Minute

By now it isn’t a secret that Tesla isn’t profitable. Perhaps less known is the fact that Tesla has yet to ever generate positive cash flow; in fact, the company’s cash burn rate hit a new high during its most recent quarter. The new record means that Tesla is now burning through $8,000 in cash every minute, or $480,000 an hour.

The data, compiled by Bloomberg, suggests Tesla will run out of cash on August 6th of next year. Of course, that isn’t likely to happen. The company’s cash burn rate is not expected to sustain at current levels once the new Model 3 sedan is in full production (which was already supposed to happen). Assuming the company can slow the burn between now and August, its current pile of cash should sustain them longer.

Tesla is also taking some creative steps to generate cash flow without having to ask investors to supply additional capital. The company is now taking reservations for its upcoming second-generation Roadster and new Tesla Semi truck. In fact, interested parties can reserve the coveted Founder’s Edition Roadster by handing over Tesla $250,000 now. They’re only making 1,000 of them, meaning the company could theoretically generate $250 million just from 1,000 Roadster reservations.

Tesla Semi reservations can be had for $5,000 per copy today. Companies such as Wal-Mart and JB Hunt have already placed reservations for an undisclosed amount of the haulers, which won’t go on sale until at least 2019.

Despite the strategy of seeking cash flow from advance buyers, Tesla’s options for additional cash are limited. The company already has outstanding bonds that have not performed well for investors. The other option is to seek equity capital by issuing additional stock, which would dilute existing shareholders, including CEO Elon Musk, who owns 20 percent of the company.

On an official basis, Tesla simply says it expects to “generate significant cash flows from operating activities” once production of the Model 3 sedan reaches 5,000 per week. Right now that production milestone–originally scheduled for this year–is slated to be achieved by March 2018.

 





 

About Nick Saporito

AutoVerdict Senior Editor Nick Saporito began writing about cars at age 13. Nick ran a couple of automotive enthusiast sites for several years, before taking some time off to focus on his career and education. By day he's a marketing executive in the telecom world and by night he hangs out here at AV. You'll find him focusing on tech, design and the industry's future.
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 One Comment

  1. Nov 22, 2017 at 3:07 pm

    Considering recent news about Tesla and Uber, I wonder if the two will still be leading the pack (or leading the hype) I'm autonomous tech a decade from now.

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 Latest Forum Messages
  1. Andrew_L
    nsaporito
    Fascinating strategy at play here. It really seems to be 50/50 on rather or not they survive.

    The amount of misperception about the company is staggering. They are living off hype, literally.


    I get that but how long will investors keep putting up with loss after loss.
    nsaporito
    Fascinating strategy at play here. It really seems to be 50/50 on rather or not they survive.

    The amount of misperception about the company is staggering. They are living off hype, literally.
    arutherford
    FenwickHockey65
    If they generate more cash using preorder deposits, what happens when that cash runs out? Time to tease another product they have no way to build...?


    And repeat!
    FenwickHockey65
    If they generate more cash using preorder deposits, what happens when that cash runs out? Time to tease another product they have no way to build...?
    Andrew_L
    send some of that money this way I am sure I can spend it more efficiently!
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