Tesla has approximately $2.7B in cash. The GF is going to cost $5B, probably will be built in stages. May be a pilot plant for <$1B with Panasonic and other partners sharing some of the cost? Then scaling up the production?

In addition, Tesla will have to invest in the Model 3 production line, probably in stages? Looking at the capex of Model S, I would guess that $500M would be the minimum to get started. With steel, costs should be lower for the equipment. To drive this kind of demand, Tesla will have to install a minimum of another 200 SCs in the US/Canada, Europe, China. That is another $30M at least. Plus service, etc. Meanwhile, Model S, X production is going to be scaled up to 200,000 autos. Cost?

How is the Capex going to be funded? Until Tesla reaches economies of scale with producing 100,000-200,000 Model S, X, cash flow from operations will be limited.

Any opinions? Will Tesla have to have another secondary? How much?

EQC | 6 september 2014

First: I am an I know very little about finance. However, simple math I can do all day. I just don't know if this is the right simple math to answer your question.

Anyway: Tesla will sell roughly 35,000 Model S this year. Profit margin on each is a bit over 25% on an average selling price likely around $90,000. So, there is about $22,500 profit per car. Some of that will be used to fill an account to fund warranty repairs. The rest is "profit" that will be used to fund developments for the future (superchargers, gigafactory, Model X, Model III, factory upgrades, stores and service centers). Basically, all of Tesla's profit is spent on these future developments, which I think makes good sense for a growing company.

Lets say Tesla saves up $12,500 per car sold (more than half the profit margin on each car) to pre-fund a warranty account....that leaves a nice round $10,000 per car to fund the future.

This year, 35,000 Model S ==> $350million to use future developments.

The factory is already set up to produce 50-60,000 cars, so without much more investment there, Tesla should be able to produce 60,000 Model S and next year ==> $600million to fund post-2015 things.

2016 should see production climb to 100,000 for the year ==> $1billion to use.

Add this growing cash stream to the $2.7 billion currently in their bank account, and I'm not seeing a money problem.

The superchargers "pay for themselves" via the $2000 per car fee -- just 35,000 $2000 fees means enough money to build over 300 supercharger sites.

The money needed for Tesla's share of the gigafactory is already on hand.

Model X development should be very nearly done now, and the factory is basically ready to produce it on the same line as the Model S.

Stores and service centers are likely fairly cheap compared to gigafactory and product development.

AND: I suspect my calculations above for Tesla's useable cash flow are under-estimates. As production quantity grows every year, profit margin on each car goes up, and the likely warranty expenditure per car should drop ==> even more money to fund the future for every car sold.

JeffreyR | 6 september 2014

They did a corporate bond to finance the Gigafactory. Should be plenty of documentation on this.

Red Sage ca us | 7 september 2014

The only people who care about the capital expenditures of Tesla Motors right now are impatient stockholders who want to see quarterly dividends and $h0r+s who want to trick people into selling shares prematurely.

I don't think anyone will see any dividends whatsoever prior to 2022 or 2025.

$h0r+s are too... shortsighted... to realize they are the ones who have been driving the price of TSLA upward. One can only hope they don't catch on before it reaches around $1,500 per share.

Brian H | 7 september 2014

The 25% is gross margin. Then subtract all amortized capital costs to date, admin, etc. and very little is left (so far). The GF won't be funded by current cash flow; it's a bet on future cash flow -- i.e., an investment of equity.

El Mirio | 30 august 2019

OP, in Q2 they showed 5.4 Bio cash on hand. They expect total capex for 2019 to be 1.5 Bio to 2 Bio total, which was a reduction from previous quarter.

Giga3 is financed thru debt for the most part.

EVRider | 30 august 2019

No need to respond to 5 year old topic. Only the spammers do that.