Tesla has burned through $4.2 billion over the past 12 months, spending cash at a rate of about $8,000 a minute as it struggles to ramp up production of its Model 3 sedan, reports Bloomberg, citing its own data. At that rate, the news outlet estimates Tesla will deplete its current cash reserves by Aug. 6, 2018.
That is, of course, a hypothetical financial projection that doesn't take into account income from the Model 3 or other products like its Model S luxury sedan, and it assumes Tesla continues its frenetic pace of spending. But it adds to a growing chorus of doubts and criticisms of the company as it struggles to produce the all-important Model 3 in meaningful numbers and reports sizable quarterly losses, even as it introduces a new electric-powered semi truck and Roadster sportscar.
Investors largely remain bullish on Tesla, whose shares were trading at $317.81 as of the close Tuesday and were up around 40 percent since the beginning of 2017. Tesla has a market capitalization of more than $53 billion, eclipsing the likes of Ford ($48 billion) and Fiat Chrysler (nearly $28 billion), despite those companies turning consistent quarterly profits.
Elon Musk has turned to taking reservations from customers as a way to get cash in the door. Consumers can reserve a Roadster, which doesn't come out until 2020, by putting down $50,000, while the Founders Series Roadster requires a $250,000 down payment. The latter is capped at 1,000 examples, meaning Tesla could generate $250 million in income. But bringing new products to the market will also add new costs.
"Whether they can last another 10 months or a year, he needs money, and quickly," Kevin Tynan, a senior analyst with Bloomberg Intelligence, told Bloomberg. He estimates that Tesla will need to raise $2 billion or more in fresh capital by mid-2018.
Separately, a Morgan Stanley analyst said he expects Tesla shares to be volatile next year before collapsing, according to Investor's Daily. In a note to clients, Adam Jones maintained an equal weight rating on Tesla with a price target of $379, but he issued a warning: "From a shorter-term trading perspective, we anticipate Tesla's stock price may reach highs in the range of $400 or more over the next few months before facing some more serious headwinds later in the year that could take the stock significantly below current levels."
Tesla has said it has enough money to meet its target of building 5,000 Model 3 sedans per week by the end of March, and expects to "generate significant cash flows from operating activities" after that point, per a letter to shareholders dated Nov. 1.