After the quarter, the $3.7 billion of cash on hand would be stashed away in the bank and be used in the next quarter of Q4 2017. As mentioned, Tesla’s cash outflow is made up of operating cash flow and capital expenditures. That was down from $2.67 billion at the end of the first quarter, but it wasn't down nearly as much as some (including your humble Fool) expected. But while Tesla has ambitious plans for expansion, the company isn't in urgent need of cash at the moment. But while Tesla has ambitious plans for expansion, the company isn't in urgent need of cash at the moment. Former hedge fund manager Darius Brawn said the debt payment could put Tesla in a cash crunch, unless the company sees exceptional Model 3 sales next month. Tesla Inc., formerly known as Tesla Motors Inc., is headquartered in Palo Alto, California. The answer can be found in cash flow from financing activities. And being a startup in the capital-intensive car business means raising billions of dollars to spend on manufacturing infrastructure. But there's every reason to expect the same basic pattern to repeat—with cash flow turning positive some time soon—maybe even in the current quarter. Musk is Tesla's biggest shareholder, and he bought still more Tesla stock just last month. Conversely, if investors lose faith in Tesla, that could threaten Tesla's ability to raise more capital, posing an existential threat to the company. That crunch stands a good chance of getting much more severe soon. CNMN Collection Ad Choices. "We're highly confident of being cash flow positive and GAAP profitable in Q3 and Q4," Musk said during the company's earnings call. Is GM Stock A Better Buy Than Tesla Stock? Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. All rights reserved. There's more. Sometimes the business can use up more cash than it can generate during the normal course of its business operation. Tesla's cash balance has fallen even further since the end of the second quarter. This has resulted in the increasing cash reserves in the company balance sheet for the last 5 years. And there are other signs that investors are getting nervous about Tesla's debt. Tesla cash on hand and cash outflow comparison. On the other hand, capital expenditures or CAPEX are cash needed to acquire and maintain hard assets such as property, buildings, equipment, offices and factories. In this aspect, we will compare cash on hand with free cash flow which is derived from operating cash flow minus capital expenditures. Got a confidential news tip? Both will convert to stock if Tesla's share price gets above $360 and stays there for a while, but unless Musk's ambition to take Tesla private at $420 per share works out, that looks unlikely -- at least for that first payment due next February. This means the next few months will be critical for the company. Thanks for sharing! Tesla laid off about nine percent of its workforce last month in a major cost-cutting step. The bond rating agency Moody's downgraded Tesla's debt back in March, causing Tesla's outstanding bonds to trade well below face value. First, Tesla appears to have put off paying some bills. But capital expenditures declined 43 percent last year to $2.32 billion, and the company is targeting $2.5 billion in 2019, well below the $4.08 billion in costs in 2017. Musk has said he has no plans to raise more money. Adding this amount with the free cash flow generated in the same quarter of roughly $600 million, the total amount of cash inflow was $2.8 billion. A negative figure indicates when the company has paid out capital, such as retiring or paying off long-term debt or making a dividend payment to shareholders. Tesla also faces some other headwinds. Tesla has about $13 billion in debt on the books and about $6.9 billion net of cash on hand. As shown in the current chart, Tesla’s cash on hand has been more than enough to cover what Tesla has spent in the last 5 years. As of its most recent quarterly report, Tesla had $8.6 billion in cash on hand… But there's another important question that was being asked before Musk's tweet changed the subject: How close is Tesla to running out of cash? Basically, the automobile business is an asset-heavy operation that requires a large amount of cash to run. A Tesla spokesperson pointed to comments from the fourth-quarter shareholder letter, when the company said it has "sufficient cash on hand to comfortably settle in cash our convertible bond that will mature in March 2019." As of right now, it doesn't appear that Tesla has taken any steps to raise money via an offering of stock or bonds. While Tesla cash position has been increasing over the years as discussed in prior paragraphs, the next question is whether this amount of cash is sufficient enough to cover the ever-increasing cash consumption. If people have confidence in Tesla's long-term vision, it won't be hard to find people willing to provide the company with the capital it needs to cover its short-term expenses. Tesla also shared that it finished the quarter with $5 billion in cash, the “highest level in Tesla’s history,” largely thanks to a $2.7 billion capital raise in May. In the same context, free cash flow is equivalent to cash outflow which is plotted in the chart above. Tesla cash flow from financing activities. Tesla has two big convertible debt issues coming due: A $920 million issue due next February, and a  $1.38 billion issue due in early 2021. Tesla has more than $10 billion in total debt, and more than $1 billion of that could come due in the next eight months. Additionally, letters of credit rose 53 percent against Tesla in the second half of last year. Despite its diminishing liquidity, the electric vehicle maker aims to build a new factory in Shanghai while also ramping up Model 3 production. So with the configuration opening up to seemingly everyone, I stopped to try and figure out why. Please check your download folder. Tesla cash on hand for 2019 was $6.514B , a 67.93% increase from 2018. As we all know, Tesla has mostly been unprofitable all these years and yet, the company has been able to accumulate to such a significant amount of cash reserve. Tesla CEO Elon Musk tweeted in April that Tesla will achieve positive cash flow and profits in the third and fourth quarters of 2018. In its 2018 annual report, Tesla said it had $3.69 billion in unrestricted cash and equivalents to end the year. Tesla (NASDAQ:TSLA) cash flow has always been a hot topic. Tesla’s cash on hand or cash reserves are highly liquid assets which include cash such as cash and cash equivalents as well as restricted cash. The magnitude of negative cash flow has been much bigger for the Model 3 than for earlier cars because the Model 3 is a bigger, more ambitious project. GM Global Sales & Market Share The cost of credit default swaps—essentially, insurance policies against a default on Tesla debt—has been rising in recent days, suggesting investors are worried that Tesla might be a bad credit risk. Tesla probably could have continued enjoying positive cash flow into 2014 if it hadn't begun work on the Model X. The scale of the losses is bigger this time because the Model 3 is a much higher-volume product. Returns as of 10/22/2020. That's $4.85 billion in bills that were either due or coming due soon as of June 30. However, the company’s free cash flow generated was only about $600 million in 2Q 2019, meaning that cash reserves should only come to about $2.9 billion when you add up both free cash flow in 2Q 2019 ($600 million) and cash reserves from the prior quarter ($2.3 billion). Sign up for free newsletters and get more CNBC delivered to your inbox. Work on the Model 3 assembly line should be winding down—reducing capital spending—while increased production of Model 3 cars should mean more money coming in from customers. And as this chart shows, there's a clear pattern to Tesla's free cash flow. Tesla cash on hand for 2018 was $3.879B , a 10.1% increase from 2017. Tesla Crucial Infrastructure During the same quarter, the company has also generated as much as $500 million of free cash flow, leaving plenty of cash around for the next quarter and the rest of 2020. Selling stock would mean diluting the profits of existing shareholders—including Musk himself—and he may simply not see a need to do that.

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