Elon Musk Might Need Another $180 Billion to Make 10 Million Teslas a Year

Somehow someway, Tesla CEO Elon Musk manages to capture our attention with each new week. Musk kept his behavior pretty tame this week. But what’s surprising now is how much money Tesla will need to reach the Musk’s vehicle production goals. The CEO’s goal is to produce 10 million electric vehicles each year which means Tesla would have to spend about $180 billion to reach this target. 

Tesla’s business forecast

The $180 billion evaluation is based on research by automotive analysts at the Morgan Stanely research firm. The analysts echoed Musk’s previous statements about Tesla’s stock being too high.  Tesla has been profitable this year, even amid the coronavirus crisis. In fact, Tesla’s success in 2020 caused the company’s stock to rise above $800 a share but analysts say that the stock is valued at around $680.

This assessment doesn’t necessarily mean that Tesla is failing financially, but it does indicate that the electric vehicle company is up against some challenges, similar to other carmakers during our current global health and economic crises.

If it weren’t for the coronavirus pandemic, Tesla would have probably seen its first full annual profit. The company had its best first quarter this year and 2020 also marks its one millionth car milestone since starting production in 2003. 

Predicting Tesla’s capital funding needs

Tesla was already dealing with a variety of problems before coronavirus challenges.  Analysts at Morgan Stanley predict that Tesla will go through $66 billion in capital expenditures from now to 2030 to rise above its business challenges and accomplish its master plan.

“However, Elon Musk’s goal-reaching 10 million units of vehicle volume supported by ‘terawatt’ scale battery factories would imply far greater levels of spending than we have forecasted and greater than we believe demanded in global markets for many years to come,” said the analysts at Morgan Stanley.

The auto analysts went on to say that Tesla would need 15 production facilities and about 800 GWh of battery cell production capacity to build 10 million vehicles. Currently, Tesla has five facilities. Increasing its level of production to 10 million vehicles is almost 30 times what the carmaker generates now; this goal would cost up to $180 billion as we mentioned earlier. 

Additional challenges for Tesla

Tesla has a large fan base and a compelling product lineup, but the competition is mounting against the car brand. While Tesla still has the upper hand in the electric vehicle market, other carmakers are ready to compete here too.

The Polestar 2 is taking on the Tesla Model 3, and companies such as Porsche, and even Ford are making an impact in the EV market.  Plus, newer startups like Rivian are also looking to shift market share. Time will only tell how Tesla will maintain its lead and rise above COVID-19 disruptions.

“While we believe Tesla’s balance sheet is strong enough to weather the storm as it currently stands, we believe investors should consider the multitude of risks facing the company including but not limited to U.S./China relations, additional factory shutdowns, and global auto demand in 2020,” the Morgan Stanley analysts said.