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.