Relax…Tesla Doesn’t Need $6 Billion In Cash
Back in September, an analyst for Goldman Sachs declared that Tesla was effectively dead in the water if it couldn’t acquire at least $6 billion in capital over the next 11 years. The analyst claimed that for Tesla to produce a truly disruptive electric car (presumably a reference to the Model 3), $6 billion or more would be required.
Here’s how Bloomberg reported the situation put forth by the Goldman Sachs analyst:
“…a Goldman Sachs Group Inc. analyst said the company may need at least $6 billion in capital, most of it over the next 11 years, if its electric car becomes a “disruptive” product.”
“The automaker led by Elon Musk is targeting production of 100,000 premium electric cars by late next year and has an eventual goal to sell at least 500,000 cars annually. The capital may be needed to fund growth if Tesla’s vehicles prove to be as popular as Apple Inc.’s iPhone or Ford Motor Co.’s Model T. Under such scenarios, production would range from 1.8 million a year to 3.2 million a year by 2025, Patrick Archambault, an analyst at Goldman Sachs, wrote today in a note.”
“With numerous projects laid out (as well as those not currently communicated) ahead for Tesla, we see a possible need for additional capital,” he wrote.
“Archambault, who has a neutral rating on Palo Alto, California-based Tesla, said the bulk of his estimate for the company’s capital needs would be for 2017 through 2025.”
The words of this lone analyst spawned a whole series of related articles in which various websites took the words of Archambault and basically believed everything the analyst declared.
But there’s one aspect overlooked. While Tesla may desire $6 billion in additional funding and may even seek it at some point in the future, the automaker certainly doesn’t need it.
Just look at that market cap…$29.94 billion!
So, the money is there for Tesla. Yes, we’re aware that Tesla may rather leave that $29.94 billion right where it is, but the automaker has used its market cap to fund operations in the past and it certainly could do so again.
So, as the title states, just “relax…Tesla doesn’t need $6 billion in cash.” Tesla may want $6 billion, but want and need are words with entirely different meanings.