Musk Goes Back to Wall Street to Bring the Model 3 to Market – Bloomberg (Mar 15, 2017)

I think it’s safe to say that Tesla’s plans for Model 3 manufacturing represent the biggest test the company and Elon Musk have faced by a long way. The ramp contemplated is so rapid and takes the company so far beyond its historical production rate that it seems almost impossible for it to meet its targets. And yet here it is raising more money to fund what’s going to be a massive capital spend in the first half of the year to prepare for that production run that’s scheduled to begin in July. In the first half of last year, the company spent around half a billion dollars on capex, and it plans to spend $2-2.5 billion in the first half of 2017, which gives some sense of just how big the leap is from anything the company has done in the past. That’s going to cause a massive cash drain, hence the new funding. Musk continues to execute extremely well on his long-term plans eventually, but hitting short-term targets continues to be his big weakness, and it feels like the Model 3 is either going to be the worst example of that flaw or the biggest possible exception to the pattern. I’m betting it’s the former.

via Bloomberg

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