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But Tesla has been showing signs of financial stress for a while. The company has reduced its capital expenditures in 2018 and expects only a modest increase this year. Meanwhile, Musk seduced Tesla fans with the promise of quick repairs and bodywork for Tesla owners, as well as autonomous driving features and new products such as solar roof tiles, new cars and electric trucks.
With such projects, capital spending is expected to increase, especially for Tesla, which has announced new, improved facilities, including its future Gigafactory Shanghai. But capital spending dropped 43% last year to $ 2.32 billion, and the company is targeting $ 2.5 billion in 2019, well below the $ 4.08 billion cost. committed in 2017.
There are other indications of stress.
In the last quarter of 2018, Tesla carried $ 180 million in debt to Solar City first in January and again in April 2019, choosing to pay a higher interest rate at a later date. In addition, letters of credit increased by 53% against Tesla in the second half of last year. Letters of credit are generally subscribed by suppliers who do not know if a customer can pay their bills in full or on time.
In the risk factor section of its annual report, Tesla "annually negotiates cost reductions with existing suppliers". The company also warns investors that "if our efforts to control and reduce supplier costs fail, our operating results will suffer."
In January, Tesla proceeded with a massive restructuring, laying off staff and reducing production of older, more expensive vehicles, Model S and X, to produce Model 3 electric sedans for European and Chinese customers.
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