After the most recent quarterly report (Q4 2015 - details/recap), a new air of conservatism is in the air at Tesla Motors.
In the last quarter of the year, Tesla reported a loss of $320 million dollars and $889 million lost for the year, which lessened the company's cash on hand to about ~$1.2 billion dollars.
Construction Of Tesla's Gigafactory Will Consume Part Of An Estimated $1.5 Billion Worth Of New Investments In 2016
Truth be told, going through money fast is nothing new for the company. The cash goes down pretty much every quarter, but thanks to its standing with investors and the market at large, raising new capital has never been any issue at all.
However more recently Tesla's financial image, and market cap, has taken a bit of a hit indicating it might not always be so easy to acquire capital.
Not to say a $21.8 billion valuation (as of Thursday's close) is anything to sneeze at; and there is still plenty of options on the table to raise additional funds today, but the fact the market cap was at $37.5 billion just last summer, means that the company now needs to protect both its image, and its cash on hand, to a much greater extent.
So it was little surprise that Tesla's new CFO Jason Wheeler stressed better cash-flow management on the conference call after the report last week.
Wheeler said that the cash situation would improve in 2016, even as Tesla invests a further estimated $1.5 billion into its infrastructure.
"My mandate from Elon is clear," said Wheeler, "Cash is king."
A good bulk of the conservation on Tesla's cash pile (and the conservation of it) is still predicated on the company selling between 80,000 and 90,000 Model S and X vehicles, and at a margin of up to 30% and 25% respectively.
A Major Point In Tesla's Plan For Profitability In 2016 Is The Sales Of 80,000+ Electric Vehicles
Wheeler described a "nice comfort level" for cash around $1 billion, and in the short term in order to maintain that level the company will draw on a revolving credit line (backed by company assets), as it waits on deeper sales at higher margins.
Tesla noted in its 2015 report that the company will turn a profit in 2016 based on non-GAAP accounting, but also based on generally accepted accounting principles by the 4th quarter as well. Basically, Tesla is going to keep burning at a decent pace for another 6-7 months, and then hopes to be more self sufficient.
Besides gearing up for Model 3 production in 2016, the company will continue to pour money into completing construction on this phase of its Gigafactory project in Nevada. Additionally, the company will open 80 more boutique stores and 300 further Supercharger stations.