Tesla says no need for capital raise as Model 3 output rises
Tesla Inc sought to squash any speculation it might need to raise more capital this year on Tuesday, driving the company’s battered shares higher as it announced it built 2,020 of its cheaper Model 3 sedans in the last seven days, APA reports citing Reuters.
Tesla shares jumped as much as 6.9 percent in morning trade, recouping a third of its losses from a week dominated by bad news about its credit rating and a crash involving a car using its semi-autonomous driving technology.
But with the company again missing its own 2,500 target for weekly production at the end of the first quarter, doubts remained among analysts and fund managers about Tesla’s ability to keep production growing to a promised 5,000 Model 3s per week in three months time.
Musk’s $50-billion dollar company, involved in a raft of projects ranging from trucks to a Roadster sports car and a factory in China, said it would also churn out 2,000 of the Model 3 cars next week and promised output would climb rapidly through the second quarter.
The Model 3 is the most affordable of Tesla’s cars to date and is the only one capable of transforming the niche automaker into a mass producer amid a sea of rivals entering the nascent electric vehicle market.
“(Tesla is) laying the groundwork for Q3 to have the long-sought ideal combination of high volume, good gross margin and strong positive operating cash flow,” the company said in the filing.
“As a result, Tesla does not require an equity or debt raise this year, apart from standard credit lines.”
Jefferies analysts had estimated that Tesla needed $2.5 billion to $3 billion of fresh equity to fund the Model 3 ramp-up and several other Wall Street brokerages have predicted the company would need more funds this year to fund its wide range of technology initiatives.
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