Company announced last week it had lost $702m in the first three months of the year and sold 31% fewer vehicles in the first quarter

This article is more than 1 year old

This article is more than 1 year old

Tesla is seeking to raise $2.3bn after its latest results heightened concerns that the troubled car company is running out of cash.

Last week, Tesla announced it had lost $702m in the first three months of the year and had sold 31% fewer vehicles in the first quarter than in the fourth quarter of 2018. The company had $2.2bn of cash at the end of the quarter, down 40% from the $3.7bn it had the previous quarter. Tesla ended the quarter with about $10bn in debts.

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In a filing with the Securities and Exchange Commission (SEC), Tesla announced it was seeking to raise money through the sale of bonds and shares.

Founder Elon Musk has previously dismissed the idea of raising more money but in the last earnings call said: “Tesla today is a far more efficiently operating organization than it was a year ago. We’ve made dramatic improvements across the board. And so I think there’s merit to the idea of raising capital at this point.”

In a research note Wedbush Securities said the decision was good news for Tesla and that the company “needed to take its medicine and clear the air of the very real investor worries that the company would not having enough capital.”

Tesla’s share price has fallen close to 30% in the last six months as investors have grown concerned about the company’s future.

Sales of its mid-priced Model 3 sedan have been hit by logistical challenges and a reduction in a federal tax benefit for electric car buyers in the US. Musk has blamed seasonal factors for the fall. “People don’t like buying cars in winter,” he said last month.

The sales stumble is just one of a series of problems Tesla has recently faced. Tesla is investigating a video posted on Chinese social media which showed a parked Tesla Model S car exploding, the latest in a string of fire incidents involving the company’s cars.

The company has also had to struggle with self inflicted wounds. After a legal tussle Musk has been forced by the SEC to submit any public statements about the company’s finances to vetting by Tesla’s legal counsel after tweeting that the company had “funding secured” to take the company private. The company had not secured the funds.

Tesla’s shares rose 3% following the news it was raising more money.