Tesla Motors discloses $1.1 billion in third-quarter cash needs

August 5, 2016 6:14 PM EDT

A prototype of the Tesla Model 3 is on display in front of the factory during a media tour of the Tesla Gigafactory which will produce batteries for the electric carmaker in Sparks, Nevada, U.S. July 26, 2016. REUTERS/James Glover II


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SAN FRANCISCO (Reuters) - Tesla Motors Inc (NASDAQ: TSLA) on Friday disclosed $1.1 billion in third quarter cash requirements in payments and planned expenditures, about a third of the cash on hand mid-year, in a new sign of pressure on the electric vehicle maker.

The company is finishing construction of a massive battery factory in Nevada, the Gigafactory, and ramping up for production next year of a mass market sedan, the Model 3. That has raised questions about whether the company will need to raise new cash to reach its goals.

It said in the filing that it had $3.25 billion in principal sources of liquidity as of June 30, 2016, including $1.7 billion from a public offering in May and a $678 million credit line.

The filing also said that in July it had repaid that $678 million credit line and that it intended to repay principle on $411 million of 2018 convertible notes in the third quarter and could spend more on the securities.

"During the third quarter, we will be using substantial amounts of cash in connection with conversions of our 2018 Notes and we could pursue other actions to reduce our outstanding balance of convertible notes, which could require further outlays of cash," Tesla wrote in the filing with the U.S. Securities and Exchange Commission.

If the two third-quarter payments are subtracted from the mid-year cash balance, Tesla would have $2.1 billion left over. The company on Wednesday told analysts it planned $1.75 million in the second half of the year on capital expenditures.

Tesla declined to comment beyond the filing.

Tesla, which wants to buy solar panel installer SolarCity Corp (NASDAQ: SCTY) for $2.6 billion in shares, also disclosed that the value of its secured assets had limited its ability to borrow under its asset-based revolving credit agreement with a syndicate of banks.

Chief Executive Elon Musk earlier this week had repeated a projection that if the deal is consummated, the combined Tesla-SolarCity could require a "small equity capital raise" next year.

REGULATORS REQUESTS

The company also said in its filing that "from time to time" it has received requests for information from regulators and governmental authorities "such as the National Highway Traffic Safety Administration (NHTSA), the National Transportation Safety Board and the Securities and Exchange Commission."

The federal regulator NHTSA is investigating a May 7 fatality in Florida in which a driver using Tesla's auto-pilot system crashed into a truck.

The Wall Street Journal reported last month that the SEC was investigating whether Tesla had taken too long to disclose that crash. Tesla at the time said it had received no communication from the SEC. It was unclear from the filing whether the reference to the SEC related to the crash or another matter, and Tesla declined to comment further.

As it warned in its previous quarterly filing in March, Tesla said the cost of building and operating its Gigafactory could exceed the company's current expectations.

Tesla spent $117.4 million on the Gigafactory construction in the first half of 2016 and targets spending a total of about$520 million in 2016.

(Reporting by Alexandria Sage and Paul Lienert. Writing by Alexandria Sage; editing by Sriraj Kalluvila and Bernard Orr)



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