Tesla is likely to turn to Wall Street for another big cash infusion as it gears up to launch its first mass-market electric vehicle later this year, chief executive Elon Musk indicated on Wednesday.
His comments came as the US electric carmaker disclosed that chief financial officer Jason Wheeler would leave the company after little more than a year. Mr Musk said only that Mr Wheeler was quitting to do “something in the public sector”. His departure makes way for the return of Deepak Ahuja, who had been Tesla’s CFO for seven years before Mr Wheeler arrived.
The switch in the top finance role comes as Tesla faces a make-or-break year, with the planned launch of the Model 3, the gearing up of a massive battery plant dubbed the “gigafactory”, and integration of its Solar City acquisition. On Wednesday, the company held back from issuing its usual full-year forecast because of uncertainties around the Model 3 later in the year, predicting only a first-half vehicle delivery tally of 47,000-50,000.
A soaring share price has given Mr Musk the chance to pad Tesla’s cash reserves at a critical moment, plugging a potential hole in the company’s finances later in the year. The stock has risen 50 per cent from a low point in December, hitting an all-time high last week, despite a lack of any new information or catalysts for the rally.
Asked on an earnings call about whether he would try to raise more capital, Mr Musk said: “This is really a question of what’s the risk tolerance of the company, or how close to the edge do we want to go? The company’s current business plan could push it close to that.”
. . . we’re studying a number of options, but it probably makes sense to raise capital to reduce risk
He added: “That’s probably not the best thing for shareholders on a risk-adjusted basis. So we’re studying a number of options, but it probably makes sense to raise capital to reduce risk.”
Mr Musk’s huge popularity among retail investors has helped to buoy his company’s stock and enabled him to finance a hugely ambitious timetable for Tesla’s new car. He brought forward a 500,000 annual vehicle target by two years, to 2018, forcing an acceleration in capital spending. But the strength of Mr Musk’s Wall Street fan base enabled the company to raise $1.7bn of equity and refinance $1.7bn of convertible debt in the first nine months of last year, despite concerns he was overstretching the company by acquiring SolarCity.
The Tesla boss reiterated a target for vehicle deliveries — which were only 76,263 last year — of 500,000 in 2018 and 1m two years later. However, he struck an uncharacteristically cautious tone, saying: “As far as the information I have at my disposal right now, I believe that is the most likely outcome.”
The company, which has dropped “Motors” from its name following the SolarCity deal, reported a narrower than expected quarterly loss for its latest quarter and said revenues rose more than expected. Its fourth-quarter loss fell to $121.3m, or 78 cents a share, in the three months ended in December, compared with a loss of $320.4m, or $2.44 a share, in the same period a year before. However, that fell short of its third-quarter profit of $21.9m.
Adjusting for one-off items, the 69 cent loss was slimmer than the loss of $1.13 a share that analysts had forecast. Revenues nearly doubled from a year ago to $2.28bn, ahead of Wall Street expectations, despite sliding 1 per cent sequentially.
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