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Elon Musk confirms Tesla flirted with financial disaster

Questions about the financial health of Tesla have surfaced on a number of occasions in the past few months, to the delight of the company’s naysayers and to the great frustration of its many defenders.

Meanwhile, the majority of industry watchers, us included, have watched events unfurl with interest. The viability of Tesla as a business concern is not an insignificant question. The role the automaker has played and continues to play within the industry is a major one. There’s no doubt that without Tesla, the rest of the industry would not have advanced nearly as much as it has in terms of electrification. To put in bluntly, Tesla has made things happen. Its disappearance from the landscape would have negative consequences; the reverse of that is that its success benefits just about everyone.

We’ve now learned from the company’s founder himself that the enterprise was in serious danger of failing earlier this year, when it faced ongoing problems with the rate of production of the Model 3. Elon Musk said this week that during that difficult time, Tesla was on the verge of running out of cash.

"Tesla really faced a severe threat of death due to the Model 3 production ramp. Essentially, the company was bleeding money like crazy, and if we didn't solve these problems in a very short period of time, we would die. And it was extremely difficult to solve them."

- Elon Musk

Elon Musk, 2017
Elon Musk, 2017

At one point, it appears the company was within a few weeks, perhaps even one or two, of emptying its accounts of operating funds.

Musk could never have let this be known earlier on, of course, and he can only do so now because of the positive developments we’ve seen since then.  The company has managed to ramp up production and posted a profit in the last quarter.

Those rumours regarding the financial straits faced by Tesla earlier in 2018 are thus now known to have been accurate. The company’s very existence was at risk, and Musk himself confirms it.

At a moment when the big ship that is the automotive industry as a whole finally seems to be starting to turn itself towards electrification, the role Tesla will continue to be a primordial one in the coming years.

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