As orders for Tesla's new Model 3 climb, they're also raising a question that's critical to the automaker's future: Will the company need to raise billions of dollars to expand its capacity?
Officially, Tesla has given no indication it needs more cash. But analysts said the automaker could be primed to use a surge in Model 3 reservations — which have already topped 325,000 — as leverage to raise capital.
Barclays analyst Brian Johnson told investors he thinks the automaker could seek to raise $3 billion to expand capacity and better meet a surge in demand. Raising billions either in the debt or equity markets is likely to give investors pause, and cause them to calculate how much that new capital would weigh on Tesla's bottom line.
As of fourth quarter 2015, Tesla had $2.64 billion in long-term debt.
"We believe Tesla may justify an additional capital need by citing that demand exists to build more car and battery factories sooner rather than later, while also taking advantage of an open capital market," Johnson said.