In spite of Elon Musk’s statement during the Q3 earnings call that Tesla Motors would not need to raise capital or borrow more money in the fourth quarter, a regulatory filing on December 21 reveals that the company has indeed increased its borrowing capacity by approximately $500 million under two new credit agreements.
Tesla and a Netherlands subsidiary have added $200 million to an existing line of credit with Deutsche Bank, bringing total borrowings to $1.2 billion. There is another $50 million of borrowing built in to the agreement that Tesla can tap at a later time.
In a separate transaction, Tesla Finance LLC and another finance unit doubled the size of a separate credit agreement from $300 million to $600 million. Tesla isn’t commenting beyond the contents of the filing on plans to expand its credit lines, said a company spokeswoman, according to Bloomberg.
Musk’s announcement in October that there would be no need to raise capital or increase borrowing before the end of the year was a surprise to the investment community. Many analysts felt the company would need to raise as much as $2.5 billion soon in order to pay for the company’s ambitious expansion plans.
Recently, Tesla has obtained approval from the city of Fremont to nearly double the size of its production facilities as it ramps up for the launch of the Model 3. It is also pushing ahead with construction of the Gigafactory in Nevada and preparing to begin production of its new Solar Roof photovoltaic tiles which the company anticipates to be market-ready around the middle of next year.
David Whiston, an analyst with Morningstar Inc. in Chicago told Bloomberg at the time, “I don’t think it’s that shocking that over time Tesla needs more funding. It’s young and has enormous growth plans, so over time I would expect more equity raises and more revolver capacity.”
Tesla is very tight lipped about its financial plans. Perhaps Elon Musk will have more to say on the subject at the Q4 earnings conference call with investors in early February.
