Two other bits today
and not letting the police help investigate/recover $37M in theft at Nevada Gigafactory
#governance
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Maybe Iâm wrong, which happens from time to time, but I thought there was some sort of law requiring manufacturers to have parts available for vehicles for at least 10 years past production. Then again, it wouldnât be the first time Musk said "F the lawâ
The fact that youâre potentially boned now if youâre in an accident, or you need a new gear shift knob is kinda sad. It kind of brings a new meaning to âPlanned obsolescence.â
Thatâs ok, I guessâŚjust plunk 100 bucks down on that beautiful truck that MAY arrive by 2021.
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In for a penny in for a poundâŚ
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Soo Tesla the company is going bankrupt because Elonâs personal assets are illiquid? Was he financing the company single-handedly with his cash? I am only asking since the thread is titled Tesla bankruptcy.
Whoâs making that one?
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Mortgages on 5 of his houses to pay payroll, personally guaranteed by his stock. As 1 data point.
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That doesnât answer my question though, it only shows he indeed has bunch of illiquid assets. Teslaâs operations are not financed by his personal cash reserves, only his personal assets are used to secure loans. He still owns the properties in question, right? Why would him not having cash in hand personally indicate an impending bankruptcy for Tesla? Do you have any data point showing Tesla is struggling to secure loans or raise money?
I have a feeling that Tesla would become a crowd funded concern before it ever truly gets a chance to go belly up.
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Tesla was so close to bankrupt in the past year, Musk loaned Tesla personal money to pay payroll. The money he loaned them reportedly came from new mortgages he took on his houses.
One (of many) things you look for in an insolvent company is comingled personal and business finances, and inter-company transactions that donât resolveâŚ
which is why it would go through receivership before anything like this.
Tesla will raise more money on the Cybertruck and more on the Semi it hasnât delivered, and the Roadster that is late, but that doesnât unwind the fungible funds. If you take a loan on your house, loan it to your company, have your company paying your mortgage payments, and argue over Tesla not paying every penny of jet time he commutes 30 miles in a G650: where does the person end and the company begin?
One reason theyâve burned through so many corporate counsel and CEOs: the books are a hot mess (but fun reading when you arenât signing off on them).
The problem is âthe market can stay insane longer than you can stay solventâ
Even if logically assuming Tesla should be BKâd, it may happen long after every one tired on saying it should be.
On the other hand if even it BKâs tomorrow just to shed liabilities like GM did in 2008, Tesla can continue build cars just like GM did.
BK of that company doesnât mean end of Tesla cars manufacturing.
Yes and Fred Smith once bet $5k in Vegas and his blackjack winnings kept Fedex open for one more week delaying bankruptcy. Tesla did go through some really difficult times when they couldnât ramp production fast enough but that was right before the Q318 ramp here:
Since then they moved almost half a million cars and become the best selling luxury brand in the country, do you think they still depend on Elonâs personal assets to fund operations?
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Apples and oranges. Fred Smith gambled $5,000 of FedEx money, not his own, and should have gone to jail for it (or been forced out). False equivalence.
THE GUY running (part time) a $60B company had over $500M in person loans from banks guaranteed with Tesla stock, that had to be disclosed to investors when raising money (co-mingled). Same guy has personal loans from Tesla, and loans to Tesla. Executives at other public and private companies get deservedly ejected for less.
Tesla has been within two weeks of bankruptcy in the past couple years. We arenât talking about 2008.
The ramp isnât the only hump: demand for the S and X (the high margin products) is down, they have to scale/ramp/reconfigure for all of these late/nonexistent products theyâre betting on next. Their management team has been gutted, and they have more competition that ever.
I hope they succeed, but reckless management that is personally over-leveraged (the business too) micro-managing from the top (even after admitting what and when that was wrong, like trying to automate 99% of Model3 assembly), over-promising and under delivering isnât a helping. Also the sales and customer service are such that people would not tolerate it from any other brand, eventually the goodwill evaporates.
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The problem isnât selling cars, itâs that they lose money every car they sell
I havenât checked this thread in while but I am sad to see after Q3 results some of you have gone fully of the deep end. Posting garbage such as the so called fire at the New Jersey Supercharger station which is a flat out lie. Tesla supercharger station not responsible for fire at Wawa in New Jersey But by all means keep the circlejerk going.
