TSLA corporate outlook

[edatoakrun]

Via GCR:

Reactions to Tesla 100D versions less than ecstatic: here's why

http://www.greencarreports.com/news/1105727_reactions-to-tesla-100d-versions-less-than-ecstatic-heres-why

. . .if the company doesn't raise additional funds—perhaps as much as $1 billion, well beyond any incremental sales boost provided by the 100D versions—the pair of new versions won't matter much. . . .

...

TSLA will not likely be able to raise the huge amount of cash required to maintain current operations from the bond market, which already regards Solar City debt as lower-junk-grade:

Bond Market Smackdown: SolarCity...

The raging bond bull market evidently has its limits. That is a problem for SolarCity, and quite possibly Tesla Motors shareholders.

SolarCity said Tuesday afternoon that Chairman Elon Musk, Chief Executive Lyndon Rive and technology chief Peter Rive would together purchase more than 80% of the solar energy company’s latest $124 million bond issue

...SolarCity has never offered such a high coupon on its debt for such a brief maturity. In February, the company issued five-year bonds with a coupon payment of just 5.25%.

The higher cost of borrowing has coincided with a 50% decline in SolarCity’s share price this year.

Higher interest costs should alarm Tesla’s investors, who will inherit SolarCity’s obligations if a proposed merger with Tesla wins shareholder approval. Just as ominous is that it looks like outside investors aren’t willing to buy up SolarCity’s debt, despite the higher yields.

Given the bullish global backdrop for bonds, a company offering an interest rate as high as 6.5% on such a short maturity should be beating investors back, if all were well.Tesla shareholders ought to keep that in mind as they weigh whether to approve bringing SolarCity in house.

http://www.wsj.com/articles/bond-market-smackdown-solarcity-vs-sri-lanka-1472053337

So, it would seem come down to another TSLA stock offering to keep the cash rolling in.

Or perhaps further monetization of the sucker list TSLA generated from accepting model three deposits?

 

[keydiver]

Also, completely under the radar (no pun intended), Tesla boosted the price for Autopilot by $500 to $3k.

My guess is that Autopilot 2.0 isn't too far down the road, as they are already including the wiring harness for the extra camera(s) and sensors, so they might be just covering their costs for when they actually start installing the hardware. Its just the weird way Tesla does upgrades. No warning, no advance notice, they just say "hey, by the way, the cars we have been shipping for the past 2-3 weeks have this extra stuff at no extra charge".

 

[edatoakrun]

(8/25) above
So, it would seem come down to another TSLA stock offering to keep the cash rolling in...

Looks like Musk is wasting no time, and may even be moving up the schedule for when next to ask investors for more money.

Wonder how many times TSLA will be able to sell more paper to fill this?

Tesla plans to raise additional cash this year

...Tesla CEO Elon Musk had warned the company might need "a small equity capital raise" in 2017.

Earlier this month, Tesla said it closed the second quarter with nearly $3.25 billion in cash, but in July it repaid $678 million on a revolving credit line and planned to redeem $422 million in convertible notes.

That would leave the company with $2.15 billion in cash. But it also told analysts earlier this year it planned to spend $1.75 billion in the second half on plants and equipment, primarily to get the Model 3, expected to start at $35,000, ready for production next year and finish construction at the Reno, Nev., gigafactory.

As a result, Tesla would be left with around $400 million in cash....

"Tesla will need many, not-so-small capital infusions to stay on its development plan and more as it takes over Solar City, a virtual sinkhole for capital," said Erik Gordon, a business professor at the University of Michigan...

http://www.autonews.com/article/20160831/OEM05/160839976/tesla-plans-to-raise-additional-cash-this-year

 

[GRA]

They've just got to keep their fingers crossed that the economy doesn't go south and dry up the capital markets, not to mention all the Model 3 reservation holders who would suddenly find they had a more pressing use for their $1,000 than giving Tesla an interest-free, multi-year loan (or buying a new car at all, FTM - remember what happened to new car sales in 2009-2010). They're pedaling as fast as they can, but will they win the race?

 

[edatoakrun]

In depth report in todays WSJ of where all the $ TSLA has raised went.

And where more cash to keep TSLA operations going will be coming from?

Elon Musk Faces Cash Squeeze at Tesla, SolarCity

Two pillars of the entrepreneur’s empire are facing financial crunches as he seeks to combine the two companies through a controversial acquisition

...Tesla Motors Inc., which makes electric cars, disclosed in a securities filing Wednesday that it has to pay $422 million to its bondholders in the third quarter, and that it will raise additional money by the end of the year. The purpose of the additional capital, among other things, is to support its proposed merger with home-solar company SolarCity Corp. Mr. Musk is the chairman of both companies.

