Musk tweets he plans to unveil long-awaited Tesla Model Y crossover this month at L.A. event
When it comes to cash, Tesla is running out of range. And a recharge in the form of deposits on a new-model introduction just might be the way to add some juice.
On Sunday, Chief Executive Elon Musk tweeted that he’ll unveil a new car called the Model Y on March 14. The car, a crossover sport utility vehicle version of the Model 3 sedan, would be about 10% bigger and cost about 10% more, Musk said.
If the car gets built, it would create a new market segment for Tesla and potentially boost sales dramatically. The company currently sells the Model S luxury sedan, the Model X luxury SUV, and the Model 3 sedan. It lacks a crossover SUV, the style that has emerged as one of the hottest vehicle styles throughout the entire automotive industry.
The Model Y unveiling will be held at Tesla’s L.A. Design Studio on March 14.
But Musk didn’t say where the cash-short company will get the money to pay for a project expected to cost hundreds of millions of dollars at a minimum.
Musk announced last week he is closing the company’s Tesla retail stores and moving toward online sales, with an untold number of Tesla employees losing their jobs.
The company also had been cutting research and development and capital expenditures as its cash reserves dwindle.
The company reported having $3.7 billion in cash at the end of 2018. Last Friday, $920 million in bonds came due, with an additional $183 million due in April.
Just over 20% of that $3.7 billion — $792 million — came from the pockets of potential customers in the form of deposits on Tesla vehicles, including those for a Tesla semi-truck and and a high-end roadster sports car, neither of which yet exist except in prototype form. Tesla hasn’t said when they’ll be available.
The company can add to that deposit account with customer reservations for a Model Y. Last week, the company announced the availability of a bare-bones $35,000 version of the Model 3 and began taking nonrefundable $2,500 orders for the car, with delivery promised sometime between two weeks from now and the end of June.
Higher-priced versions of the Model 3 typically cost near $60,000 with options. The bare-bones version has a range of 220 miles is available only in black and comes without the company’s Autopilot driver-assist system.
In the past, the company has raised cash for growth through the public markets, with issues of bonds and stocks.
Tesla raised no new capital in 2018, and Musk said he didn’t want to. But even if he wants to now, the Justice Department, including the Federal Bureau of Investigation, is investigating the company, which could impede any new efforts to raise money.
The Securities and Exchange Commission last week filed contempt charges against Musk for allegedly violating an agreement signed in September to settle fraud charges stemming from a false claim by Musk that he had secured funding for an $80-billion deal to take the company private.
The agreement barred Musk from making material statements about Tesla on Twitter or any other public forum without prior approval of a company securities lawyer.
Musk has been ordered to file a brief defending himself before a federal district court judge March 11.
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