Tesla May Not Make It Past Q1 Without Vendor Concessions Or A Capital Raise

From Seeking Alpha

Jan. 25, 2019 4:09 PM ET  About: Tesla, Inc. (TSLA)

Summary

  • Tesla is seeing an implosion of demand – not just in US but also internationally. European Model 3 demand is below even bear expectations.
  • The company has several major cash calls from maturing debt and organizational changes and does not have the cash to cover these.
  • Without a capital raise or favorable vendor terms, Tesla faces solvency risk in Q1.
  • This idea was discussed in more depth with members of my private investing community, Beyond The Hype. Start your free trial today »

Fears of a cash crunch at Tesla (TSLA) are not new. Bears have raised these concerns in the past, and bulls have pooh-poohed them. The bear arguments were vindicated when CEO Elon Musk recently admitted that Tesla was within single-digit weeks of going bankrupt in 2018 as it struggled to ramp Model 3. Think about this: In one of the earnings calls in 2018, although there were no disclosures, Mr. Musk felt the Company may not survive until the next earnings call!

In the past, Tesla has been able to pull itself out of cash crunch situations through capital raises based on overly optimistic projections of Tesla’s prospects – and Tesla has largely failed to deliver on the investor expectation set during these raises. Management projections from the most recent quarter are also crumbling as we predicted in October. All of the major predictions from the previous article have come true. Per the article:

– In Q4, Tesla has introduced a lower priced Model 3 as demand for the higher priced version dried out.

– As US demand collapses, Tesla is starting earlier-than-expected shipments to Europe and China in Q1

-And, Tesla has laid off 7% of its employees. (note that Tesla is not disclosing the extent of contractor terminations and performance firings which will likely put the overall termination numbers much higher than 7%).

Unfortunately, for Tesla, the going is likely to get much worse. As they have done in 2018, Tesla management seems to be playing a game of chicken with investors on cash needs and capital raise. The Company continues to deny the need for a capital raise, although fundamentals point to exactly the opposite.

Elon Musk’s recent missive about the challenges that Tesla faces makes for an interesting read. After promising rosy future and sustained profitability about two months back, Mr. Musk did an about face and painted a dire picture of Tesla’s prospects. To quote a few choice paragraphs from the note:

“In Q3 last year, we were able to make a 4% profit. While small by most standards, I would still consider this our first meaningful profit in the 15 years since we created Tesla. However, that was in part the result of preferentially selling higher priced Model 3 variants in North America. In Q4, preliminary, unaudited results indicate that we again made a GAAP profit, but less than Q3. This quarter, as with Q3, shipment of higher priced Model 3 variants (this time to Europe and Asia) will hopefully allow us, with great difficulty, effort and some luck, to target a tiny profit.”

“However, starting around May, we will need to deliver at least the mid-range Model 3 variant in all markets, as we need to reach more customers who can afford our vehicles. Moreover, we need to continue making progress towards lower priced variants of Model 3. Right now, our most affordable offering is the mid-range (264 mile) Model 3 with premium sound and interior at $44k. The need for a lower priced variants of Model 3 becomes even greater on July 1, when the US tax credit again drops in half, making our car $1,875 more expensive, and again at the end of the year when it goes away entirely.”

“As a result of the above, we unfortunately have no choice but to reduce full-time employee headcount by approximately 7% (we grew by 30% last year, which is more than we can support) and retain only the most critical temps and contractors. Tesla will need to make these cuts while increasing the Model 3 production rate and making many manufacturing engineering improvements in the coming months. Higher volume and manufacturing design improvements are crucial for Tesla to achieve the economies of scale required to manufacture the standard range (220 mile), standard interior Model 3 at $35k and still be a viable company. There isn’t any other way.”

The problem is that Mr. Musk’s narrative, as usual, is not credible.

Note that Model 3 has been in “production” for over a year now and has gone through many fixes and tweaks. The production line has also been improved considerably in the same time period. Most of the easy cost improvements in parts and manufacturing process have already been made. In the near term, it is extremely difficult to squeeze another 20% or so in costs necessary to make the $35K Model 3 profitable at a net profit level. The 7% workforce employee layoffs will help but will not a big difference as direct and indirect labor is only a small fraction of Model 3 cost structure. Our assessment is that the situation is much direr than the CEO is predicting, and the solutions being proposed do not come close to solving Tesla’s problems. If, as Mr. Musk says, “there isn’t any other way”, then Tesla will die.

Let us first consider the near-term challenges that Tesla faces.

Demand Has Evaporated

As Mr. Musk himself acknowledged, the US demand is low. However, the situation appears much more dire than indicated. Anecdotal evidence gathered by Tesla watchers suggests Q1 demand is running at less than 10% of the Q4 level. Even the largest volume Tesla sales center in Southern California is seeing zero sales on many days. Other sites are also showing very low demand.

European demand is far less than even bear expectations. Sum of all orders in the largest European markets is only about 16,000 units. This level of demand may not be sufficient to tide Tesla over for even a single quarter.

Cash Is A Big Problem

Consider Tesla’s balance sheet (from the Company’s Q3 shareholder letter)

We do not yet have the Q4 financials, and we do not know if the balance sheet during Q4 has gotten better or worse or stayed about the same. However, as discussed in an earlier article, Tesla had two significant cash calls in Q4:

  • $230M Convert due 11/2018.
  • $157M Non-recourse Term Loan due 12/2018.

In the balance sheet above, note the large line items: Account Payable, Customer deposits, and Current portion of long-term debt. These items, at the end of Q3 were $3.6B, $906M, and $2.1B, respectively.

In addition to the convert and term loan needs, the latter two line items discussed above are likely to move against Tesla. In other words, cash needs will increase, and cash is likely to go down than up.

To offset this burn, Tesla may have generated some cash during the quarter. While it is unlikely to be substantial, for the sake of discussion, let us assume that the cash position has stayed the same since Q3.

Now consider that, with the stock below conversion price, the $920M convert due 3/2019 will likely have to be paid out in cash. This event alone reduces Tesla cash position to $2B.

Layoffs Have Direct And Indirect Costs

7% layoffs, along with contractor retrenchments, and other retrenchments through performance reviews, will have their own costs. While it is difficult to estimate this amount accurately, we believe Tesla will incur about $100M in cash costs and an additional amount in write-offs and other non-cash costs.

This brings the cash down to $1.9B

Capex

It is difficult to estimate how much Tesla will be spending in capex. The Company has significant control over its spending although the control comes with trade-offs. Tesla has dramatically scaled back capex in the last several quarters leading to major underinvestment in Superchargers, Service Centers, Sales Centers, etc. The result is that the Supercharger network is overburdened, and there are regular stories of customers facing long delays and descending into arguments. Similarly, service centers are overburdened, and customers have faced long delays and quality has suffered.

Note that in addition to the maintenance capex, CEO Musk sets lofty expectations on new projects. Mr. Musk, for example, promises that the Company will deliver a truck in 2019, a Model Y in 2020, and a China factory in 2019/2020. These efforts will need billions of dollars of investment today if Tesla were to have any chance of meeting the timelines promised by Mr. Musk.

For this discussion, we will assume that, for cash conservation, all these projects will be delayed, and only about $300M in maintenance capex will be spent in Q1.

This brings the cash balance down to $1.6B.

Items Not Being Considered

This cash flow analysis is ignoring a myriad of cash expenses such as:

  • Deposit refunds which could be several tens, or even hundreds, of millions of dollars.
  • Refund of $5,000 for Model 3 “P” version purchasers in Q3 (due to Tesla adjusting price on the version in Q3).
  • Tens of thousands of cars which may not qualify for the $7,500 Federal tax credit because Tesla has not registered the cars before the end of the quarter. Given that Elon Musk has promised to make customers whole if the FTC deadline is missed, Tesla may owe customers $3,750 for many of these tens of thousands of unregistered cars (chart below from Twitter user @TeslaCharts)
  • https://pbs.twimg.com/media/DxW5DoCX0AUctg8.jpg:large

It is questionable if investors should trust Tesla Q4 balance sheet when it is released. The cash numbers may be artificially inflated by Tesla not registering several tens of thousands of cars as of the end of Q4. That likely means Tesla has collected the customer cash but may not have paid sales taxes on the cars or paid off ABL vendors on the sold cars.

