SEAT to Spend Spend Spend on new Equipment, Facilities and Research and Development between now and 2019.

SEAT is going to spend 3.3 billion euros on equipment, facilities and R&D between 2015 and 2019. The announcement was made by SEAT Executive Committee President Jürgen Stackmann during the visit to the company’s facilities in Martorell by Spanish Prime Minister Mariano Rajoy, on the occasion of the 40th anniversary of the SEAT Technical Centre. 

The Premier was joined by Dr. Francisco Javier García Sanz, member of the Board of Management of Volkswagen AG and SEAT Chairman of the Board of Directors, and Jürgen Stackmann.

Stackmann pointed out that “the 3.3 billion euros is earmarked for promoting new vehicle development R&D projects at the SEAT Technical Centre as well as equipment and facilities in the Martorell factory”. 

As it currently stands, this spend, which is the largest in the history of SEAT for new models, will go towards launching four new vehicles in the next two years. 

“These models are part of an ambitious plan to continue to strengthen the brand and boost sales, which have been growing consistently since 2013. The spending on innovation ensures competitiveness and employment, and secures the future”. 

The first model of SEAT’s offensive to reach the showrooms during the first half of next year will be a compact SUV, the brand’s first incursion into this segment.

The 3.3 billion euro figure is part of the amount announced by the Volkswagen Group last May. In this respect, Dr. Francisco Javier García Sanz indicated that “Spain is a key country in the Group’s strategy. 

These resources underscore our commitment as a driver of the Spanish economy and represents a guarantee for the future”. He went on to stress that “the 3.3 billion euros strengthen SEAT’s position within the Volkswagen Group and as the country’s main industrial investor in R&D”. 

SEAT is the only carmaker which, bolstered by its own Technical Centre, has the capacity to design and develop vehicles in Spain. In the last five years, the company has spent 1.4 billion euros on R&D.

SEAT is one of the main pillars of industry in Spain and the largest company in the car industry, which currently accounts for 10% of the country’s GDP. SEAT contributes roughly 1% to Spain’s GDP and 4% to Catalonia. Many SMEs are suppliers to SEAT, which provides direct and indirect employment to around 70,000 people. 

The spending announced today will also have a positive impact on the auxiliary industry as it will significantly increase the supply of parts and components manufactured in Spain.

Spanish Prime Minister Mariano Rajoy acknowledged the spending made by the Volkswagen Group and SEAT, which continues to strengthen the automotive industry as one of the country’s strategic sectors. 

In his first trip to Martorell, Rajoy visited the brand’s Design Centre and got a close look at the vehicle development process. In this facility, which is a part of the Technical Centre, technology and creativity come together to produce all of the brand’s future models.

Following the visit, the Prime Minister was transferred in a Martorell built CNG fuelled estate version of the Leon TGI to the Meisterbock, where SEAT ensures the quality of its vehicles during their launch and development phase. Rajoy witnessed first-hand all the work and latest technologies put in by the company to ensure the precision and perfection of all its vehicles.

The Prime Minister’s visit coincides with the 40th anniversary of the SEAT Technical Centre (CTS), whose creation was a turning point for the company and the car industry in Spain. From the outset, the Technical Centre shaped SEAT’s genetic make-up and has been responsible for developing the company’s most iconic models, such as the Leon, Ibiza, Toledo, Alhambra, Malaga, Marbella, Cordoba, Altea and Arosa, among others, which were all shaped by a common development philosophy that confers them with signature SEAT character and silhouettes. 

In addition, the CTS participates in Volkswagen Group projects and has developed and implemented absolute state-of-the-art technologies, the use of ecological Ecomotive engines and systems that enable car connectivity.

Over the course of these last 40 years, the SEAT Technical Centre has become the main local and national driver of industry and serves as a catalyst of technological development among businesses, institutions, universities and suppliers to the company all over Spain. Today it occupies an extension of 200,000m² and by the end of the year will employ 1,000 engineers, after the addition of 100 new employees who are being recruited in recent months.

Tesla gets through $359 Million in the last quarter, but with two new cars coming it's only to be expected.

It's crunch time for Tesla Motors.

The Silicon Valley automaker is losing more than $4,000 on every Model S electric sedan it sells, using its reckoning of operating losses, and it burned $359 million in cash last quarter in a bull market for luxury vehicles. The company on Wednesday cut its production targets for this year and next.

