Electric car maker, Tesla Motors, is currently venturing out into business expansions, first through expanding their Giga factory located in Nevada, and entering into a merger project with SolarCity with a buyout process for solar energy needs.
Papers have already been filed with the Securities and Exchange Commission of the US on the merging and voting process for the buying out of Solar City, together with data as to how to expand their business through selling either through capital or debt.
Tesla did not comment any further as to how much funds they wish to add to their equity.
On June 30, the car manufacturer has a total of $3.25 billion cash, which is almost 3 times more than December 2015.
Afterwards, they managed to settle a credit line which amounted close to $700 million. Furthermore, the car company expanded even more just this September after its acquisition of SolarCity, the process of which amounted to $2.6 billion for stock.
A professor of the University of Michigan deemed the investment of the company in Solar City as a "capital sinkhole", despite the fact that Tesla was on the lookout for a safety net for cash. This is due to SolarCity incurring a loss which amounted to almost $400 million in 2015, which succeeded a loss of more than $750 million the year prior.
Tesla's ventures for business expansion in the past have proven futile, that is, according to Mike Ramsey, an analyst of Gartner transportation. This statement of Ramsey is justified by the fact that the stock of Tesla has not changed that much, despite falling by 15% in 2015.
Despite that, Tesla which has not been able to generate an annual profit, since more than three years ago, launched its Gigafactory in Nevada in August. The Gigafactory cost more or less $5 billion and was deemed an important factor in order for the company to manufacture a sufficient amount of batteries to lessen costs for its components and Model 3 cars.
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