Read the full article here

HT/The GWPF

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189 thoughts on “Tesla May Not Make It Past Q1 Without Vendor Concessions Or A Capital Raise

    • Two words that will finish off Tesla:

      Porsche Taycan

      I’d think about a Taycan but would NEVER buy a Tesla.

      • Porsche originally planned a production run of 20,000 units and has now doubled it to 40,000. Normally demand for a new Porsche model is derived from existing Porsche owners. In the Taycan’s case a large portion of demand is from Tesla owners.

        Taycan has 15 minute charge times, 250 mile range and a world wide dealer network. Telsa is toast.

        Oh, and did I mention that it’s a PORSCHE?

        • Hear, hear! My 1959 is still chugging along. There are many thousands of ’50s and ’60s Porsches still running. How long will a Model 3 last? How much will it cost to recycle one?

  1. I have referred to Elon Musk as “Enron” Musk for some time now.
    I’m gobsmacked there have been enough virtue-signalling fools out there to keep this scamster afloat for so long.

    • I suppose calling him “Enron” Musk is much more flattering to Mr. Musk than referring to Tesla’s cultish following by applying the sobriquet “Elron” Musk.

    • Just stick to your bias and everything should be fine for you.
      I love this site most times, but am always reminded of the limited capability of most persons to think critically when they post these anti-Tesla stories, from seeking alpha no less.

      I own a Tesla. I do NOT believe the theory of CAGW has any legs. But that said I want Tesla to succeed even though their stated mission purpose is founded on a fallacy. Why? They are an American car company that makes really cool cars. They don’t stink, can be “run” indoors, and are super fast and fun to drive. Why do you want them to fail? Because they adhere to the CAGW narrative? Does not seem very well thought out. Mostly reactionary.
      It is possible to support a company like Tesla while having a disagreement with some parts of their philosophy. Just as I love Rage Against the Machine but do not agree with communism.

      • Why do I want them to fail? Because the sooner they do the sooner money will stop being taken from those who do not buy Teslas to support those who do buy Teslas. My animas is against both Tesla, and the Gov. Had Tesla not chosen to feed at the Gov. trough it would not have earned any animosity.

        SR

        • “Had Tesla not chosen to feed at the Gov. trough it would not have earned any animosity.”

          Nor would it have remained afloat. Elon Musk was once touted as being the highest paid CEO in the country. Could that have happened if he wasn’t receiving government monies? My wife drives a ten year old Explorer and my pickup is seventeen years old. Why should my taxes be taken to subsidize those with money to buy a Tesla? Asking for myself.

      • Well John, I personally want Musk to fail because I regard him as a lying fraud who knowingly exploited a moronic state leader’s desire to be green and as a result helped make electricity in my state the highest in the world.

        Considering his actions our helping to destroy our economy and way of life I am completely happy to see his actions destroy his own as well. Yes, it might be petty of me to hope one day that I see Musk stinking up a street corner with a hand made cardboard sign but then again I never claimed that I wasn’t shallow.

        Musk was a small time success story who believed his own glowing performance reviews and conned his way into a vision at everyone else’s expense.

  2. Not surprised, TESLA has been courting bankruptcy for quite a while.

    Further hurting sales and reservations has been the permanent, it seems, delay in the Autopilot function. Customers have already paid thousands and prospective customers are now being told they may order the option but there is no guarantee of the product ever rolling out.

    The diehards will purchase, others will move to new offerings from BMW, Porsche and others. Smart people will steer clear of all of it and go hybrid or gasoline. Tesla has been nothing but virtue signaling for years, maybe it is time for their swan song.

    • As you point out, there are now plenty of full electrics now available. link

      Electric cars are still more car than electric. The battery is a big problem but you can’t discount the problem of building an automobile that can be sold at a competitive price. Once you have the battery problem licked, the rest of the electric drive system is relatively simple.

      Once Tesla no longer had the market to itself, it was doomed. It simply can’t compete as an automobile manufacturer.

      • The BBC has also been giving Tesla copious and completely free advertising for many years [*].
        If you only read the BBC it would be easy to think that Tesla doesn’t have any competition at all.

        [* Or at least, free as far as we can ascertain. I think an in-depth audit of the finances of some BBC ‘science&environment’ contributors is long overdue. Twitter is another corporation that seems to have done well by the BBC, thank you very much.]

    • “Further hurting sales and reservations has been the permanent, it seems, delay in the Autopilot function.”

      No, that’s the Full Self-Driving feature (autonomous driving) that’s on the ICE. Autopilot is still being updated—the latest new feature is the Summon function.

  3. Judging by the Tesla stock price … there are plenty of FOOLS who will provide a capital infusion for the eco-corporation. Mainly from public pension funds and their “morally responsible” investment directives.

  4. Who relies on models is mostly left 😀
    (Wer sich auf Modelle verlässt ist meist verlassen) German wordgame

    • Krishna
      I think I would translate “left behind”

      But it’s true enough that climate modellers are mostly Linke/Leftists, maybe that’s what you had in mind?

      I suspect that Musk won’t lose anything much. He’s definitely an OPM addict. (other people’s money).

  5. It is below the standards for a site purporting to present honest debate, to repost a one-sided article from a Tesla hater. This guy predicts the demise of Tesla monthly. Present both sides fairly or risk being dismissed for a lack of any credibility.

    I love this site, but come on, don’t devolve into an “us vs them” mentality that opens the door to publish garbage so that your readers can feel morally superior to anyone who would have the desire to buy an electric car. Many of those now buying Teslas are doing so because they are great cars, not because they are trying to save the planet. Why alienate just for sport?

    • dunno….

      A self igniting car you can’t park in the garage…that’s almost impossible to put out….you can’t get parts for….if you’re knocked unconscious in a wreck, you’re fried…. that’s auto driver aims at things to hit

      ….and takes a waiting line to get one…with real delivery date

      • Read this man’s previous Tesla analysis and you will find a consistent (and persistent) pattern of down-talking the stock. It is not a question of lying, it is a question of presenting a one-sided perspective without any counter balance. The bigger question is where are the pro-Tesla articles on your blog? I must have missed them. Surely, you recognize that a large number of your followers see any attack on a “green” product as red meat (see the other comments). I am simply pointing out to you that I expect more than one sided attacks from credible sources. Again, I appreciate your work to call-out mindless global warming claims. It is a mistake, however, to apply that same mindless analysis to popular products like electric vehicles and, in the process, insult people (like me) who see the value in such products for reasons that go far beyond trying to be “green.” Grow your followers by avoiding the tendency to promote “us vs them.”

        • “down-talking the stock”? Tesla has been poison for years. Investing in it is a fools gambit. Why wouldn’t a sane person down-talking the stock?

        • The key point in your comment is that you say , and correctly, that electric cars are popular. The result is that the long established manufacturers from Asia and Europe , as well as within the US are jumping into the market. They have more experience, in some cases , lower labour costs, and can undercut Tesla motors. That surely was always going to happen. As long as owning an electric car was seen as a niche market for rich eccentrics they could survive.
          Think about the subprime crisis as revealed in “The Big Short” . A handful of analysts realised that the subprime mortgages would fail , however fancily packaged . They were vilified by those who pointed to the boom and the fact that poor people with virtually no income could afford houses , sometimes several. No one listened as they shorted the bonds . They were right , there was a financial crisis and they become considerably rich and companies died.
          Just because someone consistently says that Tesla motors will sputter and die, it does not mean that he is wrong. He might just stop someone investing their pension.

          • For some reason popular and heavily subsidized are two concepts I would never have expected most people to associate with a single product.

          • I don’t know who is telling you electric cars are popular, I just hope you are not taking financial or medical advice from them.

          • The only reason why the other car makers are making electric cars is because they get CAFE credits that allow them to sell cars that are actually profitable.

          • The key point in your comment is that you say , and correctly, that electric cars are popular. The result is that the long established manufacturers from Asia and Europe , as well as within the US are jumping into the market.

            if they are so popular than why all the government mandates and subsidies? (popular products don’t need government assistance to sell) And why, after years of such mandates and subsidies do they remain a small niche of the market? Norway is the only country in the world where EVs command a double digit market share (at 29%, and that due to Norway’s high subsidies for EVs) The Netherlands has the next highest EV market share (at 6.4%).

