Tesla will have to spend a staggering amount of money over the next few years (TSLA)

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One of my biggest questions about Tesla has always been to know why the company wants to grow so fast. "Data-reactid =" 37 ">
One of my biggest questions about Tesla has always been to know why the company wants to grow so fast.

In the abstract, I understand why: Elon Musk, CEO, believes that humanity is going through a difficult period to deal with global warming. If we do not replace gasoline vehicles with electric cars – Fast! – We are doomed.

In practice, however, it seems that Tesla has long lived unnecessarily on the razor's edge. And although the company has recorded a huge third quarter, garnering nearly $ 7 billion in revenue and a profit of more than $ 300 million, Tesla still has only about $ 3 billion dollars in cash. In the auto industry, it's enough to stay in business for a year, optimistically, if the economy is heading south.

<p class = "web-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Tesla worked in the dark on a quarterly basis before ( even though he never managed to make the whole year). These were times when I wondered: "Why not consolidate the result rather than aggressively push for the next big deal?" "Data-reactid =" 40 "> Tesla ran in the dark every quarter before it never managed to be profitable year). These were times when I wondered, "Why not consolidate the result rather than aggressively pushing for the next big thing?"

The company did not do that, of course. Thus, its uneven results have been out of step with the rest of the automotive business, which has been systematically profitable for almost 10 years. On the one hand, Tesla's strategy has given it a significant market capitalization, superior to that of Ford (profitable) and Fiat Chrysler Automobiles (profitable). For its part, Ford has eight times more cash than Tesla; it could overcome a dozen moderate recessions and a complete financial collapse.

Tesla's built-in costs are quite high

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Tesla has had a fairly good capital discipline, but to a certain extent, its ability to operate lean-start is coming to an end. For example, its plant in Fremont, California, does not operate very efficiently, requiring more than twice as many workers to build about 200,000 vehicles that General Motors and Toyota need for 400,000 when they operate jointly. 'factory. Tesla also assembles many of its Model 3 sedans on an ad-hoc line hastily erected under a tent in a parking lot. It was a good solution to a thorny problem, but it probably will not last long term.

The repair of Fremont will obviously cost a lot of money. But that's just the beginning. In the next few years, Tesla, which has grown from 200,000 to 300,000 years to a manufacturer that can eventually produce one million vehicles a year, will have to spend huge sums in dollars.

For now, I'm going to focus on investment spending rather than debt (Tesla has about $ 10 billion in balance sheet). Tesla currently manufactures three vehicles: the Model S sedan, the Model X SUV and the Model 3 sedan. In the next year or so, he wants to start building the Model Y, a compact SUV. It also has a pickup truck, a new Sports Roadster car and a semi trailer on the drawing board. The pickup could cost a billion dollars to develop. The Roadster could be cheaper, so call it half a billion. The semi could be a billion or more.

That's all Tesla's cash reserve. In the meantime, models 3 and X could be updated in the next few years. Tesla is also investing in the expansion of its Supercharger network and, as it sells more vehicles, will need to expand the scale of its retail outlets and service centers.

The very large is a new factory, destined for China. It will probably cost several billions. Tesla will surely finance it with debts, so it will be even more important that this investment pays off (it will not have to pay right away – if it lasts for decades, inflation will reduce some of the long-term responsibility). And unlike traditional Tesla competition, Musk will expand its business at 2018 prices. To return to Ford's comparison, this automaker still operates factories built in the 1920s. Much of its manufacturing capacity was bought and paid 50, 60 years ago or more.

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