Tesla will take on roughly $2 billion in debt to pad its low cash reserves

[Polycount]

Tesla has struggled on virtually every front lately. Dwindling solar panel sales have forced the company to offer the devices at a steep discount, and it was forced to cut features and customization options from its Model 3 vehicle to pave the way for a $35,000 price point.

Unfortunately, the company's cash reserves are similarly-troubled. Ars Technica reports that Tesla is sitting on about $2 billion in cash reserves, which is a dangerous position to be in for a company that has bled money at alarming rates in the past. In the interest of buying much-needed time to return to profitability, the electric carmaker will be selling off shares worth $642 million and taking on $1.35 billion in loans.

Unlike traditional loans which require a company or individual to pay the cash back after a certain amount of time, Tesla is going for "convertible senior notes" this time around. As Ars points out, these notes essentially allow a given lender to snag Tesla stock in lieu of direct repayment when the loan reaches its end date; assuming the stock raises in price, of course.

Tesla's decision to opt for this type of loan seems to imply a certain degree of confidence in the company's ability to turn its current financial situation around. Whether or not that will happen remains to be seen, as Tesla's stock has been on a relatively consistent downward trajectory since December last year, when it sat at around $379 per share. For reference, Tesla shares are now worth about $243 each.

Perhaps Tesla's upcoming Roadster or full-sized Model Y SUV will help it right the ship - only time will tell.

Update: A previous version of this article's headline incorrectly stated that Tesla would be taking on "over" $2 billion in debt. This has since been corrected.

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https://www.techspot.com/news/79915-tesla-take-over-2-billion-debt-pad-low.html

 

[VitalyT]

Tesla will take on roughly $2 billion in debt to pad its low cash reserves.

So would I, one thing I have in common with Tesla.

 

[Dimitrios]

Can someone please upload a meme of the movie JAWS where the guy has the cig in his mouth and have him say, " were gonna need more cash!"

I tried uploading a funny meme but had no luck :-(

 

[Xclusiveitalian]

Tesla has an EXPENSIVE automobile lineup, it is not affordable to most Americans, so they aren't making the sales to support themselves.

 

[netman]

Tesla means trouble!

 

[toooooot]

They need to sell a lot of those before they pay back what they owe. And the problem is that a huge demand is where Prius and Leaf are. Tesla meanwhile is positioned at a higher tier where someone would not only be able to afford electric and all the features it can offer but also a lot of style and driving fun along with fairly good interiors other brands can provide for ~35k.
There are plenty of people who dont care if it is electric or not and at the same time they look to get the most out of their 35k that would allow them to get the most fun driving.
Im almost certain that if I was shopping for something at 35k, I d get something prettier and more fun to drive.