            Popular? In the words of Inigo Montoya “You keep using that word, I do not think it means what you think it means”

        • Remove the taxpayers’ green and such companies go in the red.
          As someone said below, if individual investors choose to put their own green into such companies, they’re welcome to do so. If Tesla’s product on its own can keep it afloat, wonderful.
          I just don’t want my tax dollars keeping Tesla afloat anymore. The Feds in the name of “Going Green” have already sent to much taxpayer green down the Green Drain.
          (And into some individuals’ pockets.)

        • big o:
          Evaluating Tesla on production or finance aspects of their business has been negative for more than two years.

          Only dreamers and devoted groupies believe otherwise.

          That is based on the simple facts.
          Financially Tesla is a train wreck.
          Production of Tesla cars, especially the model 3 is a train wreck.
          Buildout of the Tesla supercharging network is a train wreck.

          Your insinuation that Mr. Watts needs your advice on how to grow the most popular science blog in the world is a truly bizarre strawman argument.

          • You are correct that it is not hard to find “analysts” who will predict Tesla’s imminent failure. You are not looking, however, if you think that there are not plenty of them who think Tesla is going to succeed. I am not going to debate the merits of Tesla as an investment. It is clear the world is moving to electric cars, however. My goodness, Tesla sold 200,000 electric cars in 2018 and are the 4th largest producer of sedans in the US. China is producing large quantities, as well. Is this something to be mocked and/or dismissed as just another green folly?

            My larger point is that petty, one-sided shots at anything green (to include Tesla) is not the purpose of this blog (I don’t think). It screams bias and an inability to be fair. Objective observers and commenters do not ignore the half of the argument that they disagree with. They also give credit where credit is due and they acknowledge when the opposition is correct.

            Are you in search of the “truth” or are you in search of some partisan victory for your team? I follow this site because I believe that it is not just here to attack the “greenies”. If it is, then fine; free country. I won’t be following it any more, however.

          • “It is clear the world is moving to electric cars”

            What’s clear is that you have a pattern of seeing what you want to see.
            Absent subsidies and mandates, there is no electric car market.
            They are, and will always be, niche vehicles for those who want to flaunt their alleged virtue.

          • When Nissan sold enough Leafs to pass the first, big subsidy drop sales dropped to near zero. That was despite introducing a much improved, almost practical for some people, new model

        • Amen. I often refrein from reacting to the articles because of mindless comments. Some of the readers successfully practice the intolerance so typical for the climate alarmists. Intolerance and denigrating others are signs of weakness.

        • The bigger question is where are the pro-Tesla articles on your blog?

          If you think such articles are lacking, there’s something you can do – submit your own article. You see that link at the top of the blog “Submit a story”? use it.

      • Well, how can you have no demand and an over-burdened staff simultaneously, for starters? Does that sound like a sensible statement? No, it sounds like a FUD statement.

        Tesla is, by no means, in great shape, but know that in the market Tesla plays in 2/3-3/4 of the cars are leased, not purchased with cash. How many Model 3s are being leased currently? None, because Tesla wants the cash. Were it a serious issue with demand, Tesla would simply go to the bond market for cash to purchase its own cars for lease. TSLA is also in the enviable position of having the CAR with the highest 3yr value retention according to KBB (almost 70%), if they decide to go into the lease market.

        Second, Tesla has two markets to sell into, EU and China. China is a far bigger market for EVs than the EU. We haven’t heard yet from that market, but given the massive push the Chinese government and banks made to get TSLA building cars in China, one might assume they’ll do ok there. That particular capex with be far more efficient from a ROI perspective than here, as well. TSLA may be building cars in China before Porsche/Audi/M-B get their EVs into the country.

        Third, TSLA didn’t promise a truck in 2019. Elon tweeted that they might show a concept of the truck in 2019. Model Y is still the next vehicle to be built; it has been approved for production and currently is in production engineering, last I read.

        Last, there are plenty of reasons to be bullish on TSLA, including the next AP revision, refreshed Model S/X, good margins on their current products, the ramp of the energy divisions, etc. Is TSLA in a precarious position? Yes. Was that article fair and balanced? No. It was written by a Short Troll. If you want to spread Short propaganda, I’d hope he would at least cut you in on his take.

        • When you have to distort what others have said in order to make your point, you prove at the start that even you know your has no merit.
          Nobody said there was no demand for Teslas, just that the demand was low and falling.
          Tesla’s workers are over burdened because many of them have been let go to cut costs.

          Perhaps if you had actually read the article you would have known that.

    • Tesla crammed the lucrative (most profitable) cars on it’s backlog into Q3 to maximize the quarter’s revenue and cash flow. This was done to try and convert bondholders to accept half of the upcoming $9 million bond payment in stock instead of cash. It didn’t work.

      Their credit rating is now junk status. They have few options at this point.

      To his credit Tesla paid off their federal loan (funded by their IPO), so the government is not on the hook for this one.

      • That’s your definition. Which facts would you like to debate? How about these:
        1. Tesla is the MOST american car company in operation today.
        2. Tesla cars out compete all German luxury cars in their respective segments.
        3. 2/3 of the previous legacy OEM American car companies received massive taxpayer funded bailouts during the last recession.
        4. Tesla paid back it’s government loan early. GM never paid back it’s bailout.
        5. GM, Ford, and Chrysler/Daimler all receive greater subsides than does Tesla currently.

        Try debating any of those specific points and let’s see how much of a Hater you really are….

        • Let give some of these a shot:

          1) A company that starts its life on a 1B dollar loan from the government? Not so american. One that has depended on product subsidization? One that depends on environmental tax credits (regardless of the mechanism)? I’d argue the most American is Toyota — the sheer numbers, the profitability, the American plants that work without union labor.. Obvious honorable mention: Honda.

          2) A weird way of saying that if we arbitrarily slice up the pie we can claim to beat all of their slices with our slice. I’ve dismissed this argument, while adding on the fact that Audi, Porshe, BMW, and others about about to have Tesla for lunch. And since they are timing it for the market and not depending on a government loan, they are slightly more American too.

          3) OEM might not mean what you think it means. But American car companies (as defined by their incorporation documents) have ceased to be American. Ford’s bailout was a loan which was paid back via sales, and not by a stock offering. I suppose a stock offering to solve problems is American..

          4) GM stopped being American long before its bailout. But now its threatening to shut down its US plants. If you are suggesting that Tesla is better than GM… I may have to agree with you. But did you really win that debate point?

          5) See points 1, 3, and 4.

          Yep, I still love Toyota as my favorite and mostest American car company. Does this mean that I hate Tesla for all of the correct reasons? Since 4 of your points forced me to compare TESLA to American (incorporation) car companies, and having agreed on some of your points still hate TESLA, I declare that I win this debate.

          • A company that starts its life on a 1B dollar loan from the government?
            Ford’s bailout was a loan

            Loans are *not* bailouts. Companies seek, and Banks grant loans all the time. That’s a normal part of doing business. There are very few companies in operation today that has never had a loan of some kind or other. That it was a government entity rather than a bank that issues the loan is irrelevant as long as they loan gets paid back (when bank loans are paid back it’s called the bank having made a good investment). Now had either company *defaulted* on their loans, you’d have value points about the loans but they haven’t so the loans are a non-issue, and taking loans is very American (debt spending is the American way, just look at the government’s own debt spending for a prime example).

          • The fact that the company had to go to the government for a loan rather than a bank is proof that it is a subsidy.

          • I can see where you might think that, as it can certainly be seen as a form of assistance, however, strictly speaking, subsidies generally don’t have to be paid back (a subsidy is the granting of money from the government). loans, even ones from the government, do have to be paid back. lending money (loans) is not the same thing as granting money. Unless you think every time a bank issues a loan they are subsidizing the entity they are loaning to.

            Now, where a government loan does stray into subsidy territory is interest-free loans as then it can be argued that a grant is being given in the form of the interest that otherwise would be owed. The loans that FORD and Tesla took advantage of (the ATVM program which is handled by the Federal Financing Bank (FFB)) were not interest-free and, same any other bank loan, the companies applying for it needed to pass certain financial viability requirements.

            GM and Crysler (unlike FORD and Tesla) were ineligible for the ATVM loans due to not being financially viable as defined by the program. Congress tried to amend the already funded ATVM program so it could provide bridge loans to keep GM and Chrysler afloat but while that passed in the House it failed in the Senate. Which lead to the creation of TARP.

