The question many investors in the technology space have for electric vehicle (EV) maker Tesla Inc. (NASDAQ:TSLA) is just how fast the company will be able to bolster its balance sheet, in the wake of profitability concerns as the company struggles to maintain profit margins amid a series of headwinds in 2019.
Expiring tax credits for EV buyers have required Tesla to slash its sales price of many of its vehicles, prompting concerns that the company may not be able to efficiently mass produce lower cost cars at a meaningful enough profit to pay back signficant debt obligations which are coming due in the upcoming quarters.
Tesla has been forced to cut staff and reduce overhead for its operations, moves which many on Wall Street believe may be bearish for the long term, for a company that has so much invested in a growth model which requires mass market acceptance of its products at a lower price point.
For a company with very ambitious growth plans, including launching a major new factory in China in a bid to open up its consumer base to the world and produce cars at a cheaper marginal cost, the cash outlay required for such investments has left many analysts and investors skeptical.
No one can doubt the positive impact of Tesla on creating urgency among manufacturers of internal combustion engines to literally shift gears, however investors ought to be wary of the company's financial position before investing in a mission statement and a CEO alone.
Invest wisely, my friends.
