Tesla model 3.........discuss

[BK]

Re: Tesla model 3.........discuss

My intense response is because I think Tesla Motors is a fraud. A serious CEO does not try to run three startups at the same time.

Charles Ponzi had some of his best days in the business within weeks of the collapse. A testament to Mr Musk skill at gaining broad support is the level of positive support he gets even at a Contrarian site like iTulip. Who in their right mind would lend Tesla Motors an additional $3-$4 Billion.

Look at the use of Twitter by Elon Musk. In an earlier generation this would have generate a SEC investigation.

Lots of regular folks will lose retirement money and savings while the Musk Family and Insiders make a fortune.

[jk]

Re: Tesla model 3.........discuss

assuming they are built, model 3's, as eventually ordered, optioned and delivered, will likely be significantly more than $35k. also, last i heard, orders were up to 276,000, ie. $276 million in working capital.

[BK]

Re: Tesla model 3.........discuss

Mode3-notorders.jpg

Here is the reservation agreement ... https://model3.tesla.com/reservationAgreement

To your point when many of these folks discover their Model 3 is going to cost a lot more than $35K - you will see a mass exodus!

[santafe2]

Re: Tesla model 3.........discuss

assuming they are built, model 3's, as eventually ordered, optioned and delivered, will likely be significantly more than $35k. also, last i heard, orders were up to 276,000, ie. $276 million in working capital.

I had responded to DSpencer that rebates had been extended in the US through 2020, which is true but I'd forgotten there is another metric that will catch up with Tesla, Nissan and Chevrolet before other manufacturers. Since all were early adopters they will reach the 200,000 vehicle threshold for rebates much more quickly than everyone else. Here's where they stand as of Q1 2016:
Nissan: 92,500
Chevrolet: 92,400
Tesla: ~73,000, (Tesla is a bit cagey with their numbers).

Tesla will catch up with Chevrolet and Nissan by the end of the year and all will be 115k-125k region. By the end of 2017 Telsa will at 160k-175k depending on when the Model 3 actually ships. If we assume they hit this threshold in Q2 of 2018, the rebate for Tesla will be 50% as high as everyone else in the 2nd half of 2018, 25% in the 1st half of 2019 and gone after that time.
Of course, if there's a Democratic president in 2017, Musk will get an extension. Maybe even if there's a Republican president, as I'm sure he sells to both sides of the aisle.

[BK]

Re: Tesla model 3.........discuss

I would like to make a gentlemens bet.

If Tesla Motors stock will be under $20 per share by Jan 2018.... if not I will make a donation of $100 or $500 of Sante Fe's choosing... and Sante Fe will contribute to mine.

People forget that a great con man like Elon Musk or Charles Ponzi or Bernard Madoff believe their story and are tremendous salesmen.

Charles Ponzi got his best press just weeks before indictments. https://news.google.com/newspapers?n...,6364677&hl=en

Two weeks later... Charles Ponzi arrested https://news.google.com/newspapers?n...,3819457&hl=en

[santafe2]

Re: Tesla model 3.........discuss

I would like to make a gentlemens bet.

If Tesla Motors stock will be under $20 per share by Jan 2018.... if not I will make a donation of $100 or $500 of Sante Fe's choosing... and Sante Fe will contribute to mine.

People forget that a great con man like Elon Musk or Charles Ponzi or Bernard Madoff believe their story and are tremendous salesmen.

Charles Ponzi got his best press just weeks before indictments. https://news.google.com/newspapers?n...,6364677&hl=en

Two weeks later... Charles Ponzi arrested https://news.google.com/newspapers?n...,3819457&hl=en

You seem to think I'm bullish on Tesla. Possibly you should re-read my many posts on this subject. As for your wager, I'm sure someone will be glad to take you up on it as there is likely not more than a 10% chance you'll win. At least that's what the market thinks.

In case your wager is open to anyone and another party is interested, here is how one takes the other side of your wager with zero risk and, should you be correct, a 10X + upside. Tesla January 2018 $30 puts last traded at $1 each so one can buy the right to sell 500 shares at $30 for $500. If you're wrong, you make the winner's $500 annual donation to their favorite charity in 2018. If you're right, the winner receives $5,000 with additional upside based on how low the price goes and the timing of that event.

