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Does Tesla Need More Cash? Goldman Sachs Say Yes, Musk Says No

Does Tesla need more cash in order to continue growing and meeting sales expectations? That’s an interesting question, but not one where there’s much consensus on the answer — as demonstrated by recent comments from an analyst at Goldman Sachs.

Said analyst, Patrick Archambault, argues that the EV pioneer would need at least $6 billion in extra capital over the next 11 or so years in order to become a “disruptive force.” Musk, of course, disagrees — as evidenced by recent comments made to the Wall Street Journal wherein he stated that Tesla would be cash flow positive by third quarter of 2015.

Gas 2 provides some more information and some commentary:

The Tesla Gigafactory alone is estimated to cost up to $6 billion, and even with Panasonic and the state of Nevada pitching in nearly $2 billion in cash and incentives, that still leaves Tesla on the hook for as much as $4 billion. Then there’s also Musk’s ambition plans for Tesla sales growth, which he puts as high as 500,000 vehicles annually by 2020 including the $35,000 Model III that may cost closer to $50,000. Such a feat would be a masterful accomplishment, but it won’t happen without serious investment into more production capacity.

At its peak, the former NUMMI factory where Tesla made its home only produced about 300,000-400,000 cars a year, 80% of what Musk will need to meet sales targets. Even with improvements in manufacturing efficiencies, it’s likely Tesla will need at least one new factory before 2020 to reach its sales goals, and along with the Gigafactory, there’s a lot of big ticket items ahead of the electric automaker. This has Goldman Sachs signaling that Tesla may need to find additional sources of revenue, and it may have to borrow that money to get everything done.

Hard to say what exactly will happen in the future on this one. The potential for great growth is certainly there, as is the potential for the bottom falling out from the whole thing if a series of bad missteps were to occur.

On the stock market side of things, with a number of big announcements expected in the relatively near future — the beginning of Model X production, the Gigafactory opening, etc — it’ll be interesting to see what happens.

Image Credit: Tesla Motors

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Written By

James Ayre's background is predominantly in geopolitics and history, but he has an obsessive interest in pretty much everything. After an early life spent in the Imperial Free City of Dortmund, James followed the river Ruhr to Cofbuokheim, where he attended the University of Astnide. And where he also briefly considered entering the coal mining business. He currently writes for a living, on a broad variety of subjects, ranging from science, to politics, to military history, to renewable energy.


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