By Rebecca Gibian / April 30, 2018

How Elon Musk Has Both Raised and Spent Billions of Dollars

Thanks to Tesla CEO's massive burn rate, the electric carmaker might run out of cash this year.

Elon Musk
Elon Musk doesn't believe in this self-driving sensor. (Getty)
(Axelle/Bauer-Griffin/FilmMagic)

Anxiety about the long-term future of carmaker Tesla have moved to the forefront recently as the company again fell short of its own production targets for the mass-market Model 3 sedan, Bloomberg reports. Meanwhile, another person died in a crash involving its assisted-driving feature and Musk entered into a public dispute with federal safety regulators. As a result, Tesla’s formerly high-flying stock has plummeted 24 percent from its peak in September. Bloomberg writes that no one has ever raised or spent money the way Elon Musk has. And  other CEO of a public company has ever bluntly addressed rumors of his company’s potential bankruptcy—even in a tongue-in-cheek manner—on Twitter during such hard times.

Tesla reportedly burns through more than $6,500 every minute, and if the 15-year-old company does not find additional financing, there is a genuine risk it could run out of cash later this year. Tesla’s “free flow cash,” or cash a company generates after accounting for capital expenditures, has been negative for five consecutive quarters.

Tesla survived for the first seven years on private equity and venture capital funds, much of which came from Musk himself. But since its $225 million initial public offering in June 2010, Tesla has raised money by selling stock and convertible bonds, monetizing leases and floating junk bonds. The company has also been “extraordinarily lucky,” writes Bloomberg. Thanks to its CEO’s public profile for promoting clean energy—and a hefty dose of fawning press coverage—no other company has been able to convince so many people to put down hefty deposits for an unbuilt car or take advantage of government subsidies for emission-free vehicles like Tesla has.

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