          • The fact that the company had to go to the government for a loan rather than a bank is proof that it is a subsidy.

            Also, remember, the ATVM program was set up not to bail out failing car companies (it was set up before the crisis that led to TARP hit), it was set up to lend money to financially viable manufacturers willing to invest in making fuel efficient cars in the US. The loan program was already in existence, that FORD and Tesla chose to take advantage of an existing loan program rather than go to a regular bank for that money at a likely higher interest rate was simply a wise business move (the ATVM interest is based on treasury yields which tend to be a little lower interest than what a bank would offer). Of the 108 requests made for ATVM loans only 5 were approved (most of the rejected applicants have since gone out of business due to how unviable they were financially). Had they not been approved for the loan, they would have gone to regular banks (though if they didn’t qualify for the ATVM loan, chances are high that they’d fail to get a regular loan for the same reasons of financial viability. banks don’t like lending to companies that are highly likely to fail and thus be unable to pay them back, image that).

        • 1) So what?
          2) There are no respective segments.
          3) Two wrongs don’t make a right.
          4) Two wrongs don’t make a right.
          5) Please name these alleged subsidies.

          Wow, you even capitalize Hater. I think you have amply demonstrated what emotion motivates you.

        • Chrysler is not Daimler…. Seems you got that wrong…. What else have you missed in recent times….? That one is a biggie when discussing the automotive industry and its financial performance. When you make an error as obvious as that, one must ask whether your perspective on the car industry, its finances, performance and future can be trusted or not. Looks like not.

          Look mate, the ONLY reason these electric cars have sold in the quantity they have are government interferences of various sorts including the vast transfers of OPM into the pockets of Tesla and those who acquire Tesla vehicles. Remove the taxes and imposts from all cars and see then how the market preferences are expressed. You won’t enjoy it. Still, it is far more moral and far preferable to allow private individuals to express their own preferences with their own money rather than forcing them to comply with your preferences.

          • Chrysler is not Daimler

            For a period of time it was. The two merged in 1998. They split in 2007. Chrysler was then a part of the TARP bailout in 2008. I can’t blame a fellow for not keeping track of the various mergers and split that large corporations engage in.

            John E Ford is wrong about “GM, Ford, and Chrysler/Daimler all receive greater subsides than does Tesla currently” for many reasons not just because Chrysler and Daimler are two separate entities. The fact that he has been unable to do as MarkW asked and “5) Please name these alleged subsidies” says it all.

      • Your stealing my lines again! This would all be different if Eloon was building a product people could afford and was actually useful. Oh, well, his mom can lend him some cash from her wildly successful modeling career.

    • Concern troll is concerned.

      Also, who died and made you an arbiter of “standards” for this site or any other?

    • Not a fan of Elon or Tesla

      BUT

      I read this

      “This idea was discussed in more depth with members of my private investing community, Beyond The Hype. Start your free trial today »”

      And I wondered why is anthony allowing a guy to shill his private investment club

  6. They mined California long enough and now it’s time to move operations to China with the new factory and lower costs.

  7. Tesla is NUMI. In case not everyone knows the Tesla plant in Fremont, CA is the former Toyota/GM joint venture. That closed when GM went bankrupt and Toyota (despite warnings from powerful political interests) pulled out. NUMI was already a losing proposition and both companies didn’t waste the 2008 financial crises in getting out.. Shortly after NUMI closed CA Congressman Henry Waxman conducted the hearings that forced the actual Mr. Toyoda to come from Japan and apologize for a largely imaginary safety issue. Why does this history matter.

    Because private investors are betting that Tesla will be bailed out of that becomes necessary. It will be interesting.

  8. Actually, this is just an early glimpse of the entire auto industry when they plunge investments into the wrong products, tech, and raise all prices 2x. The customer base is going to melt away.

    Get ready for Auto Industry Bailout II. Add this to the list of carbon tax revenue spending items.

    • Interesting supposition. However, Trump has no love for Musk and the Republicans hold the Senate. Are you suggesting a private bailout? Who is willing to throw good money after bad, absent reasonable product demand?

      Musk’s only leverage may be our inability to service the space station, but I doubt Tump gives a rat’s behind for it.

      The shorts will make a killing within two-months.

      • “Who is willing to throw good money after bad, absent reasonable product demand?”

        Green billionaire buddies of Musk like Larry Ellison, a newly appointed Board member.

      • Trump lets his own businesses fail if they aren’t profitable. I can’t see him bailing our Musk at all.

  9. Tesla’s biggest problems right now is 1) loss of half the $7500 buyer’s tax credit – will halve again June 1st, disappear Dec 31 2) competition – most of that 7% workforce departure was due to discontinuation of the base Model S and Model X due to Porsche Taycan and Jaguar I Pace.
    Those were their most popular versions,so any money saved by losing those employees will be offset by losses of revenues of the cars they did not build. The Porsche Taycan due out late 2019 and a direct competitor of the Tesla Model S has sold out their entire first year’s production, which will be greater than the Model S production this past year. Many buyers were Tesla owners. The JAguar I Pace has been outselling both the Model S and Model X in Holland by 2 to1 and 4 to 1 margins and has caused a 40% drop in Tesla sales in Norway.

    • Tesla has succeeded in a way – there are going to be millions of electric cars on the road. problem is, most won’t be built by Tesla.

      I’ve said for years Musk should have focused on a limited edition high priced sports car, the charging network (open to all), licensing technology, and building components for other companies. Instead of becoming GM he should have focused on being Motorola. leave the marketing and sales of electric cars to someone else. Focus on batteries and equipment.

      Then heck, GM goes bust, or doesn’t sell, no problem, you have your fingers in Toyota, or Ford.

        • My impression is that Tesla is suffering from a very bad case of “Not Invented Here”.
          When compared to normal automotive standards their production line is a standing joke.
          It all goes downhill from there.

    • Perhaps Tesla needs to develop cars with a Molten Salt reactor for it’s power source, right Kent? 😉

  10. I am surprised at how resilient the stock price has been. Obviously there is a good bit of support to keep tesla alive. I wonder how much state money former Gov Brown stuck into Tesla? PLus guys like Steyer, Soros, etc likely have strong interests in the stock. In the last week there have been multiple negative stories about Tesla, but only the foolish bet against the stock at this point in time as the stock has weathered every story.

    • I would not be so certain that Gov. Brown would further bail out Tesla before being certain that the federal government would bail out California. Given all of the money hemorrhaging out of the California State Legislature, Tesla may have already grown past “too big to fail” and has achieved the unenviable status of “too big to save”, on California’s balance sheet.

      President Trump is thoroughly versed in gaming the bankruptcy laws to his own advantage, so he may have little sympathy if Elon Musk and his investors cannot ride out Tesla’s failure and create a new capital venture that brings Tesla technology to market.

      As for the stock price, it is a bubble, as the price has no correlation to performance. The first large investor to pull out will take a small hit, but the stock price will then go into free fall, as every other investor tries to recover what they can.

    • “Cling to the wreckage” seems to be the motto of many shareholders in vain hope of getting salvaged by the white knight, here the Chinese. But I doubt that DJT will allow Tesla being taken over by them. He’d lose his face. But Volkswagen/Audi/Porsche might be interested, if TSLA stocks become Penny Stocks.

  11. many of the above comments appear to consider it a ‘good thing’ if Tesla would go bust.
    that is extremely short sighted.
    first, Tesla is unlikely to go bust and secondly, they have the best chances (together with the Chinese carmaker Kandi) to become the absolute leaders in electrical cars.
    I can see the development and emergence of electrical vehicles as a major technological achievement of mankind and I do not directly relate this to global warming alarmism.
    and by the way, I will not sell my Tesla shares.
    warning: seeking alpha is the website used by short sellers to talk a stock down. I have seen this happen many times.

    • damn short sellers….

      let’s get em … let’s tell everyone that we’ve got a 420 buyer (well at this point a 320 buyer).

      (maybe when musk gets to the point where he lies about a 220 buyer you will change your mind)

    • I have no animosity towards Musk, and I’m a big fan of Space X. If the stockholders wind up getting filthy rich, more power to them. As long as taxpayer money doesn’t get used to help them get there, or protect them from the consequences of bad business decisions.

