Tesla filed Thursday to sell nearly $500 million in shares of its company to raise capital and cover investments the electric carmaker plans to make in the future.
According to the filing with the U.S. Securities and Exchange Commission, the proceeds will go toward the company’s planned investments in the Model 3, Supercharger network and its Gigafactory battery plant in Nevada.
By the book, the stock sale is a short-term pain for long-term gain. Exposing Tesla further to the market carries certain risk, especially considering Tesla’s price growth and relative upside-down balance sheet, but if historical stock prices are any indication, it’ll be a cash cow. Elon Musk asking to buy $20 million in his own stock has pumped up the prices too beyond any distillation worries.
But don’t be mistaken: the second stock sale isn’t really about the cars.
Tesla’s long-term plans certainly aren’t to sell cars at a $4,000 loss per vehicle. And if you had asked Ford or General Motors 120 years ago if they’d rather be in the consumer vehicle business or the consumer energy business, Exxon and Chevron consistently rank in Forbes most profitable businesses — Ford and GM do not.
A spokesman for Tesla said their only comment on the stock sale is what is included in the prospectus. Specifically outlined in the prospectus is capital expenditures for Tesla including the Model 3, Supercharger network, service, stores — and its Gigafactory. So it’s clear that cars factor into the short-term future for Tesla.
But churning a profit by 2020 may include more than just selling cars at a loss and so far, Tesla has been run like an idea factory and marketing agency — not a car business.
If Musk can convince the world that harvesting and storing your own power is a good idea, would Tesla get out of the car business entirely? Or is this an automotive dream Elon is willing to captain to the bottom of the sea should Tesla cars continue to anchor the company with thousands of dollars in losses per unit for the foreseeable future?
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