Tesla CEO Elon Musk always deflects the government incentives it receives to build electric cars, claiming that even without them the company would survive. However, in the most recent financial report, it looks like Tesla is burning through its available cash.
Aside from Gigafactory expenses, Tesla is losing £2,500 on every Model S sold.
It burned through £230 million this quarter and only has £740 million left in cash, down from £1.6 billion last year. The company also dropped sales forecast from 55,000 to between 50,000 and 55,000, causing investors to worry about the Model X, launching in September.
The Model X will cost hundreds of millions to begin with, as Tesla starts buying bulk inventory to build the electric SUV. This should put even more pressure on Tesla in the second half of 2015, as it continues to shred its cash reserves.
It is not that Tesla is starved of customers - in fact Musk claims it is doing all it can to ramp up production for more units - it is that the cars are not making a lot of profit.
That is partly to do with Tesla’s business goal, which is to accelerate the mainstream adoption of electric cars. To make that possible, it has built SuperChargers that other electric car manufacturers can utilise and opened its patents; two potential sources of revenue squandered.
It is also selling the Model S and X at the lowest price possible to survive. Compared to other premium cars on the market, the Model S and X are surprisingly cheap at £50,000 each after government incentives.
On top of all that, Tesla is investing millions into its energy division, building the Powerwall and Powerpack. The Powerwall has been reserved for over a year, with combined sales of over £600 million so far. Amazon and American retailers Walmart and Target have partnered with Tesla for Powerpack deals.
It would seem Tesla is having trouble scaling its company to become a conglomerate of the electric industry. Musk intends to sell more shares to gain more capital.