[DSpencer]

Re: Tesla model 3.........discuss

I have a degree in accounting. A deposit creates an obligation - to deliver a $35000 automobile.

I'll tell you what I think will happen for each $1,000 deposit:

$1,000 debit to assets (cash)
$1,000 credit to liabilities (deferred revenue or similar)

How do you think it will be done instead?

[DSpencer]

Re: Tesla model 3.........discuss

I had responded to DSpencer that rebates had been extended in the US through 2020, which is true but I'd forgotten there is another metric that will catch up with Tesla, Nissan and Chevrolet before other manufacturers. Since all were early adopters they will reach the 200,000 vehicle threshold for rebates much more quickly than everyone else. Here's where they stand as of Q1 2016:
Nissan: 92,500
Chevrolet: 92,400
Tesla: ~73,000, (Tesla is a bit cagey with their numbers).

Tesla will catch up with Chevrolet and Nissan by the end of the year and all will be 115k-125k region. By the end of 2017 Telsa will at 160k-175k depending on when the Model 3 actually ships. If we assume they hit this threshold in Q2 of 2018, the rebate for Tesla will be 50% as high as everyone else in the 2nd half of 2018, 25% in the 1st half of 2019 and gone after that time.
Of course, if there's a Democratic president in 2017, Musk will get an extension. Maybe even if there's a Republican president, as I'm sure he sells to both sides of the aisle.

That is the part that I was referring to in my question. Can Musk get the full credit expanded to 300,000 or 400,000? If not, the vast majority of Model 3 pre-orders will not be eligible for the full amount. I could see that leading to a lot of cancellations.

I would consider preordering a model 3 if I could be guaranteed a $7,500 tax credit. I probably still wouldn't because there is a chance that Tesla will use all the money from preorder deposits and end up bankrupt. The deposits are refundable, but "you can't get blood from a turnip". The agreement says specifically they will not hold the money in escrow.

[BK]

Re: Tesla model 3.........discuss

Imagine all the production problems that will occur once Tesla Motors tries to produce over 100,000 cars in one year.

Everyone looks and analyzes Tesla Motors as a software or tech company. You can expect hockey stick increase in manufacturing flaws and other issues.

Building cars is a hard and low margin business. Frankly, it is amazing that Elon Musk convince the world his car company isn't a car company.

[santafe2]

Re: Tesla model 3.........discuss

Imagine all the production problems that will occur once Tesla Motors tries to produce over 100,000 cars in one year.

BK, Tesla produced and sold 5,850 Model S & X last month. That's a run rate of 70,000 a year with no apparent production problems. I doubt a 40% increase is going to run them off the rails. Try to stay focused on the money. That's where the problems are going to arise but it's unlikely they'll arise on your time frame. Have patience. You're probably right but you're learning one of the oldest investing lessons. The market can remain irrational longer than you can remain solvent. Keep your money. Invest it in something rational and maybe someday you can tell your grand children about how you knew Tesla was a bad joke.

But don't forget, the longer Musk keeps this going the more politically connected he becomes. He needs his political friends to extend the tax credit to 500,000 vehicles. I suspect they can be bought for pennies on the dollar.

[BK]

Re: Tesla model 3.........discuss

Increasing production from 70,000 to 100,000 is huge. Have you ever worked on your own car. When you are working with lots of subcomponents it is very easy to make an error. Tesla Fans love to suspend good logic. Elon Musk is a programmer turned financier/promoter. Elon is not a genius. Elon is not a rocket scientist. Elon is a financial fraud created by the lowest interest rates in the history of the United States and sadly one day folks will realize this.

I was told the same in 1999 when I was begging my sister to get out of CMGi ( $80,000 her biggest investment ever and 90% of her savings) told I was wrong that CMGi would go on being a good investment for a long time.

Begged my best friend not to buy a home and told him Fannie Mae was about to have a financial crisis (also told I was insane to believe that).

If I'm wrong I'll make up for the loss with other investments. Read history and you'll discover Elon Musk frauds look as if they will go on forever and then one day out of the blue, (like no one saw it coming) POP!

