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Tesla has a $20 billion ‘war chest’ for 2021 and beyond

Tesla Inc. will ring in 2021 with a “war chest” of around $20 billion, plenty to fund ambitious plans that include the launch of its futuristic-looking, all-electric pickup and heavy-duty trucks.

Tesla TSLA, +3.74% is fresh from a $5 billion equity tap, its second in three months, which Chief Executive Elon Musk said he and other Tesla executives debated but in the end thought it was “probably a good thing” as it would retire debt and increase the security of the company.

Morgan Stanley analyst Adam Jonas calculated that $20 billion, saying in a note Thursday that was his estimate for pro-forma gross cash balance. At the end of third quarter, Tesla said it had $14.5 billion in cash and equivalents, a bump of $5.9 billion from the second quarter.

“We forecast Tesla to spend (about $50 billion) in combined capex and R&D” from 2021 through 2025, a figure that could prove to be “very conservative,” he said. That also compares with $27 billion spending target at General Motors Co. GM, -3.51% over a similar time span, Jonas said.

Besides the plan for the new pickup and commercial trucks, the year for Tesla also includes seeing to completion its two new factories, one outside Berlin, Germany and another outside Austin, Texas.

Tesla said it was “on track” to start deliveries from the two new plants in 2021, with the Texas factory tasked with building the Cybertruck and the heavy-duty Semi in addition to Model Y and Model 3 vehicles for the East Coast. Tesla’s factory in Fremont, Calif., is currently its sole vehicle-making plant in the U.S.

There are also plans to focus on developing a fleet of “robotaxis,” expand its insurance offerings, and continue to develop its in-house battery cells it hopes to be cheaper and better-performing batteries.

While Tesla has not given official word of its sales goals for 2021, it came close enough for some.

On a call discussing third-quarter results with investors, one analyst estimated 2021 sales between 840,000 to 1 million vehicles, and Musk responded by saying that sales likely will be “in that vicinity” and that the analyst was “not far off.”

Tesla Chief Financial Officer Zach Kirkhorn then added that Tesla will provide official 2021 guidance when it reports fourth-quarter results in early 2021, seeming to prevent Musk from saying more. Tesla has kept its target to sell half a million vehicles in 2020.

Tesla shares have broken strings of record closes this year, with the latest boost coming from a Dec. 21 inclusion in the S&P 500 index. Tesla’s market valuation hovers around $600 billion.

The stock also went through a 5-to1 split in August.

Optimism on Tesla has also lifted shares of other electric-vehicle makers such as Nikola Corp. NKLA, +1.42% and China’s Nio Inc. NIO, +2.77%, Li Auto Inc. LI, +1.44%, and XPeng Inc. XPEV, +0.24%, which have soared past their initial public offering prices. EV maker Fisker Inc. FSR, -10.87% had its IPO in October.

GM in November announced a renewed push on EVs, and Ford Motor Co. F, -3.44% also has plans to add more EVs to its lineup.

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