The filing also revealed that in recent weeks, 15 institutional investors passed on either acquiring SolarCity or injecting equity into it. The company is having difficulty tapping the public markets amid the proposed merger and is facing a liquidity squeeze, the filing indicated. SolarCity’s cash declined to $146 million on June 30, from $421 million a year earlier, the company has reported...

Tesla has been able to regularly tap various sources of capital to sustain its operations. In the second quarter, it raised $1.7 billion from an equity offering, and its reserves also benefited from hundreds of thousands of $1,000 refundable deposits for its coming Model 3 vehicle.

Tesla’s core business has burned more than $3 billion in cash dating back to late 2014. It has issued equity or convertible debt every year since its initial public offering in 2010.

In the Wednesday filing, Tesla said it would again tap debt or equity markets by the end of 2016 to cover its costs of merging with SolarCity, developing a cheaper electric car, producing batteries and expanding retail operations...

http://www.wsj.com/articles/elon-musk-faces-cash-squeeze-at-tesla-solarcity-1472687133

 

[lorenfb]

Based on Tesla's "present" 2016 guidance number of 80K, YTD sales aren't encouraging. InsideEvs reports today that
Model S & X had a combined U.S. YTD sales of about 27K units. ROW sales historically have equaled U.S. sales, but now
are only about 50%. So most likely, Tesla's total YTD sales are only about 40K for the last 8 months. Tesla must now sell
and produce 40K in the last four months of 2016, i.e. twice the previous run rate. Good luck Elon! Or maybe time for
Elon to "spin" the previous guidance.

 

[edatoakrun]

I'll say it again:

There are few more impressive sights than a South African on the make.

Musk Urges Tesla Workers to Cut Costs Ahead of Fundraising Round

Elon Musk sent an e-mail to employees at Tesla Motors Inc. urging them to cut costs and deliver “every car we possibly can” in a push to show positive cash flow in the third quarter.

The chief executive officer of the electric-car company said it would be his last chance to show improved financial numbers before he tries to raise more money. The third quarter is crucial to Tesla’s future because the company is trying to acquire SolarCity Corp. and preparing to roll out the Model 3, its lower-priced sedan, late next year.

“The simple reality of it is that we will be in a far better position to convince potential investors to bet on us if the headline is not ‘Tesla Loses Money Again,’ but rather ‘Tesla Defies All Expectations and Achieves Profitability.’” Musk wrote in an Aug. 29 e-mail obtained by Bloomberg on Friday. “That would be amazing!"...

http://www.bloomberg.com/news/articles/2016-09-02/musk-e-mail-urges-workers-to-cut-costs-in-bid-to-woo-investors

 

[edatoakrun]

The article below, which provides the first authoritative estimate I've seen of the size of TSLA's short-term capital shortfall, might best be described as a critique of the Max Bialystok school of corporate finance, of which Elon Musk is a leading figure.

Here's Why Tesla Will Never Be Able to Satisfy Investors

...Musk and others have invested $14 billion in the car company in the past 13 years. Most of that investment, though, has not come from cash garnered from making and selling its Model S sedan and Model X SUV, but from fresh financings—chiefly from sales of stock, including a successful $1.7 billion offering in the second quarter. In fact in the next two years, Tesla is expect to raise another $9 billion in capital—in order to ramp up to producing 500,000 cars a year and complete the Gigafactory, which is Musk’s giant battery manufacturing facility in the Nevada desert...

http://fortune.com/2016/09/09/tesla-profits-musk/

On a related point, a Professor of Finance at the Stern School of Business at NYU descends from the Ivory Tower and provides his review of the work of the investment bankers in producing their opinions on TSLA/SCTY Deal:

Keystone Kop Valuations: Lazard, Evercore and the TSLA/SCTY Deal

It is get easy to get outraged by events around you, but I have learned, through hard experience, that writing when outraged is dangerous. After all, once you have climbed onto your high horse, it is easy to find fault with others and wallow in self-righteousness. It is for that reason that I have deliberately avoided taking issue with investment banking valuations of specific companies, much as I may disagree with the practices used in many of them. I understand that bankers make money on transactions and that their valuations are more sales tools than assessments of fair value and that asking them to pay attention to valuation first principles may be asking too much. Once in a while, though, I do come across a valuation so egregiously bad that I cannot restrain myself and reading through the prospectus filed by Tesla for their Solar City acquisition/merger was such an occasion. My first reaction as I read through the descriptions of how the bankers in this deal (Evercore for Tesla and Lazard for Solar City) valued the two companies was "You must be kidding me!"...

http://aswathdamodaran.blogspot.com/2016/09/keystone-kop-valuations-lazard-evercore.html

This video expands on his blogpost. Direct link below, and well worth the 25 minutes for the full view:

https://www.youtube.com/watch?v=uR1wbjzPnbc&feature=youtu.be

 

[palmermd]

...

