Tesla Increases Credit Line By $800 Million

JUN 26 2017 BY STEVEN LOVEDAY 16

Tesla Model 3 first deliveries confirmed for July

Tesla CEO Elon Musk doesn’t hesitate to spend what it takes to bring the Tesla Model 3 to market.

Just about six months ago Tesla increased its credit line by $500 million with two new agreements. This came shortly after Elon Musk had taken to Twitter to say that additional funding may be unnecessary. Simply increasing the credit line doesn’t ultimately mean that the automaker needs the money, but Musk is definitely playing it safe. The company also raised funds three months ago through stock and debt offerings.

Elon Musk

Tesla CEO Elon Musk is definitely no stranger to borrowing and spending to push his companies forward.

Now, the Silicon Valley automaker has expanded agreements further, to make space for another $800 million. Initially, the company has access at an asset-backed $625 million, but can then opt for an additional $175 million, if needed.

Friday’s regulatory filing shows that the total combined agreements bump Tesla’s credit line to a substantial $3.825 billion. At the close of the last quarter, the Palo Alto car maker had about $4 billion in available cash, but it was made clear that that number would likely be cut in half by the time Model 3 production starts.

Obviously, the automaker’s fast push through cash over the last two quarters, and the amount that will be flying out as Model 3 production nears, has caused a need to secure added credit options. According to the related SEC filing (via Electrek):

“On June 19, 2017, Tesla, Inc. (the “ Company ”) and its subsidiary Tesla Motors Netherlands B.V. (“ Tesla B.V. ” and together with the Company, collectively, the “ Borrowers ”), entered into the Sixth Amendment (the “ Credit Agreement Amendment ”) to the ABL Credit Agreement, dated as of June 10, 2015 (as amended, modified or supplemented, the “ Credit Agreement ”), among the Borrowers, the lenders party thereto, and Deutsche Bank AG New York Branch, as administrative agent and collateral agent, and the other agents party thereto. The Credit Agreement Amendment increased the revolving commitments under the Credit Agreement by $625 million, thereby increasing the total revolving commitments from $1.2 billion to $1.825 billion, and also amended the Credit Agreement to permit the Borrowers to obtain up to $175 million of additional incremental commitments for potential total revolving commitments of up to $2.0 billion, subject to the terms and conditions of the Credit Agreement.”

Source: Bloomberg via Electrek

Categories: Tesla

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16 Comments on "Tesla Increases Credit Line By $800 Million"

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Michael Will
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Michael Will

Rampup time ! Hope my reservation comes up in October already.

Mikael
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Mikael

Until then you can drive your current Tesla around in California.

unlucky
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unlucky

I still find it ridiculous Musk even bothers to say they don’t need to raise capital. It’s a capital-intensive business, why pretend?

That having been said, for companies revolving credit usually is just used to make purchases from suppliers. It’s working capital it’s used for short-term purposes. So you wouldn’t expect to see Tesla more “in the hole” on their balance sheet from this. Of course it will be noted as a revolving credit line though.

AlanSqB
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AlanSqB

Exactly. This is the type of thing companies do every day. It’s just amplified under the Tesla Microscope right now so it’s news.

Four Electrics
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Four Electrics

Once again the lesson of Tesla: you can make a car that nobody has made, if you’re willing to spend (and lose) more than anyone else is willing.

AlphaEdge
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AlphaEdge

Wut?

Many other car companies have stated their intention of entering this space, so what’s the difference?

Get Real
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Get Real

More repetitive 4E FUD from a serian anti-Tesla basher.

BillT
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BillT

I admire Musk’s “bet the company one one product” mindset and will be pulling for Tesla to succeed. When it is time to replace by Volt in 2024 or so I am convinced that thanks to Tesla, one way or another I will have some good affordable (250 miles @ 75 MPH) BEVs to chose from either from Tesla or someone inspired by Tesla.

Paul Smith
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Paul Smith

But The Tesla will get you to a Supercharger.

Dav8or
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Dav8or

Why does everybody here make such a big deal out of the “Supercharger”? I drive a BEV and charge at home. I have no need to go charge publicly and sit around and wait for my car. Why is this cool?

If you have enough money to buy a Tesla, you have enough money to rent a car for a long trip. Just admit it, ICE cars are way better at long distance travel.

Robert Weekley
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Of course, you could also say regular ICE cars are better at making more noise before they go fast, too!

Or, with an ICE car, you get to stand and breathe Gas Fumes while you fill you tank, too!

Or, With an ICE car, you get to stand and fill it, then move and park it (After you pay), then hit the washroom and or buy a meal.

However, most Tesla Superchargers are located where there are washrooms, restaurants, wifi, etc., so you can pull in, plug in, and take care of yourself while the car charges for 15-30 minutes, typucally: sufficient to get you to the next quick fill, 3-4 hours up the road, at most!

Pushmi-Pullyu
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Pushmi-Pullyu

With Tesla’s stock price recently climbing far beyond previous heights, this is a good time for Tesla to increase its credit line. The huge market cap will give Tesla favorable borrowing terms.

Of course, this will enrage the serial Tesla bashers (Hi, Four Electrics!), as it exposes one of their many Big Lies for what it is: Their Big Lie that “Tesla is hiding major financial difficulties and will fail any day now”.

unlucky
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unlucky

Revolving credit is continual. I’m not sure that it “freezes a moment in time” like a debt (bond issue). Having a better financial position (which should not include stock price but let’s face it it does) will help you qualify but the interest rate is probably defined against a commercial benchmark (prime rate, interbank rate, etc.) instead of being fixed based upon assets of a single moment.

Pushmi-Pullyu
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Pushmi-Pullyu

“Having a better financial position (which should not include stock price but let’s face it it does) will help you qualify…”

That was my point.

I’m not a “financial guy”, but I don’t think I need to be to understand that with Tesla appearing to better qualify for loans, that will give it more options to choose from, no matter the type of loan. Credit cards are “revolving” loans” yet we all know that you can get different borrowing rates for your credit card, depending on your credit score. It’s also better to have multiple options to choose between, when choosing a credit card, to find something that more precisely fits your personal needs.

Is it somehow different for Tesla, or different because it’s borrowing billions instead of just thousands? Common sense says it’s the same situation, with similar results. Again, I don’t think I need to be a financial expert to understand that.

Tom
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Tom

Borrowing is far more attractive than equity offerings as long as you can get decent rates. Borrowing does not dilute the outstanding shares. I recently have been going through this process by helping a company with validating claims on their product. They are seeking massive ramp up in business. Selling equity is about 4th on their preferred list of things to do in order to raise cash. Putting on debt is number one. Always has been.

Leafowner
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Leafowner

Great sign. Need more $$$$$ for that massive inflow of parts to build those hundreds of thousands of cars!