Tesla Motors Inc on Friday disclosed $1.1 billion in third quarter cash requirements in payments and planned expenditures, about a third of the cash on hand mid-year, in a new sign of pressure on the electric vehicle maker. The company is finishing construction of a massive battery factory in Nevada, the Gigafactory, and ramping up for production next year of a mass market sedan, the Model 3. That has raised questions about whether the company will need to raise new cash to reach its goals.
It said in the filing that it had $3.25 billion in principal sources of liquidity as of June 30, 2016, including $1.7 billion from a public offering in May and a $678 million credit line. The filing also said that in July it had repaid that $678 million credit line and that it intended to repay principle on $411 million of 2018 convertible notes in the third quarter and could spend more on the securities.
"During the third quarter, we will be using substantial amounts of cash in connection with conversions of our 2018 Notes and we could pursue other actions to reduce our outstanding balance of convertible notes, which could require further outlays of cash," Tesla wrote in the filing with the US Securities and Exchange Commission. If the two third-quarter payments are subtracted from the mid-year cash balance, Tesla would have $2.1 billion left over. The company on Wednesday told analysts it planned $1.75 million in the second half of the year on capital expenditures. Tesla declined to comment beyond the filing.
Tesla, which wants to buy solar panel installer SolarCity Corp for $2.6 billion in shares, also disclosed that the value of its secured assets had limited its ability to borrow under its asset-based revolving credit agreement with a syndicate of banks. Chief Executive Elon Musk earlier this week had repeated a projection that if the deal is consummated, the combined Tesla-SolarCity could require a "small equity capital raise" next year.
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