noone1:

Well, he just got a potentially multi-billion dollar compensation package. I'm sure he can float them a $1B if he thinks that's the difference between failure and success.

 

Tesla needs much more than a billion dollars............

They burn through more than that a quarter.

Most of Elon's net wroth is tied to Tesla's stocks anyway, so his net worth is quite a bit less now.

His gigantic compensation package is tied to him leading Tesla to be a 100 billion dollar worth company, it's half that right now.

His vision of entering the low margin low cost electric car in order to gain market share is great on paper......until one sees examples everywhere that it doesn't work. Look at Samsung with their phones, they tried to go high up against Apple and low against Chinese stuff, it failed on both fronts. The Chinese are eating away at Samsung's market share like crazy at the low end, and Samsung is losing out to Apple big time on the top end, it's stuck in no man's land right now.

Car business is a cut throat one, at the low end of the market there are a ton of alternatives, perhaps he had envisioned he can make those cars on schedule without problems to entrench themselves, but they forgot to look at the mirror, they had never had a model that went without problems, so why should the Model 3 be different? All the delays are eating into their planned revenue, their scheduled expenses was there assuming they get their cars out on time, it didn't happened. Now they are stuck between a rock and a hard place, either beg for more money just to survive, and hope their Model 3 production finally can hit their targets, or scale back their ambitious expansion plans to preserve capital and thus delaying the Model 3 even more. 

Lenders lend them money on the basis that they were a 50-60 billion company with a revenue stream to match. The lending terms and rates would be very different when they are down to a 30-40 billion company that keep losing money. People bid up their stock prices thinking there is growth, but when they company can't grow, nobody will want that stock, and the vicious cycle starts, the lower the stock price, the harder they can gain liquidity.

Believe it or not, Tesla is closer to filling Chapter 11 than ever. Their enormous debt needs some serious restructuring in order for Elon to fulfill his vision. We know Elon absolutely do not want to part with any of Tesla's assets, so a Chapter 7 is out of the question.

They should have gone into truck business a lot sooner, before doing the entry level Model 3. Trucks have higher margins and zero competition, no other companies are even close to doing a all-electric semi truck, Tesla would have made a killing there and stock up on money/ammo, and that's what needed to enter the mass market entry level cars. DEEP POCKETS. 

For some Tesla fanboys, this is like Tesla bashing again. It's not. It's just taking a rationalized view on fundamentals, dig deeping into press releases and finance records to see if there are any coverups. And there are plenty within Tesla. 

 

 

 


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