Tesla will probably need another $10 billion to fund the automaker’s autopilot feature and an expected expansion into China, according to a report from Goldman Sachs.
CEO Elon Musk expanding Tesla’s business venture while struggling to mass produce the Model 3 is risky, Goldman analyst David Tamberrino wrote in a research note Thursday, according to Bloomberg. Tesla is feverishly cutting spending to avoid having to raise more money.
“We see several options available to the company to refinance maturing debt and raise incremental funds, which should allow Tesla to fund its growth targets,” Tamberrino noted before suggesting angling for more capital without raking in profits could “weigh on the credit profile of the company.”
The Silicon Valley got one step closer to expanding the Tesla empire after China nominally agreed to allow Tesla to produce vehicles in the country without sharing technology-know-how with Chinese companies. Musk will likely to have raise more money to build a factory inside the communist country, Tamberrino noted.
Tamberrino’s sober warning comes shortly after Morgan Stanley analyst Adam Jonas issued warning flags Monday concerning Tesla’s business and production prospects. He slashed his price target due to troubles in the electric car maker’s production process for the wallet-friendly Model 3, which has experienced production delays. (RELATED: Tesla Bull Turns Bearish As Clouds Over Elon Musk Continue To Darken)
Tesla’s credit has gotten racked as the company continues missing crucial deadlines.
Moody’s dropped Tesla’s credit rating in March and changed the company’s outlook to negative as the fledgling Model 3’s production dwindles while the automaker’s financial situation grows dim. (RELATED: ‘Unusual’: Elon Musk Appears To Have Nervous Breakdown During Bizarre Tesla Earnings Call)
Tesla will need to raise more money in the near future to meet its cash needs, the credit rating agency claimed. Moody’s labeled the electric car marker a substantial risk for investors willing to dive headfirst into the auto market.
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