Tesla Motors Inc (NASDAQ:TSLA) Secures Up To $750 Million In Credit To Cover Daily Costs As It Spends Investment Cash

Since the beginning of the first period of 2015, Tesla Motors Inc (NASDAQ:TSLA) has been busy with investments and expansion measures particularly the construction of the new Gigafactory for battery production. The company has been quickly burning through its investment funds, thus necessitating more funds.

The electric vehicle manufacturing company now has the option of raising its credit to $750 million. Currently, the firm has $500 million designated for general corporate purposes and working capital. The firm also revealed that the interest for the loaned funds will depend on how the company withdraws the funds in the credit line.

JPMorgan Chase, Wells Fargo, Credit Suisse, Goldman Sachs, Bank of America, Deutsche Bank and Morgan Stanley are a few of the financial organizations involved in the multimillion-dollar deal. The interest charged on the bowing is floating, meaning once the U.S. Fedbegins to increase the rates, the loan costs will rise. Analysts suggest that the rates might change within the current year. The result might be a hefty loan repayment payment for the electric automobile manufacturer.

Tesla is willing to bear the extra costs. If the current plans are successfully laid out, the company stands to be one of the most lucrative unrivaled firms in the future. CEO Elon Musk announced that the company plans to sell more than 500,000 vehicles each year, an ambitious number from the 32,655 vehicles sold in 2014.

If the plan is a success, Tesla Motors Inc (NASDAQ:TSLA) will be able to repay the loans with ease. The firm’s current long-term debt amounts to about $2.5 billion. Vice president of research firm Gartner Inc, Thilo Koslowski suggested that Tesla will not have a hard time clearing the loan. His inference was based on research findings that show that many people believe in Musk’s plan.

The financial demands from the new factory have played a part in denting the company’s funds. However, the company’s venture into the electric power industry through battery energy saving systems combined with the growing embrace of electric cars will most likely pay off.

About the Author

Cooper is a graduated from Buffalo State College in New York with a bachelor's degree in Broadcast Journalism.

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