Tesla may Need to Raise Money to Meet Demand

The only group of people who don’t know how hot Tesla is at this point may be Tesla itself. After a stunning underestimation of just how popular its highly anticipated Model 3 would be, Elon Musk’s futuristic car company may have to raise more cash if it is to have any hope of sending its new electric car to buyers by the promised date, analysts say. With 180,000 reservations placed on the first day of ordering alone, Tesla certainly knows how to drum up interest — the car won’t actually appear for at least another year, and perhaps longer now that demand is so high.

Updated on 04-03-2016 by Lulu Chang: Tesla Model 3 orders surpass $10 billion mark in just 36 hours.

Recommended Videos

Musk noted in a tweet that 276,000 Model 3 sedans had been pre-ordered by the end of Saturday, which represents a stunning $10 billion in 36 hours alone at the average price of $42,000 a pop. Since this past February, when company’s stock hit an all-time low, shares of Tesla have rebounded an impressive 60 percent, largely in part to this latest electric vehicle. In fact, Barclays analyst Brian Johnson believes the enormous early success of the Model 3 “sets the stage for an equity offering” by the end of 2016. Because it’s really not every company that’s capable of bringing in around $10.6 billion in a day and a half.

Please enable Javascript to view this content

Musk earlier noted (when that figure was just 252,000) that his company had only anticipated “1/4 to 1/2” of its total preorders. And it wasn’t just preorders that Tesla failed to anticipate. On Saturday, Musk tweeted, “Token of appreciation for those who lined up coming via mail. Thought maybe 20-30 people per store would line up, not 800.” Why so humble, Tesla?

276k Model 3 orders by end of Sat

— Elon Musk (@elonmusk) April 3, 2016

While high demand almost always bodes well for a company, some experts are a bit worried by this latest development. If history is to repeat itself, the Model 3 could take quite a while to launch, as the Model X SUV was also released at a rather glacial pace. Analysts questioned how long it could take to deliver those cars after the slower-than-expected launch of the company’s Model X sport utility vehicle late last year. Indeed, analysts note, some customers who’ve already pre-ordered may not get their fancy new cars until 2019 or 2020.

Token of appreciation for those who lined up coming via mail. Thought maybe 20-30 people per store would line up, not 800. Gifts on order.

— Elon Musk (@elonmusk) April 2, 2016

If buyers do have to wait that long, Tesla by that time may not be seen as the chief innovator in the field anymore, as other manufacturers may have caught up to its technology by this point. Still, Musk himself seems thrilled by the public outpouring of excitement and support — at least that isn’t in short supply.

Editors’ Recommendations