Struggles with Model 3 pushed the electric automaker to the brink
Elon Musk, outspoken CEO of Tesla, has confirmed the company was close to running out of cash as it dealt with numerous production issues surrounding its Model 3 sedan.
In an interview with the Axios news program, which airs on HBO, Musk said, "The company was bleeding money like crazy [earlier this year], and if we didn’t solve these problems in a very short period of time, we would die".
When asked how close the automaker was to running out of funds, Musk responded: "I would say within single-digit weeks".
In April The Economist pointed out Tesla was not only burning through money at a prodigious rate, but needed more to fund further development, and service a US$1.2 billion ($1.7 billion) loan due in early 2019.
Responding via his favourite medium, Twitter, Musk said: "The Economist used to be boring, but smart with a wicked dry wit. Now it’s just boring (sigh). Tesla will be profitable & cash flow+ in Q3 & Q4, so obv no need to raise money."
Musk even posted a series April Fools' tweets joking about Tesla's bankruptcy.
After launching the Model 3 in the middle of 2017, the company went through almost a year of self-proclaimed "production hell" as it tried, failed and finally succeeded in meeting a production target of 5000 Model 3s per week.
According to Good Car Bad Car, 22,250 Model 3 sedans were sold in the US in September. With 17,750 said to be sold in October, the Model 3 was the sixth best selling passenger car in the States behind the Toyota Camry (26,914), Honda Accord (23,778), Honda Civic (22,450), Toyota Corolla (22,020), and Hyundai Elantra (18,312).
Improved production and sales have even allowed the company to turn its first quarterly profit.
Despite the company being in a better financial situation, it has still garnered more than its fair share of negative attention.
Musk and Tesla were both fined US$20 million for making false claims funding had been secured to take the automaker private. Musk was also forced step down as chairman, and the company is under investigation by the FBI over its production targets.