Tesla Is Burning $6,500 Every Minute. It’s Probably Going to Need to Raise a Lot More
At the beginning of April, Tesla founder and CEO Elon Musk joked about the company going bankrupt, but it appears that such a seemingly unlikely outcome is no laughing matter. There is now a “genuine risk” that the electric car company won’t have enough money to make it out of this calendar year, Bloomberg reports.
The company spends more than $6,500 every minute and it has had negative free cash flow for five quarters, according to Bloomberg. It has also tripled its workforce between 2014 and 2017 and its revenue per employee is lower than its competitors in the auto industry.
Tesla (TSLA) has teetered on the edge before. Since it was founded in 2003, the company has had a creative approach to financing. Musk has personally contributed millions of dollars to the company, and has helped get it out of sticky situations in other ways. In 2008, for example, Musk put together a $40 million debt deal that closed on Christmas Eve, just hours before the company would have run out of money.
Even taking into account the company’s ability to survive near-misses, market watchers have expressed concern about the company’s short-term future. Moody’s says the company needs another $2 billion to make it through the year, while Jim Chanos of Kynikos Associates sees the company heading for a “brick wall.”