Reports indicate that Tesla is blowing through money at an alarming rate. The company has been known to spend more than $100 million in a single month. This is despite the fact that Tesla has experienced losses in the past ten consecutive quarterly periods.
Even so, markets are happily handing money over to CEO Elon Musk. The company is currently working in a Nevada desert in order to construct lithium-ion batteries in a $5 billion project. The company could save considerable amounts of money by moving the project abroad.
Some market analysts have criticized Tesla for taking somewhat of an old-fashioned market approach. Most companies of today tend to outsource production to some extent in order to save costs. But Tesla appears to have no concern when it comes to saving money.
Officials from Tesla have insisted that their policies give them a competitive advantage, but there’s no denying that they are a major drain of capital. Most analysts believe that Tesla will likely work to improve its capital efficiency in the coming years. But for now, the usage of cash really is stunning.
At the present time, there doesn’t seem to be much of a problem. While shares for Tesla, aren’t exactly surging, that isn’t necessarily a sign that investors are losing faith in the company. The company has demonstrated in the past that it can easily obtain more capital, and with the support of Musk, resources are virtually endless.
Needless to say, Tesla is providing an excellent example of how expensive the automotive industry can really be, especially when virtually none of the aspects are being outsourced.
And with Apple also considering getting involved in their own domestic car project, shareholders of the iPhone company should be watching Tesla’s project very closely.
While Musk has the money to take major risks like this, it would be the money of Apple shareholders that would be put on the line during an Apple car experiment.