Tesla says it can weather the coronavirus storm
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Tesla said it has enough resources to deal with an "extended period of uncertainty" as the electric automaker announced it will suspend production at its California factory.
Why it matters: Tesla can't be untethered from the future of electric vehicles, especially not in the U.S., where it dominates sales and plays a big role in pushing the sector closer to the mainstream.
Where it stands: Tesla did not estimate the length of the suspension. The company said it had $6.3 billion in cash at year's end, and that was before its recent $2.3 billion capital raise.
- "We believe this level of liquidity is sufficient to successfully navigate an extended period of uncertainty," its announcement said.
- "At the end of Q4 2019, we had available credit lines worth approximately $3B including working capital lines for all regions as well as financing for the expansion of our Shanghai factory."
What they're saying: Morgan Stanley analysts, in a note released before the announcement, projected that a month of lost production would reduce estimated full-year deliveries by 30,000 cars to 420,000.
- They say Tesla would have "sufficient liquidity and access to capital during this time."
But, but, but: The note also models a "bear case" of a three-month hiatus and 100,000 units of lost volume, which is more severe but not fatal.
- "We note that the company’s recent $2bn capital raise is roughly equal to the $2bn of burn in this bear case. In hindsight, the capital raise was extremely well timed and helped further bolster Tesla’s liquidity during this extraordinary time," it adds.
Go deeper: Tesla will finally halt California production amid pandemic