    • by the way, I will not sell my Tesla shares.

      Good for you. I just hope you are not counting on that investment to fund your retirement. You’ll be sorely disappointed.

    • The technology and patents have value and will be bought and used by companies who won’t have to invest in R&D. A company in new technologies either becomes a world leader or donates its research to someone else.

      • What significant patents does Tesla own? The electric car has been around for a long time — the GM EV1 came out in 1996.

        • Tesla has the patent for the battery swap system.

          You remember that one, don’t you? It was going to revolutionize electric car range limitations.

          ~¿~

          • The Tesla battery swap was a stunt to get the maximum CARB rebates from California. It was never implemented, and never practical. It allowed Tesla the claim the maximum rebates allowed under California law.

          • There are a lot of things that get patented, but never built.
            Battery swapping is a solution with so many problems that nobody has bothered to actually pursue it.

          • Battery swapping is a solution with so many problems that nobody has bothered to actually pursue it.

            With modern robotics and a car designed with swapping in mind, the problems with the actual swapping are trivial and the process can be done very quickly. (Of course that costs $$$ to build, which is a big problem for a company with Tesla’s balance sheet, but that’s not a problem with the process per se). the bigger problem is trust. Do you trust that you’ll get a battery of equal battery-life expectancy (which affects your car’s range) to the one you are swapping out?

          • Perhaps I wasn’t clear. When I referenced problems with battery swapping, I meant all the problems.
            Everything from making the car heavier and more expensive, to the cost of building “swapping” stations, to the trust issue that you also mention.

          • The impressive Chinese startup Nio (production cars coming in June) will have a battery swapping feature. Its cars outshine Tesla’s according to reviewers, and cost much less.

            The trust issue could be worked around by having customers lease batteries instead of owning them. (But I don’t know if Nio will be doing this.)

        • The electric car has been around for a long time — the GM EV1 came out in 1996.

          An even longer time than that: the very first electric car ever built was built somewhere in-between 1832 and 1839 – Scotsman Robert Anderson is credited with it’s invention though that’s under some debate as in 1834/35 American Thomas Davenport is also said to have invented the first Electric car. Either way they’ve existed for nearly two centuries.

    • Tesla is near the ‘going bust’ precipice.

      As of 1/15/2019 26,268,029 shares are sold short.
      Shares outstanding on 1/29/2019 are 171,733,000.
      That works out to approximately 15.3% shares sold short.

      Bankruptcy proceedings give companies a chance to work their way out of bankruptcy. It is a much better way than a company reaching a point where they fail to pay employees, creditors and suppliers.

      Bankruptcy is not going bust! Yet.
      It may still end up there, if a company fails to correct their problems.
      Problems like cash burn rates, production costs and methods, loss of customers, loss of income…

      Short selling and put options are financial mechanisms for investors to straddle stock ownership. i.e. purchasing a position on both sides of a stock’s potential.
      There also investors who sell shares short and buy put options solely to gain financially from a company’s problems.

  12. For those who care, look up Tesla’s SEC filing for 1/18/19 titled “Company Event”.
    I haven’t seen such tap dancing since Fred Astaire.

  13. Fascinating saga.
    I am reminded of BreX.
    Even as the truth was coming out,passionate investors and even some big banks were still buying the stock.
    On the cold facts,I am amazed Tesla still exists or even got to the size it did.
    But in this era of Alphabet and multi billion dollar companies with no obvious assets,I am not sure what stock prices are valuing.

    • Where are you getting the $2.1B number from? Look at the balance sheet, “the cash and cash equivalents” line is $2.9B down from $3.3B the previous year ($2,967,504 thousand to be exact as all the numbers on that sheet are in thousands). $2.9B – 920M is approx. $2B.

    • ah, I think I see where your confusion comes from, you are looking at Current portion of long-term debt of $2.1B not the cash amount of $2.9B. The calculations were to determine how much cash Tesla would have after various expenses are accounted for, so it’s the cash number that you want to look at not the total debt number.

  14. Now that all the low hanging EV fruit has been picked Tesla is up against the reality that its’ cars cost too much, take too long to charge on the road, have limited and volatile mileage, and cater to a niche market. Otherwise they have superior features vs. ICE cars. Another Silicone Valley startup flaming out.

      • Quieter engine,
        regenerative breaking,
        less maintenance/less movable parts/less oil changes,
        no exhaust (which means not just no CO2 but other, real, pollutants are no longer coming out of your tailpipe),
        No waiting in line at the gas pump (assuming you live in a home where you charge at your own convenience)
        cheaper fuel (electric rates, for most people, are cheaper than pump prices per mile driven)
        immediate torque and smooth power delivery
        etc

        Of course there are plenty of drawbacks:
        finding a place to charge (if you live somewhere like an apartment with no easy access to an outlet where you park)
        cost (of car, of replacing the battery)
        range (much less than you’d get on a full tank of gas)
        charge time (hours vs the minutes it takes to fill a gas tank)
        etc

        there are pros and cons, which pros and which cons are most important varies by individual. For some (currently a niche market) the pros actually do outweigh the cons.

        • Quieter Engine – technically. In practical terms the soundproofing between the user and the donk in modern cars is very effective, so in real terms who are we being quieter for? There is also the fact that with some users a significant part of the driving experience IS actually being able to hear your engine rev its tits off. Your Driving Experience May Vary

          Regenerative Breaking – This works only when you brake. If you are driving in the city with constant stop/start cycles then… maybe. If you are driving freeway and a pretty constant speed, then less so. Considering you are adding mass to your vehicle to fit this system it has to be asked when the brake even (pun intended) point is reached. Below this point you are better physically removing the entire system to save weight (and one less part for sparing/maintaining.)

          No exhaust – No exhaust at the CAR end. This can be a good thing provided you accept that the exhaust and/or environmental damage is being caused elsewhere.

          No waiting to refuel – needs to be compared with just how often you are physically waiting in line and how long the refuelling process physically takes. Typically my entire refuelling process takes about 10 minutes once a week (and that includes time to stop and write the figures in my little log book). Refuelling time is in real terms dead time that you cannot otherwise use your vehicle. IF you only need your vehicle for 30 minutes twice a day to shops and back than yeah, having your car offline while refuelling for an hour each day may work for your lifestyle. It also needs to be considered just how long it takes you to physically park your car, drag the cables and plug in (and the reverse at the other end) each day and compare to the 10 minutes a week ICE vehicle owners spend.

          Cheaper fuels – HAHAHAHAHA – where YOU live maybe (also that sounds you hear is me crying into my quarterly power bill). A week or so ago I saw this same argument on another website and, as a comparison, crunched the numbers. Short answer? No.

          Torque – As someone who drives a car with 320Nm of torque sitting there waiting for my driving pleasure… YEAH BABY!!!

          Look, cars in many ways are tools. Tools exist so that smart people can select the right tool for the job and idiots can make things worse by trying to torque screws with a hammer. There is and will continue to exist situations where electric cars are a sensible choice, but the world is NOT moving towards an all electric future and the point we should be asking is not ‘should we drive an electric car’ and instead ‘should I buy an electric car designed built and delivered (on time) from a REAL car maker’.

          Also not discussed – Peak Lithium

          • “There is also the fact that with some users a significant part of the driving experience IS actually being able to hear your engine rev its tits off.”

            Porsche’s Taycan has an optional feature to turn on an artificial engine noise that follows the driver’s acceleration. (Musk’s latest noise feature is a fart app.)

          • Cheaper fuels – HAHAHAHAHA – where YOU live maybe

            Yes, hence the parenthetical indicating that it isn’t the case for everyone.

            There is and will continue to exist situations where electric cars are a sensible choice, but the world is NOT moving towards an all electric future

            I agree, but that wasn’t the point I was responding to in that post.

            Also not discussed – Peak Lithium

            we can discuss that when we discuss Peak Oil and all the other Peak predictions. 😉

          • There is also the fact that with some users a significant part of the driving experience IS actually being able to hear your engine rev its tits off.

            My cousin was like that. He loved the roar of the engine and would tune his cars to be as loud as possible, I could always hear his Trans-am a block away whenever he came over for a visit. Me I prefer a quiet car, if you car is making loud noises, there’s something wrong with it, IMHO.