Solar is well into its massive sell off and electric cars that make no profit will be next. Look up NRG, Abengoa, Sun Edison.... SolarCity will be zero one day.

PS: I suspect Bernard Madoff had lots of Politically connected protectors + Ken Lay of Enron.

[Bundi]

Re: Tesla model 3.........discuss

Doesn't even cover a quarter of operating spend, now imagine the parts order that Elon needs to place to build these units. What other business will build a $35,000 in product for a deposit of 4% of honest money??

http://www.sec.gov/Archives/edgar/da...231.htm#Item_8
As of December 31, 2015

Tesla reports the following approximate full year 2015 financial metrics.

Cash and equivalents of $1.2B

Current Assets less Current Liabilities of ($24mln) so they may want to use JK’s deposit driven working capital plan after all, even though the deposits are potentially refundable.

Total Assets less Total Liabilities of $1.1B vs. Total Equity Capitalization of $34.5B or a low low low multiple of 31x “Shareholders Equity”.

Long Term Debt of $2.0B

Cash Flow from Operations of ($524mln)

Purchases of property and equipment ($1.6B) with expectations to spend the same once again in 2016.

One conventional measure of Free Cash Flow, CashOps less PPE spend, yields ($2.1B). Or the low low low FCF per diluted share of ($16.40).

And of course Cash Flow from Financing of $1.5B. Of which $783mln was in stock issuance.

Revenue of $4B

Cost of Sales of $3.1B yielding a gross margin of $0.9B or 22.5%. This is a reduction in gross margin vs. 2014 of 500bps.

Operating expenses of $1.6B, of which R&D was $718mln and SG&A was $922mln.

Operating Loss of ($716mln)

Below the line expenses of ($172mln) of which Interest expense is ($118mln)

Net Loss of ($888mln) vs a loss in 2014 of ($294mln)

I am no accountant but this financial profile doesn’t feel so good. BK, I suspect you spend time in these numbers as well and worse yet, you understand them better than I do. Ouch.

When the Tesla discussion first ramped up here I viewed it as similar to First Solar’s run prior to the 08/09 debacle. In other words, the ability to equity finance and debt finance backed by equity is critical to propagating the story which is then critical to further equity financing, etc...

Most importantly though I think that as long the ongoing stock market cycle continues and TSLA is a major source of fees to capital underwriting interests, the story may continue to have legs.

I will also say that in reading some open ended, non-expert, consumer sentiment responses to the Model 3 announcements, I am struck by how many consumers are excited about and interested in this vehicle. This is showing up in deposit orders and is a tailwind as it furthers the story. Exactly how well mainstream Joe and Jane like the ultimate sticker price and the overall ownership experience remains to be seen.

I continue to read that Tesla shares remain very heavily shorted. Profitable shorting of stocks is an acquired taste and one that I don't have the time or inclination to master. One needs to be very proficient with identifying the timing of moves which is of course extremely difficult to consistently do well.

[jk]

Re: Tesla model 3.........discuss

how about 1/3 of a billion dollars in free financing:
Tesla Motors reports 325K deposits for Model 3

[DSpencer]

Re: Tesla model 3.........discuss

how about 1/3 of a billion dollars in free financing:
Tesla Motors reports 325K deposits for Model 3

BK, does this mean they now have 11+ billion in additional liabilities? I'm still waiting on your accounting explanation.

[BK]

Re: Tesla model 3.........discuss

Meanwhile there are lots of unfilled orders for ModelX

Complete illusion... anyone remember all the PowerWall Presales...http://gizmodo.com/teslas-gigafactor...der-1703077367

Then Model X to be delivered in 2014....http://www.autonews.com/article/2015...-in-3-4-months

And then the reality of Tesla Motors missing their Sales/Delivery target: http://www.sec.gov/Archives/edgar/da...la-ex991_6.htm

Today, everyone is all excited about the model x ,,,,, and the model won't ship for one year.

Accounting: Deposits from customers are unearned revenue and gets reported as a current liability. Read here: https://books.google.com/books?id=uw...its%22&f=false