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Tesla Cash Flow Could Determine its Future

Cash flow could be a determining factor in Tesla's success.

Electric car manufacturer Tesla has been under a spotlight recently after releasing a slightly disappointing revenue forecast. In light of that news, it was cited by Republican politicians as a green technology performance failure. However, the company has struck out against those claims, Reuters reports.

The source cites Tesla CEO Elon Musk as saying the company was not in financial trouble and would continue making payments on its loans. He had pointed to a recent company disclosure for sparking the misunderstandings, Reuters says.

"We described a relatively pessimistic scenario for Tesla, which was incorrectly interpreted by some to be what we thought was the most likely scenario," he wrote in a company blog post. "We raised the funds (from the stock offering) simply for risk reduction."

The New York Times reports that cash flow will be an essential element of Tesla's ability to get "out of the woods." Even if demand for its cars is high, the company will still need to be careful that it times spending to correlate with cash infusions from consumer purchases, the newspaper explains. The source noted that monitoring cash flows will determine whether the car company wins or loses against other U.S. automotive manufacturers.

Comments

Topic Expert
Barrett Peterson
Title: Manager, Accounting Standards,
Company: TTX
(Manager, Accounting Standards,, TTX) |

Cash flow is always important, particularly in cases of struggling entities looking for a sustainable plan.