      • Quieter engine. Modern ICE are so quiet that the loudest noise while driving is wheel and wind noises.
        regenerative breaking can be useful, in limited situations.
        Maintenance if ICE cars is not as big an issue as you seem to assume. In the last 40 years of car ownership, the number of times I’ve needed a repair for a part that doesn’t come in an electric can be counted on one hand. And most of those were over 20 years ago.
        Pushing you pollution onto someone else is not that big a deal.
        You are assuming the person has a place to recharge. Many don’t.
        The fuel is only cheaper because you aren’t paying all the taxes that are placed on fuel to support the roads that you are using.

        • Quieter engine. Modern ICE are so quiet that the loudest noise while driving is wheel and wind noises.

          Still not as quiet as an all electric engine, and. as ICE cars age, they develop more noises (due to the more moving parts) than an all-electric will (due to less moving parts)

          Maintenance if ICE cars is not as big an issue as you seem to assume

          Still bigger than for all-electrics (the more moving parts, the more maintenance needed). You can try to dismiss it all you want but the difference between the two is still there regardless. and for some that difference is a factor in their decision making process.

          In the last 40 years of car ownership, the number of times I’ve needed a repair for a part that doesn’t come in an electric can be counted on one hand.

          Maintenance is more than repairing broken parts, it’s the upkeep between parts breaking (oil changes, for example). And the frequency of all maintenance needs are greater with ICE vehicles. Again try to dismiss it all you want, it doesn’t change the facts.

          You are assuming the person has a place to recharge

          Yes, hence why I said “assuming you live in a home where you charge at your own convenience” what part of that was not clear?

          Many don’t.

          Yes, hence why I said “if you live somewhere like an apartment with no easy access to an outlet where you park” under the cons section. If you are going to attempt a rebuttal, please pay attention to what was already written before replying as you aren’t saying anything in those two sentences that I didn’t already bring up.

          • When it comes to silence in a car; that WAS an attribute which once was actively sought (especially at the high end luxury and exotic sedan niche). It reached its peak during the late ’60s and the early ’70s. After that, as the German manufacturers gained more and more global market with their ideas of austere styling and “sports-sedans”, so the pursuit of ultimate refinement and silence slowed to a crawl as those attributes became less and less valued by the market. It since all but stopped and it is difficult to find a car built to the goal of ultimate refinement today.

            Instead of the perfectly serene ride and total silence we have the “road hugging” firm ride of the “autobahn tuned” sporty sedan or the knobbly ride of the hot hatch (accepted in the quest for handling and response from a simple suspension). We also got the buck-board ride of trucks and the really hard ride of the sports/race car. Most people today think a rough ride is “sporty” and they put up with that (surprising to most is that it is not necessary to have a track hard suspension in order to have good handling). For the manufacturer this is a bit of a boon as the suspension can be left somewhat underdeveloped (saving time and expense) to some extent, stiffer than it need otherwise be for public road use.

            Meanwhile silence disappeared as people became more interested in hearing the engine at work. A lot of work has gone into making the engines sound appealing. In many cases this has been successful (not always though). The attribute of silence has not been sought in most cases for many, many years. Most people have no idea how refined a car can actually be. A pity….

            If it is perfect silence you seek you do not require electric drive. Even an old Jaguar XJ12 from the ’70s will demonstrate this adequately. Those are silent. They are even quieter than Rolls Royce. And only the Citroen has the ride quality to compete.

            By the way, having driven the Tesla S and the XJ12 I can confirm the Jaguar is a superior ride and its cabin is quieter.

  15. Billions in State and Federal money has already gone into Tesla. Like all of Mr. Musk’s adventures there is always a government angle. I don’t cheer for businesses to fail as a rule. I do expect government dependent business to fail after massive infusions of taxpayer dollars. That is why socialism fails as an economic system. Tesla’s reported profits would not exist without subsidies from government. One way or another it’s political enablers will keep it afloat if they can. The stockholders are betting on it.

  16. “I can see the development and emergence of electrical vehicles as a major technological achievement of mankind” Patrick

    It was back in the late 19th and early 20th Century. The internal combustion engine beat battery technology out in the market place. Not cheering for Tesla to fail or even electric cars to fail. Wondering why I’m paying for it with my tax dollars. If private capital wants to take the risk let them have at it.

    • My grandmother loved EVs. She drove a 1910 Baker electric around town. When roads improved and extended travel became possible on improved motorways, my grandfather sold the Baker Electric and went with Ford. She never drove again after the EV was sold.

      Same problems in 1910 as today. Batteries and range. Solve those problems and the world is your oyster. EVs are great. Ask my grandmother.

      Wait up… you can’t. She died in 1971. But I’m sure she’d give a thumbs up to EVs if she were alive today. Not that I’d want my 133 year-old grandmother on the road driving, mind you, unless she moved to Florida where it’s the norm.

  17. For over 50 years the auto manufacturing industry has gone through a harsh Darwinian process. And Tesla, despite all the green/battery fanfare, is in the auto manufacturing business. The idea that Musk and his team were going to somehow build from scratch such a business, with all the long supply chains etc., and beat the Fords, the Toyotas, etc. is rather silly. Add to that the fact the Tesla models are based on a not quite ready for prime time power source, and you start to question whether the investment makes any sense.

  18. Too bad he isn’t in the climate business, otherwise he could have screamed ‘Funding secured!’ carefree.

    This just goes to show that government shouldn’t pick winners or losers. Let the free market decide. Musk says ‘thank you for the billions’ though.

  19. That $920B convertible bond payment coming in March will send them down in a death spiral from which TSLA will likely not recover from. It could alos realistically be called a tipping point from which Tesla cannot recover from with weak Model 3 sales amplify the spiral. Like ENRON and now PG&E, the TSLA death by bankruptcy for stock holders will come quicker than anyone thought possible.

  20. Eloon is rapidly running out of other people’s money. Looks like time for FBI to seize his passport and lockup his aircraft before he absconds with what little is left. The Simpsons nailed this guy long ago with their Monorail episode.

  21. Tesla has made a great deal of their customers very, very, unhappy.

    Services issues and unhappy customers is the kiss of death for mass produced products.

    Tesla is a very complicated product that only a Tesla specialist can fix.

    No Tesla, no service. With no service how long before it will no longer be safe or possible to drive a Tesla?

    Tesla will be an interesting case study for future MBAs.

    https://www.sfchronicle.com/business/article/Tesla-owners-fume-about-delays-for-service-13112104.php

    “But I don’t want to drive it!” said Kaushal Bhaskar, a software engineer from nearby San Ramon who complained he sometimes couldn’t get the passenger door to open, while other times the door would open up all by itself — including once on the Interstate at highway speeds. “This is a safety concern for me!”

    A wide variety of Model 3 quality problems are reported on Tesla customer forums, including broken glass, bad paint jobs, body panel gaps, dead batteries, wind noise, dents, scratches and software problems including door locks and weirdly behaving touch screens.

    https://news.abs-cbn.com/business/08/05/18/battery-of-complaints-against-tesla-in-norway
    OSLO – “I’ve had the car for eight months and it ran fine for four days,” says Yngve Solberg, who like many Norwegians is fed up with the slew of problems his Tesla X has given him.

    In Norway, the third largest market for Tesla cars after the U.S. and China, some customers told Norwegian media they have been waiting months on body parts for their damaged Teslas.

    • Norway practically pays people to buy elec cars…….and fines them for buying petro cars

      ….Pay people to buy frozen liver and watch liver sales soar

      While motorists are typically subject to punitive levels of taxation, those who buy a purely electric vehicle are rewarded with a string of incentives worth thousands of pounds. Buyers escape heavy import or purchase taxes and are also exempt from 25% VAT. They also avoid road tax, road tolls, pay half price on ferries, get free municipal parking in cities and can usually use bus lanes.

      • “Norway practically pays people to buy elec cars…….and fines them for buying petro cars”

        And if we’d have elected Ms. Clinton instead, we’d probably be doing the same today.

        It appears that Mr. Musk is in the process of moving his government-money harvesting operation overseas. Better there than here.

  22. With the sudden layoff of workers from Musk’s other brainchild SpaceX, one wonders if that organization is also on extremely wobbly legs.

