Tesla’s Grand Ambitions: Will They Eventually Drain Finances?

Investors are shrugging off any concern over Tesla over-stretching its production and financial resources with the unveiling of new futuristic semi-trucks and a pricey sports car, with its shares advancing.

Chief Executive Elon Musk shocked industry-watchers by launching a $200,000 USD ($A280,000) sports car on Thursday, along with two electric trucks, possibly adding more logistical nightmares even as it wrestles with production issues related to its Model 3 sedan.

“But Chief Executive Elon Musk did not offer details about how Tesla would fund these projects, leaving Wall Street analysts skeptical about the company’s ability to ramp up production as it spends money at a quick clip,” reads a new report from Reuters.

According to the report, Tesla spent $1.1 billion USD on its automotive business in the third quarter, and expects expenses of $1 billion in Q4. The company had about $3.5 billion in cash and cash equivalents at the end of September.

At the company’s current rate, Tesla would likely be down to about $1 billion USD in cash by the end of the first quarter.

“In essence, all last night’s event did was add to Elon Musk’s shopping list of things he needs to spend money on at a time when the company is having difficulty making its base vehicle [Model 3],” said Cowen analyst Jeffrey Osborne.

Some analysts fear the trucks will be an expensive distraction for Tesla, which is burning cash, has never posted an annual profit, and is in self-described “manufacturing hell” related to the $35,000 USD Model 3 sedan.

Although Tesla has made inroads among luxury car buyers with its Model S sedan and Model X SUV, it is the Model 3 on which the company’s long-term success rests.

The Model 3 sedan is expected to go into production in 2018, electric trucks in 2019. Production for the new Roadster sports car, a likely Ferrari rival, will start in 2020.