Tesla Motors Inc (NASDAQTSLA) is on its way to revolutionize the auto industry, like no other automobile company has, but when it comes to finances, Tesla Motors Inc (NASDAQ:TSLA) is in a dilemma. The company recently announced its plan to the ‘Gigafactory’, in order to reduce the costs of the lithium batteries that power up its vehicles. The new plant is estimated to cost Tesla Motors Inc (NASDAQ:TSLA) around $5 billion and will be built in partnership with Japan-based Panasonic.
FBN’s Liz MacDonald reported on Tesla Motors Inc (NASDAQ:TSLA)’s plans for the ‘Gigafactory’ and how the company is still in the process of location hunting to save taxes, even after breaking ground for the ‘Gigafactory’ in Nevada, this week.
“Where is Tesla Motors Inc (NASDAQ:TSLA) going to build this 5 billion dollar battery factory. Word is, it’s breaking ground outside Reno, Nevada. It is saying though that the other seats are still in contention. California, New Mexico, Arizona and Texas, but here is the problem for Tesla Motors Inc (NASDAQ:TSLA), it has got a lot of debt on the balance sheet. It needs a tax-break bidding war between these states,” MacDonald said.
Tesla Motors Inc (NASDAQ:TSLA) is also facing pressures from investors to increase its production and meet its delivery estimates, but that perhaps won’t be possible if the company fails to set up the ‘Gigafactory’ in time. Tesla Motors Inc (NASDAQ:TSLA) plans to start delivering 100,000 vehicles per year starting from 2015 and the company has high hopes for its ‘mass market’ car, the Model 3, which is to be launched in 2017.
“It needs anywhere about $3 billion, even more to fund that battery factory, so, Elon Musk is saying that to Wall Street analysts that yes, he needs tax incentives in order to fund the costs of that massive ‘Gigafactory’,” MacDonald added.