Tesla’s Innovative Capital Financing

It’s interesting to look at this one statement regarding Tesla’s finances, $9m in the bank after taking deposits on 1,200 orders. I picked a number at random, a number between the $4k and $60k deposit required when placing an order calculated that they have taken $20m in deposits, which means they have burned through half of the money committed by customers before delivering but a fraction of the orders they took.

This might not be a bad thing because I’d bet that a very large percentage of those customers would still have placed an order with a deposit even knowing that Tesla lacked all of the capital to deliver on the cars they committed to selling.

You couldn’t do it because of SEC regulations covering the number of allowable investors (as well as being accredited investors) but it would be quite dramatic if Tesla had come out and said from the get to that the first 1,000 customers would in fact become investors in the company in exchange for a larger upfront deposit. That could have generated the additional $20m that Musk says he needs to break even without all of the drama they are experiencing right now.

In an employee meeting, Musk shared the company’s finances, which indicated that Tesla has about $9 million in cash.

[From Tesla Motors seeks cash to keep moving forward | Green Tech – CNET News]