Tesla’s Elon Musk is betting the company. Now what?

The bad news for the world’s second biggest electric-car maker is that the crisis could be deep-sixed, because Elon Musk said he’s “not interested” in purchasing the company. But the good news is that…

Tesla's Elon Musk is betting the company. Now what?

The bad news for the world’s second biggest electric-car maker is that the crisis could be deep-sixed, because Elon Musk said he’s “not interested” in purchasing the company. But the good news is that Tesla can immediately turn to the second best option in front of it.

The company made the deadline for keeping $60 million of its $920 million in funding from Elon Musk and Redfin Real Estate, which obtained it through a public offering.

Musk’s electric-car maker reportedly needs to raise $750 million in funding in the next two to three weeks to save itself from bankruptcy. That puts it in constant need of funding from Musk, who could use his SpaceX startup, which he said was being prepped for a $5 billion investment in South America this year, as collateral for $100 million in loans. The Wall Street Journal, citing two sources with knowledge of the situation, reported on Feb. 1 that the problems first began last year when he was doing a good job expanding Tesla’s lineup, but the bank loans would not go far enough to cover the burgeoning cost of future spending.

Tesla’s roughly $4 billion in fourth-quarter losses over the past two years are more than double what it had said in February 2017 that it would lose in the following year. In a conference call Thursday evening with analysts, Musk said he understood why the original $920 million in funding from high-net-worth investors didn’t go as far as originally planned: He probably needed a lot more than that to see the company through.

But there’s no guarantee Tesla can find new funding this way. Tesla hasn’t ruled out raising the cash to buy out Daimler’s stake in the luxury electric-car maker, where Musk holds a board seat. Musk said he was “not interested” in buying the company, which would require putting about $350 million more into Tesla.

But as Musk pointed out, Tesla won’t have money if it doesn’t continue its Model 3 production ramp-up. That’s why the company needs new funding. But without Daimler’s investment in Model 3 production, “the Model 3 would likely not be profitable,” said Jon Commenschneider, the vice president of research and development at Gartner. “If you’re not running as lean as possible, then it may become a difficult situation to get out of.”

Gartner’s Commenschneider said that he expects Tesla to finance its spending with selling stock and warrants. Such a move would significantly dilute Musk’s voting control of the company as it raises capital to run the business. Tesla on Thursday made the deadline for keeping $60 million of its $920 million in funding from Elon Musk and Redfin Real Estate, which obtained it through a public offering.

Musk said he understood why the original $920 million in funding from high-net-worth investors didn’t go as far as originally planned: He probably needed a lot more than that to see the company through.

Tesla’s roughly $4 billion in fourth-quarter losses over the past two years are more than double what it had said in February 2017 that it would lose in the following year. In a conference call Thursday evening with analysts, Musk said he understood why the original $920 million in funding from high-net-worth investors didn’t go as far as originally planned: He probably needed a lot more than that to see the company through.

But there’s no guarantee Tesla can find new funding this way. Tesla hasn’t ruled out raising the cash to buy out Daimler’s stake in the luxury electric-car maker, where Musk holds a board seat. Musk said he was “not interested” in buying the company, which would require putting about $350 million more into Tesla.

But as Musk pointed out, Tesla won’t have money if it doesn’t continue its Model 3 production ramp-up. That’s why the company needs new funding. But without Daimler’s investment in Model 3 production, “the Model 3 would likely not be profitable,” said Jon Commenschneider, the vice president of research and development at Gartner. “If you’re not running as lean as possible, then it may become a difficult situation to get out of.”

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