Tesla offers Fremont factory as collateral

Tesla’s burning money is a major contributor to global warming.


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NEW YORK — Tesla has changed the terms of its borrowing agreement with banks to allow it to pledge its Fremont auto plant as collateral — a move seen by some analysts as an effort to boost liquidity.

The electric car maker has just $543 million of the $1.8 billion credit facility left to use, according to a regulatory filing on Monday. But banks periodically review the amount they are willing to lend, and Tesla continues to burn through cash.

“While not clear at this point, we suspect that with the large upcoming cash burn in 2Q18, the banks have demanded additional collateral protection for Tesla to maintain its $1.8 billion facility,” CreditSights analysts said in a note.

“In doing so the banks are protecting themselves.”

A person familiar with the matter told Thompson Reuters IFR the amendment had not been requested by the banks and was at the company’s discretion.

But the 5.3 million square-foot plant in Fremont, California, would give banks a claim on one of Tesla’s most valuable assets. It is the production hub of Tesla’s mass-market Model 3 sedan, which is seen as key for the company’s path to profitability.

Tesla, however, is struggling to ramp up production of the car. It is trying to build 5,000 of the vehicles per week by the end of June and overcome manufacturing hurdles that have delayed its rollout.

“They are still going to burn cash for a couple of years,” said Scott Roberts, head of high yield investments at Invesco, who does not own Tesla bonds.

“They are shoring up liquidity before they need to probably because they think they will need it.”

Chief Executive Elon Musk has promised investors that the company will swing to a profit in the third quarter, after accumulating losses for several quarters.


Desperate times call for desperate measures. Too much burning cash and not enough profit. Musk is an interesting dude but he’s made so many stupid decisions with the vehicles that it’s just needlessly costing them so much money and causing them so many headaches, would all have been easily avoided if he were to listen to the smart people around him. Too much automation, too much fancy expensive shit for no reason, too much stupid twitter drama, too much stupidity when dealing with investor questions, too much drama when dealing with NTSB questions, too much drama on twitter for no reason.


h/t lanismycousin


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