    • I’d hate it if it were so. I’ve been an advocate for private space exploration from the beginning, but at least there are a few viable competitors today.

      • The best thing SpaceX could do is drive Eloon out before he guts the capital out and runs. They have a working system which shows promise for future expansion.

    • SpaceX is ramping up reusability, which means they’ll be building a lot less Falcon rocket stages in future. Also they just changed the design for their new rocket to use stainless steel instead of carbon fibre, so they probably need to replace some engineers who have carbon fibre experience with engineers with stainless steel experience for the new design.

      So I doubt the layoffs are a financial issue, though obviously they need a lot of cash to pay for the R&D on the new rocket. They do seem to have been bringing in a lot of new investment money in the last year or so.

      • “They do seem to have been bringing in a lot of new investment money in the last year or so.”

        But not as much as they want. Their latest offering was only 1/3 subscribed.

  23. And in a bold move, like every other car manufacturer, VW follows Tesla into the abyss and expands its eCar line up of eUp and eGolf with plans for a $23,000 Tesla rival and their entrance into the energy market with Elli and Naturstorm charging stations. Will environmentalists and the general public wake up in time from their dazed-and-confused-renewable-energy-fantasy before the bottom drops out of the eCar industry and China completely floods the world with their non-renewable non-green green [sic] energy batteries and all the economic and environmental woes that come with them? Meanwhile, across the pond, Elizabeth Warren will be extolling the virtues of sustainably manufactured brewskis during the Super Bowl whilst yelling “BRUCE, I’m gonna go get me an eBud!”

  24. History repeats itself.

    DeLorean went bankrupt into receivership in 1982.
    A popular movie (Back to the Future) was made using a DeLorean as an iconic centerpiece of the era of flashy futuristic autos made of brushed aluminum. (1985).

    In a few years, after Tesla is in deep into receivership, someone will make a movie with a Tesla Model X or S (in “Ludicrous mode” probably) as a iconic centerpiece of this current era of Green stupidity.

    Easy Prediction: We are living TODAY in an Era of Renewable EnergyLies and Green Deceptions that will be mocked in 15-20 years, if not sooner as the climate scam and the wind-solar hustle collapses. Sadly, vast landscapes will be covered with broken, busted, and rusted solar farms and frozen-in-place wind turbines as a multi-generational reminder to how much wealth can be lost to stupid ideas in politics.

  25. I’ll keep my used Toyotas and watch all the fun from the sidelines……until they come for bailouts.

    • I’m with you except my vehicle is a 1992 F150. Starts every day and for weather like this, it also has an amazingly good heater.

      • You got a good one. That’s great.

        It’s a bit like a savings plan that also takes you places but is hard to explain to others since direct comparisons of savings and checking accounts is rare. Three used, long-life vehicles that last 2x longer or more than other choices should have some king of online calculator to demonstrate it.

      • I had a E-250 work van that would melt my boots for hours on end in 0 degree weather up in Maine. Freezing to death in a Tesla is a distinct possibility.

        • Having the engine and tranny close to you does help. I ran a Chevy Econoline van for work and that thing would roast you out in summer, even with AC running and it did not most of the time.

  26. Since progressive government believes IT has the answer to all problems, I suspect that Sacramento will pass a new law REQUIRING the purchase of electric vehicles or be subject to a special tax… TeslaCare. And perhaps only ones made in California.

  27. Once the major car manufacturers moved into EV they where always going to eat Tesla’s lunch, they have after all spent years mastering the large scale manufacturer of cars dealing with supplier chains etc.
    Tesla has been living off other peoples money and government subsidies for years, the last thing, and perhaps the only thing, he made money on was the flamethrowers .

  28. Not sure I’d want to book passage on one of Musk ‘s spaceships when his cars can’t make short cross-country trips effectively.

    • SpaceX has been rather successful in lofting cargoes to ISS and have put no few satellites up. I am no fan of Eloon, that said whoever is actually operating SpaceX is doing a good job.

    • It’s called flooding the pipeline. Tesla had a huge backlog of profitable Model 3 cars it could pre-produce and sell in Q3. This was a one-off event and not sustainable in the long term. It was a gamble to lift the share price to swap equity for debt payment. It failed.

    • Mercedes has a lot of other cars to help keep the pipelines full.
      They don’t even have to make a profit on the C class.

      • Those who work on the C class, don’t just work on the C class. They also work on other vehicles.
        Many car manufacturers deliberately make high end cars that they know they are going to lose money on just so they can maintain bragging rights.
        (BTW, bragging rights also helps sell other cars in the line.)

    • “Tesla Model 3 US sales in December were 25,250”

      That’s because sales were being pulled forward from January, when the federal tax credit was halved from $7500 to $3750, and also due to Tesla’s inducements and appeals to prospective buyers. (E.g., it offered leaseholders of S and X models foregivness of their unpaid lease amounts if they’d by an M3.) Estimated sales in January will be released in a few days and will show a pronounced drop, from early indications.

  29. Henry Ford knew that you had to have a cheap model that most could afford. A Tesla Model “T” or at at least Model “A” without all the frills. I think one could reduce the cost by half and still put out a serviceable car at a profit. You may have to close your trunk by hand, or even wind your windows with a crank.

    The folks who want to drive into the New Dark Ages would go for a Tesla Dune Buggy. Even the proletarian Volkswagen attracted snobbish types. Get a couple of million on the road and then try a few luxury models on for size. Sheesh, the pathway was already paved for these guys.

    Also they would have made good use of all the subsidy largess and made the electric car mainstream. Now it’s too late. Subsidies are gone, CAGW basically died after climategate revelations, Trump gave it a burial and the ‘New World тотаliтагiаиism Is Kool” schtick is old hat now.

  30. I think this line is relevant:
    This idea was discussed in more depth with members of my private investing community, Beyond The Hype. Start your free trial today »
    Looks like a bit of a red flag to me.

    • Many articles on Seeking Alpha have that sort of postscript. Publication on Seeking Alpha is used as an inducement to obtain subscribers to the Premium or early bird version. It’s been going on for years.

  31. A large part of this is their refusal to go with the traditional dealer arrangements.

    Used and certified pre-owned Teslas would have a HUGE market pull and act to prevent devaluation of their vehicles. For the right price, I could see myself considering one of the earlier S sedans in a couple years if they had a proper dealer network where I could acquire parts… but I’m not about to be at Tesla’s whims, so I don’t consider them a viable choice in any view.

    Many horror stories abound from those attempting to buy a used Tesla… directly from Tesla… These things would not be a problem if your standard Mazda/Ford/BMW/etc.. dealers just happened to pick up some Teslas… these dealers generally know how to sell a car.

  32. Not so sure.

    Frankly, I’d consider layoffs at Tesla a step toward maturation, the reason they hired so many assembly workers is because their Model 3 automated production had failed so badly. Are they laying off in a desperate move to save money, or because they’re actually getting some headway on automating Model 3 production?

    I said some months ago that Tesla would eventually have to dispose of a bunch of the desperately hired Model 3 assembly staff if they were going to meet unit-cost targets, and maybe it’s come to pass. Or maybe it hasn’t.

    • My take: the deposit agreements stated they were refundable which would make the depositors secured creditors. A policy which Tesla has now abandoned.

      But their is a hierarchy of bankruptcy payouts, so they very well end up getting nothing or fractions of a dollar on their claims. Worst off are the normally unsecured trade vendors, where it is often worth the time to attempt to get some of the leftover crumbs.

      • All lenders have some kind of contract under which they either get their money back, or some other kind of compensation.
        If having a promise of repayment was all it took to make one a secured lender, then all lenders are secured lenders.

  33. This might be a very, very bad week to own and drive a Tesla in the
    Chicago area.

    Why ? Their batteries may or may not be too functional at sustained below
    zero air temps. This will be their first test in harsh cold conditions.

  34. I drove electric forklifters for 10 years. A heavy battery in the rear is good as a counterweight to the load on the fork.

    An electric forklifter accelerates very high – and brakes very fast: in counterpulse mode.

    The thing also drives fast: 18 km/h in winding factory halls aisles appears quickly.

    The battery was initially enough for 2 weeks.

    When the truck was used in 3 shifts, the battery was exhausted after 7 hours.

    That thing was fun to drive in factory halls. Not on the highway, not on minor roads.

