Monday, October 1, 2012

An Electric Carmaker Struggles as Its Production Lags
As Tesla Motors, a maker of electric cars, burns through cash and misses production targets, it is turning to investors and taxpayers for extra financial help.

On Tuesday, Tesla announced plans to sell five million shares to raise cash. The federal government agreed earlier to waive some conditions of a $465 million loan, easing pressure on the company over the next couple of quarters. The moves raised questions about the long-term viability of the company.

In recent months, Tesla has been ramping up production of its main vehicle, a high-performance sedan called the Model S that goes from zero to 60 miles per hour in 4.4 seconds. Tesla has started rolling out the first cars, but was four to five weeks behind on delivering the vehicles to customers. In the meantime, it is consuming cash at a rapid rate and cut its revenue forecast on Tuesday. 
Under the new terms of the loan, Tesla received extra time to make a future payment, and will not have to pass a test this quarter that compares short-term assets with short-term liabilities.  But ... by the end of October, Tesla must submit a plan for early repayment of the loan.

The company has fully drawn down the government loan.  Its share price fell $3, or 10 percent on Tuesday, to $27.66 a share, down from a 12-month high of $38.01 in April.
Mr. Ahuja said that he expected Tesla’s operations to produce positive cash flows soon. In the first six months of this year, Tesla showed a cash drain of $111 million.
Some early customers who have received their Model S cars are extremely pleased.
Roadster 2.5
Buyers are paying a hefty sum to reserve the Model S. The deposit on the basic model, which sells for about $57,400 before tax credits, is $5,000. Souped-up versions require larger deposits.

Such payments have been a big source of cash for the company. At the end of June, Tesla was holding $133.4 million of reservation payments....
The New York Times
September 25, 2012

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