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Tesla To Be Cash Flow Positive By The End Of November


2012 Tesla Model S Signature

2012 Tesla Model S Signature

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Just last week, Tesla revised its 2012 revenue projections downward from some $600 million to between $400 and $440 million, blaming production startup problems with the Model S sedan for the decline in revenue.

In the same filing with the Securities and Exchange Commission (SEC), Tesla stated its desire to raise an additional $150 million through a follow-on share offering, leaving some to speculate the start-up automaker was running short of cash.

In a statement on the Tesla Motors website, Elon Musk addressed this speculation as an “incorrect interpretation” of the SEC filing. Saying that public companies need to make investors aware of every risk, no matter how slight, Musk explained his use of language as “discomforting at best.”

Further clarifying the company’s position, Musk went on to state that money raised was to be used exclusively for risk reduction. While Tesla can control production and even (to some degree) vendor supply issues, it’s can’t control the unforeseen, such as fires, floods and earthquakes.

Shrugging off the notion that Tesla was running out of cash, Musk went on to say that Tesla would be cash flow positive at the end of next month, November 2012. Furthermore, it’s making an advance payment on outstanding Department of Energy (DOE) loans, making its March 2013 payment this month.

Tesla has negotiated with the DOE to lower the amount of principal payments held in reserve from nine months to six months, and has assured the DOE of its intentions to pay back the loans earlier than required to do so.

While others may view Tesla as a failure, if Musk can deliver as promised we see nothing but growth in its future.
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