2016 Tesla Model X

Tesla Motors (TSLA - Get Report)  late Wednesday disclosed one small step toward closing its well-documented funding gap. Filling the entire hole will require more drastic measures.

The Silicon Valley-based automaker said in a securities filing that it has entered into an agreement with Deutsche Bank to borrow up to $300 million to fund its vehicle leasing program. The agreement should mean Tesla's need to supply capital to the program will be "significantly reduced," the company said, freeing up cash to continue development of its Model 3 sedan and other initiatives.

The $300 million is just a fraction of the billions the company will need in the next 18 months as it endeavors to complete its Gigafactory battery plant, bring its Model 3 to market and build out its global retail and charging network. Tesla will face further cash needs should it succeed in its $2.6 billion bid for acquire SolarCity  (SCTY) , which like Tesla is an Elon Musk-backed company that has been bleeding cash and is in need of further funding.

Tesla and SolarCity have a combined $5 billion in debt and together would generate significant cash burn. The lending markets have seemingly shied away from providing a stand-alone SolarCity with more debt, with Musk and two SolarCity executives last month committing to acquire $100 million of new SolarCity debt previously marketed to outside investors.

Tesla, which had $3.25 billion in cash and equivalents as of June 30, has warned investors it is likely to tap capital markets for the second time in 2016 before year's end. As a result of relying on Deutsche Bank funds for the vehicle leasing program, the company said in its filing "there would be a corresponding reduction in both the amount of funds that Tesla may raise from the public market, as well as the amount of dilution to Tesla's existing stockholders from such fundraising activities."

That's good news for investors, and a reminder that despite the doom and gloom surrounding Tesla of late the company still has significant wherewithal to raise capital. While the company's sales goals and product launch deadlines appear overly ambitious and perhaps unattainable, bulls argue that Tesla needs only to bring the Model 3 to market in a reasonable time frame to be a success, and past history would support that argument.

But Tesla still needs significant additional cash, and with its shares off by 13% in the last month tapping equity markets for additional capital is growing more challenging by the day. Cowen & Co. analyst Jeffrey Osborne on Thursday initiated coverage of Tesla with an underperform rating and a $160 a share price target, compared to its current $199 price, saying that while Tesla is "fundamentally well positioned for the long-term" there is "material amount of execution risk over the next 12 to 18 months."

Musk, in a memo to employees last week, urged them to cut costs and deliver "every car we possibly can" in hopes of generating positive cash flow in the current quarter, a milestone the CEO said would put the automaker in "a far better position to convince potential investors to bet on us."

A more radical option to reduce the amount of capital needed, and likely jumpstart Tesla's share price, would be for the company to drop its SolarCity bid. Such a move would come at a great personal price to Musk in terms of both reputation and to his pocketbook, but investors have largely been skeptical about a deal that adds little beyond complications to the automaker in the near-term and would likely cheer a strategic retreat.

Wall Street is seemingly concerned, with shares of SolarCity now trading 20% below the Tesla bid. It's far from certain whether SolarCity would be able to survive absent a Tesla acquisition. But from the automaker's perspective dropping the deal would free up capital and management attention toward getting the Model 3 out the door.

While some might argue that Tesla's valuation is so tied to investor belief in Musk that a SolarCity rejection could cause shareholders to lose faith, an argument can also be made that Musk making such a difficult decision would go a long way toward convincing investors on the sideline that the CEO is maturing on the job.

Dropping SolarCity might not be necessary if Tesla can succeed in reporting a strong third quarter and, in the words of Musk's memo, "throw a pie in the face of all naysayers on Wall Street who keep insisting that Tesla will always be a money loser." The company has shown as recently as last May it can defy expectations when it sold nearly $2 billion worth of shares with ease, and a quarterly beat would likely provide the momentum needed to reverse the stock decline and raise the capital it needs.

Whatever road it takes, Tesla faces a difficult journey. Buckle up.