Report: Tesla Losing $4,000 on Each Car, and is Burning Cash Faster

After Tesla Motors announced last week that it had lost $184 million in the second quarter of this year on lower vehicle deliveries and higher spending on its factory ahead of a new model, analysts say the company could have a bumpier road ahead if it can’t raise cash soon.
According to a Reuters report, Tesla is losing $4,000 on each car it sells, and the company’s ability to raise capital could be severely hampered by its spending now and its inability to create positive cash flow in a luxury market that is extremely favorable.
“A capital raise, given the way they’re burning cash today, given the fact that they have future investment needs, seems very likely at some point,” UBS Securities analyst Colin Langan told Reuters.

Despite favorable press and an extremely effective marketing plan, Tesla has only one profitable quarter in its history and the automaker doesn’t project a cash-positive year until 2020.
Tesla’s stock tumbled more than 10 percent Thursday after the announcement and closed Friday still down around 10 percent from its one-week high.
The story points out that Tesla has had tough times before. In 2012, Tesla CEO Elon Musk steered the company out of a cash crunch and renegotiated a federal loan and sold shares of the company to raise money ahead of the Model S launch.
Musk faces a similar quandary now, ahead of the Model X launch, but with a challenged budget sheet, significantly higher investments in production and more competition in the market.
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