  35. Having been involved in a number of R&D projects through the years I find the Tesla situation rather sad.
    Research has shown up a couple of interesting trends re R&D:

    – The last 10% of development gobbles 50% of the cost
    – Usually it is not the inventor that gains the profits but the next in line that adopts it

    Another common occurrence is the constant blabbing of armchair critics who have never laid their own initiative on the line.

    I admire anyone who has the courage to set new boundaries. It is better to die a failure than to have never tried at all.

    Regards

    M

    • You be the first in 200 years to solve the battery problems, then you build a car. You don’t build a car and screw around how you are going to take on the world and build a viable battery to make it go.

    • We said it this way, “The first 90% of the work is 90% of the cost, the last 10% of the work is the other 90% of the cost.”

  36. This past weekend I saw, for the first time ever, a Model S on a used car lot. Granted, it’s been lowered and has aftermarket wheels on it, so could be the owner hit a rough patch and just needed some quick cash.

    But still, a strange thing when they seem to be such beloved possessions.

  37. “It’s worse than we thought”. Ever heard of VIE (Variable Interest Entities)? Tesla sold off parts of their cashflow in return for financing. See https://seekingalpha.com/article/4233257-teslas-day-vie-reckoning-approaches It’s a bit of a dry read.

    Even before it went public, SolarCity financed much of its operations by selling interests in its leased solar energy systems to outside investors. In exchange, these investors were entitled to a portion of the cash flows generated by the systems and typically were assigned the tax benefits of the systems as well. Tesla (TSLA) has continued this practice and in fact, has expanded it in some cases to include leased cars. The structure through which these sales have been accomplished is known as Variable Interest Entities (VIEs).

    These transactions fall into a bit of a netherworld. Although they appear on Tesla’s balance sheet, they are classified neither as debt nor as stockholders’ equity. Instead, they are listed as “non-controlling interests” or “redeemable non-controlling interests” and are reported below the liability line in the equity section of the balance sheet.

    When companies resort to “creative financing” like this, I tend to worry about them.

  38. No electric car company is viable. Tesla lack of viability is hurting sales. It was never a matter of if it goes bankrupt, but when and in what form it implodes.

  39. I was worried that this would happen.
    As Mr. Wonderful says on Shark Tank:
    “If you succeed, the big guys are going to come in and squash you like the bug you are.”

    If Musk had stuck with producing a fair number of high-end cars, he could have had a profitable business as other niche carmakers do (though many haven’t done well).
    In moving down market, to true mass production he’s facing competition on price and the infrastructure to deal with masses of users over a world-wide market. This is something the big guys know really well.

    He’s still got a little bit of a chance, in that electrics are doing so poorly in the market, the big guys are backing off somewhat but, of course, electrics doing poorly in the market is really bad news for him in itself.
    He really needs a lot of government intervention on his part to force electric cars on the market quickly before the big guys get spun up.

  40. One of the biggest problems for Tesla’s future is not only that they will have to sell the lower priced Model 3 versions, but that by the time they have to do it, there are going to be much more interesting alternatives in the market. The long range versions of the Hyundai Kona and the Kia Niro look really interesting right now for about the same price. And I am sure other companies will soon start offering good alternatives to the basic Model 3.

  41. Tesla is a classic example of good people doing the wrong thing for the wrong reasons. They have produced the wrong sized car into a market that is not geared up to supporting their overpriced though loss making product.
    In most of Europe any car designed to combat city pollution should be able to park in bays designed for city sized cars. Tesla failed even that simple requirement. So if your car does not fit on European city streets where do you sell the vehicle?
    The share price of Tesla has been remarkably resilient over the past two years. While the trend is down it has managed to find supporters who keep buying the stock when it has its periodic sharp drop. We might wonder who are these investors? I just hope my pension fund managers are not part of the cavalry support for Tesla.
    A fast electric sports car for the peculiar Californian market, made in Cal, and a sensible low cost no frills city sized car able to ride on the tail hype of its sporty brother, but made in China, may have given Musk a fighting chance.
    Who knows if Gov Brown can find enough tax payers money to secure electrical supply for Cal now one of the big utilities has said enough is enough and gone bust, he might push money into Tesla because it is a Green icon. The economics of investment return is of no significance to the Green spenders who use tax payers money.

  42. Musk is a conman!
    He is not even a particularly nice or intelligent conman.

    Maybe the greeny – “lets-make-the-electricity-with-coal-somewhere, anywhere-else-except-where-I-can-see-the-cooling-towers” to charge my greeny TESLA – virtue posturing will finally make people wake up when he finally goes t..ts up!

    We still haven’t progressed beyond Watt, the steam engine and the kettle visuals since 1800.
    Anyone who can make believe otherwise to that extent is on a par with Bernie Madoff.

    • Not just a conman, he left his native South Africa to avoid conscription.
      That Gentleman has obviously never heard of “My country, right or wrong ” which is attributed to Carl Schurz.

  43. My 1999 Ford can drive overnight from Sydney to Melbourne (877km or 545 miles) without a fillup on the way. When an EV can match that I might think about it.

    • An airplane can travel way longer distances than your car without refill. I don’t know why you bought a car. Unless, perhaps, you found other advantages not covered by an airplane. It is just merely possible that the people buying electric cars have detected advantages not covered by one with a combustion engine. Think about it.

      • Nylo, it’s not just advantages one needs to look at, it’s also disadvantages.
        The type plane you describe it very expensive to buy. But even a modest single-engine plane can cost as much or more than a high-end luxury car (unless its a very old and very used one, which brings in all kinds of repair and upgrading costs).

        But beyond purchase price, where do you store it? Parking it in your driveway/garage is probably out of the question (the wingspan is generally too wide for the typical home garage). You’ll need a runway (which takes up more land than the typical homeowner owns). So you’re gonna need a to own/rent a hanger (that’s more $$$ you’ll need to spend) which won’t be at your home (so you’re gonna need to purchase or rent a car to get to and from your airplane. so why get the plane when you can just stick with the car and save yourself some bucks)

        And we haven’t even gotten into fuel & maintenance costs, runway fees for landing and taking off, insurance, various accessories (such as head sets, engine covers, etc), inspection costs, etc

        It’s often not the advantages that matter as much as the disadvantages. And an EVs range limit (coupled with it’s long charge up time) is a huge disadvantage for anyone doing long distance driving on a frequent basis.

        • “And an EVs range limit (coupled with it’s long charge up time) is a huge disadvantage for anyone doing long distance driving on a frequent basis.”

          Totally true. But how big a percentage of the total population is that? And does it need to do 877km without a refill? 875 is not good enough? What about 875 with a single stop in the middle for lunch/dinner? Is that not reasonable? How do you define “long distance”?

          • Totally true. But how big a percentage of the total population is that?

            Depends on the part of the world you are talking about. Those who live in the more Rural “fly over” parts of middle America need to drive a distance for *anywhere* they wish to go.

            What about 875 with a single stop in the middle for lunch/dinner?

            And how long of a lunch/dinner do you have to take while you wait for your vehicle to charge up? (and that’s assuming you don’t have to wait for a charging bay to open up because the cars currently occupying all the bays are waiting for their owners to come back because, apparently, the thing to do when using a charging station is to wander off and come back sometime later). And what if you don’t want to stop mid-way (or even multiple times) for long stretches of time? some long distance drivers will eat as they drive if they’re hungry.

            Is that not reasonable?

            Is it not reasonable to not want to make unnecessary long stops?

            How do you define “long distance”?

            In the comparison between ICE and EV, any trip that an ICE vehicle can make without refueling where an EV would need to take time out to recharge is long distance (so not all that long for many of the current EVs on the market).

          • Generally I get around 475-490 miles on a tank, takes less than 5 minutes to fill. From what I am reading at automotive review sites most EVs can’t even come close to that, plus I can carry up to 8 people or load full sheets of plywood/drywall 4 feet by eight feet or any other cargo. Till EVs can match that they are simply toys for the rich or tiny, in city transport for 2-4 persons and nothing else, and you best hope that city does not have extended periods of temps below freezing.

            Want me in an EV? Then it best have a gasoline or LP gas motor running a generator to provide the needed electricity. Till then I stick with an actual, real vehicle.

  44. You can only sell the sizzle for so long. Ultimately, the pesky customer is going to want his steak.

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