About Tesla’s New Capital Raise

As predictably as a wasp on crystal meth, Elon Musk’s Tesla is hitting the markets for around $1.15 billion in cash, split roughly 25:75 in equity and debt. 

Elon is throwing in the usual sweeteners: the actual Raise is a billion with a 30 day option to raise 15% more if demand is high enough. He will buy $25m In stock or 10% of the equity portion of the raise and so on and so forth. 

All good and well. I’m a Tesla shareholder, however tiny and so I want to see Elon win but it’s not hard to see that he’s skating on thin ice in the way only he can. Tesla, post Solar City combination, needs so much more than just a billion raise if you look at both companies cash burn rates prior. But raising too much can send negative signals and smells like desperation.

So Elon is raising just enough to get Model 3 production underway. The company plans a limited run if production, round 5000 cars per week by July, and maybe double that by early 2018. If they can make a mass release before end of 2018, it will be the home run of home runs for Elon. I know the Model 3 will sell like hot akara and bread on a cold Saturday morning but Tesla has to stay solvent long enough to work through all the production issues, build it and sell it. 

This is the make or break mission. If Elon fails this, Tesla will crash harder than a failed rocket mission. If he succeeds, Tesla will make him richer than he’s ever been and provide the transformational fuel to take him (and the world) to Mars.

I’m watching eagerly, with popcorn on the side. 

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