“Take up money when you can, not when you have to” – he always teaches this to students in his course on strategic equity finance at Wharton Business School, writer David Erickson writes in a recent article on Tesla’s valuation. At least in this regard, the electric car pioneer follows common management theories: This week he announced a capital increase, although CEO Elon Musk had only announced 14 days earlier that Tesla needed absolutely no money.
But on the same day that the unexpected capital increase was announced, Tesla released another stock market document that shows that a little extra money might not hurt Tesla: Form 10-K with detailed information on business performance and plans , As it shows, Tesla plans to invest at least $ 2.5 billion this year.
That alone would be almost twice as much as in 2019, when Tesla, according to finance lecturer Erickson, invested only $ 1.3 billion instead of the planned $ 2-2.5 billion. And the forecast of Tesla’s $ 2.5 billion investment this year is just the bottom. Investments could also reach $ 3.5 billion a year, Tesla says in 10-K, not only in 2020, but also in the two years thereafter.
According to Tesla, it is difficult to say exactly how much it will be because “the number and breadth of our core projects is high at all times”. With each ramp-up for new products like Model Y and Solar Roof recently, the schedule is uncertain, and depending on the progress, some investments may be made earlier.
It is known for 2020 that Tesla wants to complete a production line for the Model Y in the Gigafactory in China, the construction of which started in late 2019. There will also be expenses for the preparations for and then the construction of the Gigafactory in Germany, which is due to start operating in the summer of 2021. According to Tesla CEO Musk, the production of generation V3 superchargers and the photovoltaic roof Solar Roof should also be increased significantly.
The big unknown, after all, is Tesla’s own battery cell production, which according to Musk could take on gigantic proportions. Preparations for pilot production at the Tesla headquarters in Fremont are currently being made. When it starts on a large scale, so that high investments should be incurred, will probably not be cleared until a spring at a Tesla battery investor day.