Tesla faces a cash crunch with a $920 million debt payment due on Friday


But Tesla has been showing signs of financial strain for a while. The company decreased capital expenditures throughout 2018 and plans for only a modest increase this year. All that while, Musk has tantalized Tesla fans with the promise of speedy repairs and body work for Tesla owners, as well as “full self-driving” features and a pipeline of new products like sleek solar roof tiles, new electric cars and trucks.

With such plans, you would expect capital expenditures to rise, especially for Tesla, which has talked up new and improved facilities including its forthcoming Shanghai Gigafactory. But capital expenditures declined 43 percent last year to $2.32 billion, and the company is targeting $2.5 billion in 2019, well below the $4.08 billion in costs in 2017.

There are other indications of stress.

In the last quarter of 2018, Tesla rolled a $180 million Solar City debt forward first to January, and then to April 2019, opting to pay a higher interest rate at a later date. Additionally, letters of credit rose 53 percent against Tesla in the second half of last year. Letters of credit are generally taken out by vendors who aren’t sure if a customer can pay their bills in full or on time.

Tesla says in the risk factors section of its annual report every year that it’s “negotiating with existing suppliers for cost reductions.” The company also warns investors that, “if we are unsuccessful in our efforts to control and reduce supplier costs, our operating results will suffer.”

In January, Tesla implemented a massive restructuring, laying off workers, and reducing its production of older, higher-priced Model S and X vehicles to focus on making Model 3 electric sedans for European and Chinese customers.


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