Contrary to popular belief, business cycles are not a natural consequence of everyday economic activity. They are rather a symptom of monetary manipulation. Ultra-low interest rates encourage companies to borrow ever larger sums of capital in the hopes they can be repaid as the boom – itself fueled by other companies borrowing large amounts as well – continues indefinitely. But it never does. Eventually, inflation kicks in, interest rates rise to combat it and debt service payments swallow up offending companies who were sucked in.

Right now, Tesla is at ground zero for these offenses, and it could soon be forced to pay up or bow out. The debt merry-go-round cannot go around forever. After selling $1 billion in bonds at just over 4% in October, the electric car company is looking to raise another $1.5 billion to support the production and distribution of the Model 3. It has already raised $600 million toward this, and it looks like the debt raise will be successful. What other outcome could there be in a world of extremely low interest rates?

But beloved ideas and hopeful dreams cannot prevent a company from having to pay its debts in full. For decades, the idea of a mass-market electric vehicle has been a global environmental dream, a panacea that will cure the world of pollution and ease the universal boogeyman of climate change. This boogeyman convinces us life on Earth is on the brink of extinction if something drastic does not change. Whether or not electric cars solve all these, or at least many of these, problems, if selling them is not profitable, the company that makes them will go bankrupt regardless.

According to Tesla’s own optimistic numbers, Model 3 sales projections are 500,000 vehicles in 2018 and one million in 2020. If we assume a generous 750,000 vehicles in 2019, that comes out to a total 2.25 million vehicles by the end of 2020, for total revenue of $79 billion by 2020.

That sounds like a grand number, but let’s take it into the context of Tesla’s most recent gross profit margins. Gross profit for 2016 was 23%. If that stays steady, and there is no guarantee it will, gross profit will be around $18 billion. Administrative expenses plus research and development came out to 32% of revenues in 2016, which takes off another $25.3 billion. That still puts Tesla at a loss of $7.3 billion through 2020, and this does not even take into account debt service, which will become more and more expensive as interest rates rise. They cannot go any lower than they are now, after all.

Tesla bulls will claim economies of scale will kick in and gross profit margins will improve as administrative expenses shrink. Maybe so, but debt service will increase, perhaps even quite significantly. Even in the event Elon Musk’s sales projections come to fruition, the numbers still do not look profitable based on recent income statements.

What if there are problems with the Model 3 that are unforeseen? What if Musk’s sales projections do not hold water? Even if they do, the numbers do not seem to work out so obviously. If they do not, the fairy tale that is Tesla encouraging debt investors to pony up every dollar may quickly evaporate.

Tesla has already eaten through $3.43 billion in equity since inception. As long as interest rates remain low, that can theoretically continue. But as soon as they start to climb and the business cycle comes into its less desirable stages, as it always does thanks to monetary manipulation, Tesla could very well be at the forefront of the next bust.

Disclosure: No positions.