Elon Musk, the well-known entrepreneur who is the CEO of Tesla has announced that his electric car company won’t be raising cash by selling stock. Along with this he also stated that the investment in the new factory to be set up in China is expectedly to be done through a local debt from the bank.
Provided that Tesla is burning cash to boost up development of its Model 3 sedan, various investors raised up a query that how will the company continue to fund its operations. To this, the company responded that it is on the path of reaching profitability by improving margin and cutting costs.
However, Tesla reported on Wednesday that its quarterly loss rose to $742.7 million which was earlier $401.4 million in the same period last year. In the third quarter, the founder has planned to make the company cash-flow positive.
The company’s stock increased 9 percent in extended trading after revenue crossed analysts’ expectations. As for the new factory in China, Elon Musk claimed that the plan is to fund it with “local debt.”
Elon Musk and Robin Ren who is head of Tesla’s worldwide sales, announced earlier during the company’s annual shareholder’s meeting that they expect to build a “Dreadnought” factory in China that will manufacture batteries and assemble vehicles in the same place.
Last month, Tesla had signed a deal to build Gigafactory 3 in Shanghai. The company stated that it would take two years to commence the production of cars and that gradually the factory would build 500,000 vehicles a year for Chinese customers. However, the company still needs to gain permission in Shanghai and reaching full capacity could take up to five years.