Funding Not Secured: Musk Tells China Tesla Must "Sell Cars Today To Build Factory Tomorrow"

Elon Musk is now begging urging Chinese customers to buy cars.

We reported earlier that Elon Musk was in Shanghai for the "ground breaking" of the new Tesla Gigafactory 3, which is – if you take the company's guidance at face value – slated to be up and running within a matter of months, despite the parcel of land the factory will be on looking like nothing more than a flat slate of dirt.

The "ground breaking" didn’t actually break ground. Rather, it reportedly involved Musk and those accompanying him putting their hands on LED columns which then lit up. The groundbreaking ceremony - which was also attended by the Mayor of Shanghai, Ying Yong - came just a week after Chinese state run media reported that the company's progress in Shanghai appeared to have stalled, with no visible construction taking place.

But it was Elon Musk’s comments to a Shanghai news outlet on Monday that warranted further scrutiny. On Monday, Bloomberg reported that Musk said during an interview that "the high-end versions of the Model 3 -- the price will still remain the same next year. I don’t want people to hold off on purchasing, or waiting for or expecting a price drop. We need to sell cars today in order to build the factory tomorrow.

This is surprising admission for a couple of reasons. First, Musk seems to be tacitly admitting that the company may not have the cash on hand to start building the Shanghai Gigafactory without selling new cars. In fact, it sounds like the CEO has taken more of a tone that you would hear from someone who is facing a demand cliff and a sense of urgency, as opposed to a CEO who is calm and collected with an ample backlog.

The other ridiculous part of the statement is that Musk is trying to posture as though there will be no discounts or price drops in order to stoke up new business now. While that may be the case on the Model 3 going forward, it flies in the face of Tesla's recent actions in China, where it just cut prices on some of its models for the second time.

Musk also tried to lure in potential future Tesla employees by stating: “Somebody who joins today as a junior engineer in Tesla China could one day be CEO of Tesla worldwide. They could have my job one day maybe.”

In light of Musk's ongoing legal troubles and operational challenges, that does not sound like much of a selling point.