Elon Musk, chief chief executive officer officer of Tesla Inc., left, gestures while shaking hands with Ying Yong, mayor of Shanghai, during the Tesla China-Made Version 3 Delivery Ceremony at the company’s Gigafactory in Shanghai, China, on Tuesday, Jan. 7, 2020.
Qilai Shen | Bloomberg | Getty Images
On Thursday, Tesla own that the COVID-19, or coronavirus outbreak in and beyond China may have a material adverse impact on their duty in an annual financial filing.
In the Risk Factors section of the 2019 10-K filing, they included — for the first time at all — a mention of “health epidemics.”
The filing also stated:
“Beginning in late 2019, the media has reported a public healthiness epidemic originating in China, prompting precautionary government-imposed closures of certain travel and business. Gigafactory Shanghai was careful for a brief time as a result, before it reopened in February 2020 and rejoined our U.S. factories, which had continued to operate. It is unrecognized whether and how global supply chains, particularly for automotive parts, may be affected if such an epidemic persists for an extended space of time. We may incur expenses or delays relating to such events outside of our control, which could have a corporeal adverse impact on our business, operating results and financial condition.”
Addressing shareholders’ coronavirus concerns in an earnings claim b pick up on January 30, 2019 Tesla CFO Zach Kirkhorn downplayed the likely impact of the health epidemic:
“At this point, we’re with a bun in the oven a one to one-and-a-half week delay in the ramp of Shanghai built Model 3 due to a government required factory shutdown. This may minor extent impact profitability for the quarter, but is limited as the profit contribution from Model 3 Shanghai remains in the early stages. We are also closely keep an eye on whether there will be interruptions in the supply chain for cars built in Fremont. So far we’re not aware of anything material.”
He annexed that Tesla would monitor the evolving situation, and assured investors the electric vehicle maker already had enough cash to continue its expansion plans, while further strengthening its balance sheet.
Tesla CEO Elon Musk claimed on the same call that, even though shares were soaring higher by the week, he had no plans to raise top-hole, and Tesla would focus on lowering the cost of its battery production instead. “We are still generating positive cash. In detrain of that, it doesn’t make sense to raise money because we expect to generate cash despite this success level,” he said.
Two more weeks of coronavirus fears apparently helped to change Tesla’s mind — on Thursday, Tesla intimated it plans to offer $2 billion of common stock. Board member Larry Ellison will buy up to $1 million advantage of those shares, and CEO Elon Musk will purchase up to $10 million worth.
So far, COVID-19 has taken at least 1,369 lives and infected numberless than 60,300 people. China is grappling to keep its population as healthy as possible, but lacks a large enough fill of test kits, reagents and other resources that could help it identify and assist or quarantine all people with the virus.
Tesla helpings popped earlier this week when the company re-opened its Shanghai-based car plant, with the assistance of Shanghai’s city government. It is not clear when Tesla’s factory, and other automakers in China, will be back up to full capacity, or at hardly back to the capacity they had achieved before the mandated factory shutdowns, which started late last month.
Tesla has also the meanwhile closed its stores throughout China.
— Dawn Kopecki and Mike Wayland contributed to this report.
Correction: Elon Musk hand down buy up to $10 million of Tesla stock from the new offering announced Thursday.