CEO Elon Musk said he's considering options to raise more capital, and didn't rule out selling more stock.

Musk has taken investors on a thrill ride since taking Tesla public in 2010. Now he's given himself a deadline, promising that by the first quarter of 2016 Tesla will be making enough money to fund a jump from making one expensive, low volume car to mass producing multiple models, and expanding a venture to manufacture electric power storage systems.

Tesla's shares fell almost 9 percent on Thursday and slipped another 2 percent on Friday as investors and analysts weighed the risks of Musk's ambitious plans for expanding Tesla's auto and energy storage businesses. Tesla had just $1.15 billion on hand as of June 30, down from $2.67 billion a year earlier.

Automakers consume cash to pay for assembly line equipment, including metal dies and plastic molds, as well as testing to meet safety and emissions standards. A typical new car can cost $1 billion or more to engineer and bring to market.

Established automakers such as General Motors and Ford Motor Co. have amassed far larger cash cushions as they've rebuilt balance sheets battered by the 2008-2009 recession. GM, restructured six years ago in a government funded bankruptcy, has targeted cash reserves of $20 billion and had more than $28 billion in cash equivalents as of June 30.

To be sure, GM sells more than 9 million vehicles a year, while Tesla plans to build between 50,000 and 55,000 cars this year. Tesla, most of whose cars are built to order directly, delivered 11,532 cars in the second period and said it had an operating loss of about $47 million, for an operating loss per car of about $4,000.

Tesla's narrower margin for error is just one more way in which it is different from its century-old rivals.

Capital spending

The company said it plans $1.5 billion in capital spending this year, mainly to launch its Model X, battery powered SUV with eye-catching, vertical-opening "falcon wing" doors. Tesla reported $831 million in capital spending during the first half of the year, indicating it will spend roughly another $700 million.

During the second quarter, Tesla said operating costs and r&d spending rose, while average selling prices for the Model S lineup, which starts at $70,000 before federal and state electric vehicle tax breaks, fell 1 percent as the mix of sales shifted to less expensive models and a strong dollar hit revenue generated overseas. The Model S comes in several different versions, ranging in price up to $106,000 or more, depending on options.

Tesla has signaled capital spending will drop next year because the company won't be spending on a major vehicle launch. In 2017, Tesla plans to launch its Model 3 line, which the company says will start at about $35,000 and push total sales toward the goal of 500,000 vehicles a year by 2020.

Barclays analyst Brian Johnson disagreed with the company's estimates, and said he expects Tesla's capital spending will go up in 2016 and 2017 as the company ramps up its battery factory and Model 3 development. "Their small scale means the cash generation is not as great as they might have hoped for," he said.

Worth more than FCA

Musk said this week Tesla expects to have $1 billion in cash over the next year, and told analysts "there may be some value" in raising capital "as a risk reduction measure."

Tesla's stock is still about 70 percent higher than it was two years ago, and 8 percent ahead of its level on Jan 1. With a market capitalization of $31 billion, Tesla is worth more than Fiat Chrysler Automobiles NV, the much larger maker of Ram pickups and Jeep Grand Cherokees.

"A capital raise, given the way they're burning cash today, given the fact that they have future investment needs, seems very likely at some point," said UBS Securities analyst Colin Langan, who has a sell rating on the stock.

Musk has steered Tesla out of tight corners before. In September 2012, the company faced a cash crunch, but raised money by selling shares and renegotiating the terms of a federal loan. The Model S started production in mid-2012.

Tesla has made moves to expand sales volume, and lure people to pay more for its vehicles. In addition to adding a lower priced version of the Model S, Tesla last month said it would offer performance upgrades for its Model S 85 and 85D for $5,000 and launched the Model S 90D and P90D high performance cars at a $10,000 price premium.

GAAP numbers

Tesla reports its finances in a different way from the Detroit automakers. Using the generally accepted accounting principles, or GAAP, used by GM or Ford, Tesla's operating losses per vehicle have steadily widened to $14,758 from $3,794 in the second quarter of 2014.

But Tesla points out in its statements to investors that its GAAP accounting excludes certain revenue and profits from Model S sedans that customers lease.

In the second quarter, the deferred gross profits from Model S leases amounted to $61.9 million, Tesla said. Analysts say they add back the deferred revenue to make Tesla's figures more comparable to the reporting used by other automakers.