On a related point, a Professor of Finance at the Stern School of Business at NYU descends from the Ivory Tower and provides his review of the work of the investment bankers in producing their opinions on TSLA/SCTY Deal:

Keystone Kop Valuations: Lazard, Evercore and the TSLA/SCTY Deal

It is get easy to get outraged by events around you, but I have learned, through hard experience, that writing when outraged is dangerous. After all, once you have climbed onto your high horse, it is easy to find fault with others and wallow in self-righteousness. It is for that reason that I have deliberately avoided taking issue with investment banking valuations of specific companies, much as I may disagree with the practices used in many of them. I understand that bankers make money on transactions and that their valuations are more sales tools than assessments of fair value and that asking them to pay attention to valuation first principles may be asking too much. Once in a while, though, I do come across a valuation so egregiously bad that I cannot restrain myself and reading through the prospectus filed by Tesla for their Solar City acquisition/merger was such an occasion. My first reaction as I read through the descriptions of how the bankers in this deal (Evercore for Tesla and Lazard for Solar City) valued the two companies was "You must be kidding me!"...

http://aswathdamodaran.blogspot.com/2016/09/keystone-kop-valuations-lazard-evercore.html

This video expands on his blogpost. Direct link below, and well worth the 25 minutes for the full view:

https://www.youtube.com/watch?v=uR1wbjzPnbc&feature=youtu.be

Thanks for posting this video. It really points out the flaws in the banking industry, not only in this deal which is awful. I really hope this deal falls apart. I really like both Tesla and Solar City, but there is no way I want to see them under one roof at this point in their growth. Perhaps it does make sense to Elon, but I just don't see it, and he has not shown the evidence of how it makes sense and all reports that have been published, including this one, show that it is a really badly orchestrated deal.

 

[edatoakrun]

If the deal does collapse, what is the probability that SolarCity will survive TSLA merger mania...?

Lawsuits could delay Tesla Motors’ proposed merger with SolarCity.

In an SEC filing released Monday, Tesla said the merger is being challenged in four separate lawsuits that were filed in early September.

The main claims: Tesla and SolarCity breached their fiduciary duties to shareholders, and Tesla failed to disclose certain material facts.

...Financial analysts have called the $2.6-billion all-stock deal an attempted bailout for both companies:

Each faces a cash-flow crunch.

Patrick Jobin, an analyst who follows SolarCity for Credit Suisse, said at the time “we put a low 20-40% probability” of the deal being completed...

http://www.latimes.com/business/autos/la-fi-hy-tesla-watch-20160919-snap-story.html

 

[GRA]

It seems Tesla is offering discounts of $7,500 until the end of the month to boost their quarterly sales numbers, via ABG:

Now might be the best time ever to buy a Tesla
Elon wants to look good for SEC quarterly, so discounts abound.

http://www.autoblog.com/2016/09/19/tesla-prices-elon-musk-sec-report/

Check out the photo of all the new Model S/X waiting for customers at the Buena Park store in post #147: https://teslamotorsclub.com/tmc/threads/supercharger-buena-park-under-construction-opening-mid-september-2016.69490/page-8

Seems like they're really pushing them out of the factory.

 

[edatoakrun]

It seems Tesla is offering discounts of $7,500 until the end of the month to boost their quarterly sales numbers...

Those discounts, and much larger ones on inventory, CPO and refresh (?) Ss & Xs shown and discussed here:

https://teslamotorsclub.com/tmc/threads/filtered-tesla-inventory-search-www-teslainventory-com.66013/page-3#post-1736500

...There are 6 that are over $15,000 off the new price. 2 only have 50 miles (maybe less) and are $17,200-$17,700 off for a basically brand new car...

