After Tesla Motors (TSLA -3.55%) reported better-than-expected revenue and EPS Wednesday, one analyst is questioning just how sustainable the company's aggressive spending is.

Tesla's current rate of cash burn is "eye watering," said Morgan Stanley analyst Adam Jonas, who has a $280 12-month price target on the stock, up about 20% from today's price of about $235.

Model S. Source: Tesla Motors.

Tesla's rapid cash burn
Jonas detailed his concerns (via MarketWatch) for Tesla's cash burn in a note to investors after analyzing the company's first-quarter results.

"Cash burn of $558mm (closer to $480m when including leasing cash flow from bank partners, but excluding warehouse line drawdown) was well above our forecast of $330mm of burn in the quarter," Jonas said. At this rate, Tesla would burn through its current cash and cash equivalents of $1.51 billion in about three quarters, he noted.

While Tesla's automotive gross profit margin excluding the benefit from zero-emission vehicle credits, or ZEVs, of 26% is certainly impressive, the company's aggressive spending is equally astounding. Tesla's primary spending is categorized under capital expenditures on the cash flow statement. Tesla spent $426 million on capital expenditures during Q1, investing heavily in production capacity expansion for Model X and its growing sales of the all-wheel-drive Model S and the Gigafactory.

Tesla Fremont, California, factory. Source: Tesla Motors.

Including the cash outflow at the operation level, and even after excluding the $63 million increase in inventory quarter over quarter due to Tesla's efforts to fill its pipeline of in-transit customer-configured Model S, Tesla's total cash burn for the quarter was $417 million -- about 44% of revenue.

How Tesla may reverse its cash burn
While Tesla's cash burn is certainly one of the risks to owning Tesla, the company is far from being at a point of financial distress. Tesla could easily raise capital through a debt offering or through equity.

With a premium $28.8 billion market capitalization, Tesla is in a comfortable position to raise capital through equity, if needed. But this would dilute the underlying intrinsic value for each share, since Tesla would have to issue additional shares.

The company could likely also tap into the debt markets at reasonable rates. With revenue rising rapidly and the company's already-impressive gross profit margins continuing to expand, Tesla appears to be a good candidate for borrowed money.

Model X prototype. Source: Tesla Motors.

Longer-term, Tesla is looking to its Model X to help alleviate cash burn. The Model X, which goes on sale later this year, has the potential to eventually double sales and increase operating cash flow. However, it could be another year before the Model X begins to contribute meaningfully to the company's cash and cash equivalents: Manufacturing for the Model X will likely initially be costly since it's a new product, and because overhead for the car will be relatively high until Tesla ramps up production for the model.

Tesla management believes the company will be free cash flow-positive as early as the end of this year, expecting financials to benefit from increasing manufacturing efficiencies and a more robust pipeline of in-transit customer-configured vehicles (requiring smaller incremental hikes in finished-goods inventory each quarter).

Investors should keep a close eye on Tesla's cash burn the rest of the year. And investors shouldn't be surprised if Tesla raises capital through debt or equity -- or a combination of the two. As Jonas went on to say in his note to investors, raising capital at this point is "desirable if not absolutely necessary."