Tesla Inc. will need about $10.5 billion in fresh capital through 2020 to keep operating and meet its own targets, Goldman Sachs analysts said Thursday.

That’s the sum needed from external capital raises and debt refinancing for the electric-car maker to fund its current operations and finance new product spend and capacity additions, Goldman analysts led by David Tamberrino wrote in a Thursday note. Goldman is assuming that Tesla TSLA, -10.34% will go ahead with a plan to launch a new vehicle manufacturing plant and gigafactory in China.

“We believe this level of capital transactions may be funded through multiple avenues, including new bond issuance (secured and/or unsecured), convertible notes, and equity,” the analyst wrote. “We see several options available to the company to refinance maturing debt and raise incremental funds, which should allow Tesla to fund its growth targets.”

Still, issuing more debt may weigh on the company’s credit profile, while issuing equity or convertibles would dilute the current shareholders, said the note.

“Our preference is to express long views via the front-end convertible credit — and we continue to express a bearish view on the equity,” said Tamberrino.

See also:Tesla to halt production line again, report says

Don’t miss:A longtime Tesla bull just slashed his price target on the stock

Related:Tesla to restructure management as more executives depart

Goldman is recommending a trade on the company’s liquidity levels that involves buying the 0.25% 2019 convertible bonds and selling a March 2019 call option to isolate the credit value.

“We believe selling a lower strike $330 call against the convertible creates a 9.2% annualized yield if the stock ends the period below $330 (+15% from current) at maturity while only losing a maximum of 2.0% (annualized) if the stock reaches $359.87/share at maturity,” said the note.

Tesla said in its most recent earnings that it does not intend to raise capital this year, and, on a controversial earnings call, Chief Executive Elon Musk said he does not “want” to raise capital.

But numerous parties, including credit-rating agency Moody’s Investors Service, have said the company will inevitably need to tap the markets as it continues to struggle to meet production goals for its Model 3 mass-market sedan.

Highlights From Elon Musk's Combative Tesla Earnings Call

Goldman said it is sticking with its sell rating on Tesla shares, as it expects the company to continue to be challenged by its manufacturing process and to be free-cash-flow negative through 2020.

If Tesla hits its production targets with the Model 3, its mass-market vehicle, and it is able to “sustainably” produce 10,000 of the sedans a week in 2020 as well as move forward with its other expansion plans, its would still need about $5 billion in debt (refinancing and growth), the note said.

Read:Federal regulator opens probe into Tesla crash in Utah

Tesla’s high-yield bonds, the 5.300% notes that mature in 2025, were last quoted on Thursday at 87.125 cents on the dollar to yield 7.646%, according to MarketAxess, or at a yield spread of 456 basis points over Treasurys, 1 basis point wider on the day.

Shares were slightly lower in early trades Thursday and have fallen 8% so far in 2018, while the S&P 500 SPX, -2.37% has gained 2% and the Dow Jones Industrial Average DJIA, -1.92% has fallen 0.1%.

Staff writer Claudia Assis contributed to this report