 

[GRA]

Via GCC:

Tesla Q3 deliveries up 70% from Q2 to 24,500 vehicles

http://www.greencarcongress.com/2016/10/20161002-tesla.html

Tesla delivered approximately 24,500 vehicles in Q3, of which 15,800 were Model S (64%) and 8,700 were Model X (36%). This was an increase of just over 70% from last quarter’s deliveries of 14,402. Tesla only counts a car as delivered if it is transferred to the customer and all paperwork is correct; about 5,500 vehicles were in transit to customers at the end of the quarter. These will not be counted as deliveries until Q4.

Production rose to 25,185 vehicles in Q3. This was an increase of 37% from Q2 production of 18,345. . . .

 

[lorenfb]

Via GCC:

Tesla Q3 deliveries up 70% from Q2 to 24,500 vehicles

http://www.greencarcongress.com/2016/10/20161002-tesla.html

Tesla delivered approximately 24,500 vehicles in Q3, of which 15,800 were Model S (64%) and 8,700 were Model X (36%). This was an increase of just over 70% from last quarter’s deliveries of 14,402. Tesla only counts a car as delivered if it is transferred to the customer and all paperwork is correct; about 5,500 vehicles were in transit to customers at the end of the quarter. These will not be counted as deliveries until Q4.

Production rose to 25,185 vehicles in Q3. This was an increase of 37% from Q2 production of 18,345. . . .

Their YTD WW number is about 53K. Given a low end 2016 guidance of 80K, Elon might luck-out and achieve it.
Still, hardly indicative of an automotive production rate bent on delivering 400K reservations even in a few years!

 

[cwerdna]

Mercedes CEO: We will beat Tesla in less than 10 years
http://www.businessinsider.com/mercedes-ceo-overtake-tesla-electric-cars-2025-2016-10

"Mercedes’ head said that the German automaker plans to overtake Tesla as the top premium electric car maker in less than 10 years..."

 

[LTLFTcomposite]

"Mercedes’ head said that the German automaker plans to overtake Tesla as the top premium electric car maker in less than 10 years..."

I'm sure 10 years from now the number one topic of conversation will be whether or not that prediction came true.

 

[lorenfb]

"Mercedes’ head said that the German automaker plans to overtake Tesla as the top premium electric car maker in less than 10 years..."

I'm sure 10 years from now the number one topic of conversation will be whether or not that prediction came true.

Time for a new M/B CEO! Probably didn't ever work in marketing.

 

[edatoakrun]

My thoughts, exactly...

Wait, Tesla Motors Might Need to Raise $12 Billion?!?!

Yesterday, Tesla Motors (TSLA) set Nov. 17 as the day for a shareholder vote on its acquisition of SolarCity (SCTY), and Oppenheimer’s Colin Rusch and team argue that the odds of it passing have increased. They also contend that combined company will need to raise more than $12 billion. They explain:

...We also believe Tesla and SolarCity will increasingly use asset-backed lines to support working capital and select capital equipment spending, but still see Tesla’s vehicle platform needing $2B+ in additional capital beyond ABLs through 2018 with SolarCity needing $5B-$8B+ depending on volume of leased systems.

We believe a combined entity will face cash needs in four key areas: stationary power capex (primarily solar), auto capex, working capital and operating lease obligations. In total, we expect the combined company needing ~$12.5B for capex through 2018 sourced from a combination of asset-based debt, system refinancing, tax equity and corporate debt…

http://blogs.barrons.com/stockstowatchtoday/2016/10/13/wait-tesla-motors-will-need-to-raise-12-billion/

 

[LTLFTcomposite]

Opening their own bank?
http://www.techtimes.com/articles/181999/20161013/tesla-might-open-up-its-own-bank-as-model-3-pre-orders-rank-record-numbers.htm

Maybe they can have fake accounts too :-D

 

[edatoakrun]

Since TSLA does not report, the estimates below may be close to correct...or maybe not, as the author discusses:

Trending Analysis: How Much Consumers Pay for A Tesla on Average?

Within the mind of financial analysts, how much consumers have paid for a certain product on average provides an important signal of how the product is doing in the market.

For Tesla, its current two models’ price lies in a wide range. For example, the Model S starts at the $66,000 (the 6o base trim) and goes all the way up to $161,750 when you pick the P100D trim with all option boxes checked.

Therefore an interesting question arises: how will a “normal” consumer option a Tesla? In other words: what is the typical price range that a Tesla buyer is looking at?..

Tesla never publish this information to the public...

Here is a summary of the average selling price (annually):

2013: $100,856.52
2014: $106,574.25
2015: $95,015.38
2016: $99,289.04ˆ

^: half-year data...

http://youwheel.com/home/2016/10/19/trending-analysis-how-much-consumers-pay-for-a-tesla-on-average/