, showing that both of the legacy manufacturers are swimming in debt. Meanwhile, Tesla could pay off its remaining debt tomorrow if it wanted to.
Currently, Ford has a total long-term debt of $140 billion, while GM is right behind with $115 billion in the same category. Tesla, on the other hand, has just $5 billion in long-term debt, and plenty of cash to show for it. In fact, the company has $22 billion in free cash flow, meaning that its cash minus debt gives it a $17 billion surplus.
To be sure, the auto industry requires high capital expenditures to some extent, largely due to the expensive materials involved, as well as labor and equipment for production. Automakers also need top-of-the-line research and development, which can be costly from an investment standpoint. Cobb attributes Tesla’s low debts to a few different things, with the first being its sleek lineup of cars, innovative technology and its overall dedication to renewable energy and sustainability. Through this and CEO Elon Musk’s ability to create investor buzz on social media, Cobb points out how Tesla was able to go from a startup to a soaring stock with a high valuation around 2020.became highly valued, the company gained access to equity funding instead of typical debt financing.
Worst conceivable time for a company to have to borrow
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