Mar 20, 2020 - Economy & Business

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

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NTSB warns about lax oversight of new car tech

Illustration: Sarah Grillo/Axios

There's mounting evidence that people put too much trust in driver-assistance features like Tesla Autopilot, but federal regulators aren't doing enough to ensure the systems are deployed safely, experts say.

Why it matters: Nearly 37,000 Americans die each year in highway accidents. As automated features become more common, the roads could get more dangerous — not safer — if drivers use the technology in unintended ways.

Tesla will finally halt California production amid pandemic

Photo: David Butow/Corbis via Getty Images

Telsa announced that it will suspend production at its chief U.S. plant, located in the Bay Area, on March 23 amid the coronavirus pandemic — a week after local authorities ordered all nonessential businesses to shut down.

The big picture: Tesla has been among a small number of businesses resisting a full shutdown of operations to curb the potential spread of the virus among workers. Local law enforcement has been in discussion with the company after it told employees to keep coming to work.

  • "Basic operations" that fall under the shutdown order's carveout for essential business will continue "to support our vehicle and energy service operations and charging infrastructure," Tesla added.

Go deeper: Automakers to close all plants over coronavirus fears

Social Capital files for two more blank check company IPOs

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VC firm Social Capital has filed to take public two more special purpose acquisition corporations ("blank check companies"), aiming to raise at least $300 million and $600 million respectively, according to new SEC filings.

Why it matters: Social Capital and partner Hedosophia first executed this unusual move a couple of years ago, culminating with the vehicle's acquisition of Virgin Galactic last year, taking the private space exploration company public at a valuation of about $1.5 billion.

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