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Comment by exabrial | Hacker News Reader

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exabrial·

My big question is, why? It seems they are selling vehicles. Are they in trouble or is this just to expand business?

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Well, they plan to sell 500k vehicles a year soon which takes a huge ramp up form current production.

Sure, they could increase production with current profits form sales but it would slow them down.

Just to quantify this a bit more: they plan to hit a rate of 500,000/year by the end of 2018, and so far the company has sold something like 200,000 cars total, ever, since it started.

(I don't know how likely they are to hit that goal by the end of 2018, but they're trying.)

That's a very lofty goal indeed. They will definitely have to come down in price

The Model 3 is supposed to start at $35,000. Demand doesn't seem to be a problem, as they have hundreds of thousands of reservations and pretty much stopped trying to solicit more while they work through the backlog. The major challenge for now is actually getting production up to capacity.

If you order parts for 100k additional vehicles, and if they would cost only 10k per car, you are talking about a billion dollar bill. Tesla plans to double their car production again this year, and this requires large advance payments. Those 100k cars would give 4Billion in revenue, but thats only at the end of the year.

According to Elon it's to qualm investor fears, not because they have anticipated needing the capital.

Maybe to grow faster?

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