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For the last week, Tesla's (NASDAQ:TSLA) CEO Elon Musk has been promoting a revolutionary plan Tesla has on Twitter without revealing the details. Even as the company announced profitability for the first time in its history on Monday, Mr. Musk continued to tell people that this project would overshadow the news that the company was finally profitable. Most investors of the company were hyped up, even though some analysts downplayed the announcement saying that it was probably just another sugar-coated secondary offering by Tesla to raise cash.

Now, we found out about the company's new plans. We are looking at a new financial product which is a result of a partnership between Tesla, U.S. Bancorp (NYSE:USB) and Wells Fargo (NYSE:WFC). So how does it work? Those that are interested in leasing a Tesla will come up with a down payment totaling 10% of the car's value. The leasers can use the federal/state tax credits ranging from $7,500 to $15,000 for this down payment, which should cover pretty much all of the down payment. If the buyer/leaser doesn't come up with the down payment, he or she can obtain this money from US Bank or Wells Fargo and pay it back after receiving the tax credit as per the agreement between Tesla and the two banks. Tesla further claims that "when considering the savings from using electricity instead of gasoline, depreciation benefits and other factors, the true net out of pocket cost to own a mid-range Model S drops to less than $500 per month." The leasers will keep the car for 36 months, and they will have two options afterwards. They can either keep the car or they can sell it back to Tesla. The company promises that when and if people decide to sell their car back, they will get a comparable residual value to Mercedes S Class, which is known to be one of the cars that continue to keep its value for a long time after being used. This is where Elon Musk's earlier statement on Twitter that "he would put his money where his mouth is" comes to play. If it turns out that Tesla's Model S depreciates in value faster than the S Class of Mercedes, Elon Musk promises to pay the difference from out of his own pocket.

Furthermore, Elon Musk went on Twitter to say that this announcement was the 2nd announcement in a series of 5, which means there will be 3 more groundbreaking announcements from the company in the coming days (or weeks). This is really exciting. Elon Musk is known for innovative ideas, and while some of his ideas are seen as "eccentric" by the general public, many of his ideas were proven to work, most notably PayPal.

After the announcement, Tesla's share price fell by nearly 3% in the after-hours on relatively heavy volume (for after-hours anyways). It looks like many investors were expecting something else. Before the announcement, I read several blog posts and articles and I don't remember anyone mentioning anything close to what the company announced. Most people were talking about a possible capital raising in terms of a secondary offering. I think what Tesla investors got was a better deal than a possible secondary offering.

Some of Tesla's investors might feel that the new initiative will not really help with increasing the company's car sales. After all, Tesla's cars are high-end and most people who are willing to spend $65,000+ on a car probably earn so much money that he or she will not need financial incentives in order to get the cars. Those are the same people who claim that Tesla is a "rich man's toy." In fact, I will admit that even I made such claim at some point.

The fact is, this new agreement will surely help with increasing the demand for Teslas. This is not all about money incentives either. This is about guarantees. Over the last few months, a lot of people were reluctant to get a Tesla car due to bad publicity. By offering his personal guarantee, Elon Musk is telling the reluctant consumers to go ahead and give it a shot; after all if they don't like the car, they will get most of their money back. The guarantee alone shows to the public that Elon Musk is fully confident with his product and he's willing to pay the price for it if anything goes wrong. In fact, he said that even if the company goes bankrupt, those who want to sell their car back under this plan will still be able to sell their car and get their money.

What's even better for the investors is that this financial plan will not hurt Tesla's margins. Most of the time a company offers special payment plans or discounts to consumers, it is sacrificing its margins. This campaign will not result in Tesla leaving any money on the table. The company will still receive the full price for its cars.

I had been a skeptic of Tesla for a long time. I've written some articles that weren't very positive about this company, even though my later articles of Tesla are more positive than the older ones. I've been feeling progressively more positive about this company. Today, I actually ended up initiating a long position in Tesla. Of course, as always, I will be writing covered calls every month in order to bring my breakeven price down over time, but that's just me being ultra conservative.

Just for the fun of it, let's take a look at the titles of my Tesla articles from oldest to newest:

Tesla's Management Seems Highly Optimistic - June 26, 2012

Tesla Falls As General Motors Announces Weak Demand For Volt - August 28, 2012

Tesla Looks To Become Profitable in 2013 - September 3, 2012

Tesla's Volatility Worries Me At The Moment - September 26, 2012

Is This Time To Buy Tesla - November 7, 2012

It Will Be Bullish if Tesla Meets Its Goals - February 22, 2013

The investors have very little reason to be upset about Tesla's new plan. I expect the company to prosper in the next few years as the concept of cool looking electric cars gains more fans over time. As more of these cars hit the roads, more people will notice them, and as more people notice them, more people will want them. Elon Musk looks like he is up to something here.

Source: Tesla's New Plan Is Revealed, Investors Don't Look Happy