Big price tag seen for Musk's Tesla 'master plan', shares fall

Thu Jul 21, 2016 4:43pm EDT
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By Paul Lienert and Tenzin Pema

(Reuters) - Elon Musk's latest "master plan" for Tesla Motors Inc (TSLA.O: Quote) to develop an electric commercial truck, a public bus, a pickup and systems to enable fully autonomous driving could cost $2 billion to $3 billion or more, experts and analysts said Thursday.

Musk did not lay out a budget for his latest strategy, revealed on Wednesday, to expand Tesla into a broader range of vehicle markets as well as ride services and solar energy systems. The Tesla chief executive also did not explain how the company planned to pay for the new products he envisioned.

However, analysts said it is likely Tesla will have to go back to investors for more capital to fund the plan, despite raising about $1.7 billion with a sale of shares in May.

"It's beyond us how much fundraising Tesla will need to carry out this master plan," Barclays Capital analyst Brian Johnson wrote in a research note.

Standard & Poor's on Thursday cut its rating on Tesla to "sell" from "hold", saying that while the new plan may build "a long-term technological monument, we think it will create a short-term cash flow sink hole."

Tesla shares fell 3.4 percent on Thursday to $220.50.

Up to Wednesday's close, the company's shares had risen 5 percent since July 8 after Musk tweeted that he was working on a second master plan for the company he founded in 2003.

Musk sketched out a vision for Tesla to become an integrated carbon-free energy enterprise offering products and services beyond electric cars and batteries.   Continued...

Tesla Chief Executive Elon Musk attends a forum on startups in Hong Kong, China January 26, 2016.      REUTERS/Bobby Yip/File Photo