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I disagree, it is not false equivalency. My point is coming very close to bankruptcy does not always mean the company should eventually fail. Also disagree on competition being more of a threat. Legacy brands get significantly less range with similarly sized battery pack, clearly Tesla has a big lead in EV technology.
I was on the fence about buying one because of the quality and customer service complaints on Tesla forums, which seem to have died down since around July. Finally pulled the trigger myself and have had zero customer service or quality issues since placing my order 2 months ago and taking delivery about 6 weeks ago. I have cross shopped many sport sedans from established luxury brands but I couldnât bring myself to leasing one of them after one test drive with the Model 3. In fact the product itself is so much better than the competition that I, who is a fierce lease enthusiast, ended up financing it as the Model 3 leases terribly.
I understand your points about Elonâs personality and management style but they are finally manufacturing well-built Model 3s at a large volume. Even Elonâs antics wouldnât be able to bring the company to bankruptcy after this point in the companyâs maturity curve. Upcoming Model S and X refresh will help the margin but volume is their number one need to ease the fixed cost burden. If Model Y launches better than the 3, there is no going back for Tesla for many years to come.
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As far as I know they have the highest gross margin per car of any volume manufacturer so they are far from losing money on each car they sell. They are struggling to turn net profit but that is mainly due to capital expenditure required to grow manufacturing footprint, which makes sense for a young company with high volume aspirations.
That wasnât my point: mismanagement kills companies. Iâm willing to be wrong, but the moves and financials are a slow moving train wreck.
Youâve had the car six weeks, let us know how you feel in six months. Curious if youâve had the paint density checked? I saw one yesterday that a variance of + and - 100% of normal on the same car.
97,000 cars a quarter is not a large volume: not for the former NUMI plant, not by Muskâs own assertions, and not by their competition. For a new car company, sure, but they have made a ton of expensives mistakes along the way they are still digging out from.
WowâŚnot even close:
In the auto industry, mass-market car makers post profit margins of less than 10%; luxury marques do much better, and on an individual-vehicle basis can really rake in the cash. Teslaâs gambit here has been to argue that the Model 3 would be a lot less costly to manufacture than, say, a Toyota Corolla, but itâs clear that hasnât come to pass. Teslaâs attempt to build an automated Model 3 assembly line failed so catastrophically that the company had to quickly throw up an old-school line under a tent in the parking lot of its Fremont factory.
Tesla has adopted what Iâd term a backward strategy for Model 3 because CEO Elon Muskâs vaunted âMaster Planâ always called for making expensive vehicles to fund cheaper ones, with the ultimate goal of getting more electric vehicles on the road. Tesla has achieved that objective, but at the cost of undermining its marquee products.
Auto revenue is now 85%, and the Model 3 is 81% of their auto revenue. Q1 of 2019 was incredibly slow for them, weâll see how the rest of 2019 goes and how 2020 shapes up - after their Federal EV tax credits expire 12/31/2019.
This is the only data point in the article you shared about gross margin:
âIn the auto industry, mass-market car makers post profit margins of less than 10%; luxury marques do much better, and on an individual-vehicle basis can really rake in the cash.â
Sandy Munro, who did a product tear down of the Model 3, estimated the margin to be around 30% and as you stated S and X get even better margins:
As for satisfaction after 6 months of ownership, I wondered the same thing and actually posted a poll in a Tesla forum before buying mine and asked everyone if they would buy their Model 3 again. Out of 249 people who voted, 95% said yes:
There is quite a bit of other analysis out there that put the Model 3 (original expensive ones) at 25% and in the ensuring quarters see that blended down to 20%. Donât forget that Tesla also had 39 price changes on the Model 3 in March. More than the industry average, but they have established fixed costs and have been depreciating their capex for a while. Tesla is still spending on CapEx like crazy (âcorporate crackâ as we used to call it at the VCs I worked for).
Iâd rather hear from you and @Electric personally when you hit the six month mark. Iâll keep my fingers crossed you donât get #whompywheels or #paintIssues or have any #TeslaServiceIssues (the last being why I swore off Ford forever after 2 leases I was otherwise very happy with).
All my friends that have Teslas are Model S owners, one Model X. I had an Uber to the airport 2 weeks ago that was a Model 3, I didnât care for the interior at all. Lucky I donât have to drive it though. The original Roadster is probably the only Tesla I would own (and have shopped seriously), as long as I ship it to Seattle to the Tesla Whisperer when it breaks.
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