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  • Tesla: Debt Growth Chief Among Its Demons [View article]
    "So what GM car today goes over 200 miles and gets a recharge of 170 miles in just 20 minutes? Anybody else? If this is "behind" I want in. :-)"

    I thought it was 30 minutes. Can you cite your source for 20 minutes?
    Mar 6, 2015. 03:44 PM | Likes Like |Link to Comment
  • Tesla: Debt Growth Chief Among Its Demons [View article]
    "Tesla is said to have gross margins of 27% and growing, which is double the average of most other automakers. This is a sign of health. Why should anybody care if he borrows most of his growth, if the debt at 0.25% and 1.25% for the convertible bonds is so cheap, and likely to fund a much higher return?"

    Tesla's gross margin isn't comparable to other auto manufacturers because all of the others (US) include their R&D as a cost of manufacturing, where as Tesla counts their R&D as other operating expenses. So, you can't compare Tesla's GM with the others without adjusting for that.

    Tesla is overburdened with debt, IMO. Take Linn Energy (LINE). It's in a totally different industry, but the bulls were saying LINE's debt didn't matter when I was saying, "yes it does". When oil and gas tanked, there went LINE's share price and the distribution it was paying. In a recession, the heavy debt load would be a real burden. Plus, the cost of borrowing is going up.

    Tesla currently has no operating cash flow to pay the debt or interest on the debt.

    The rapid expansion could eventually pay off for Tesla, agreed, and the negative cash flow could turn positive at some point. And the reason for the rapid expansion is probably partly due to the limited amount of time before they have to pay back or refinance the debt (2018 and 2019). But until the cash flow turns positive, and alot of it, they have to borrow or issue equity to stay in business.

    I don't see investing in real estate as comparable to Tesla. Real Estate values generally only go up. It's hard, IMO, to lose at real estate investing. Tesla's assets depreciate, not appreciate in value.
    Mar 6, 2015. 03:32 PM | 3 Likes Like |Link to Comment
  • Tesla: Debt Growth Chief Among Its Demons [View article]

    Cash used to purchase depreciable plant and equipment (cash used in investing activities) is in addition to cash flow from operations. They need positive cash flow from ops to pay for the investing activity, which was $1 billion in 2014. They don't, which means that cash has to come from cash or assets on hand, or debt or equity. In other words, Tesla is heavily dependent on external financing to fund their growth, rather than that funding coming internally from cash flow from operations.
    Mar 5, 2015. 01:14 PM | 6 Likes Like |Link to Comment
  • Tesla: Gigafactory Tipping Point [View article]
    Mar 5, 2015. 01:07 PM | 1 Like Like |Link to Comment
  • Tesla: Gigafactory Tipping Point [View article]

    "Bryce - That was confusing.
    Bottom line, if you are shopping for a used car, you will buy a used car. Most people know whether they intend to purchase a new car or a used car up front."

    And the rest makes sense, buying used Model S rather than a new Model 3. I am thinking out loud and not the sharpest pencil in the room.

    Will the new Model S, once the Model 3 has come out, have the same battery as older Model Ses? What I am getting at is, can a 3 year old Model S with less range be upgraded from software updates to about the same range of a new Model S or will the older Model S's range be less? And if it is less and the new Model S costs the same as the old one did, how will the old one retain 50% of the purchase price after 3 years? It just seems to me that obsolescence could be a risk with the resale value.
    Mar 5, 2015. 12:58 PM | Likes Like |Link to Comment
  • Tesla: Gigafactory Tipping Point [View article]
    " It will be a larger and more luxurious car than Model 3, and therefore worth more. BMW 7 is worth more than BMW 3 despite having the same range."

    A 3 year old BMW 7 is worth more than a new BMW 3?

    Pricing these two, with equivalent 6 cyl engines, a new BMW 3 costs right at $41.6 K (with no options selected) and the 3 year old BMW 7 in outstanding condition, 36K miles, is valued at $36 K.

    Mar 5, 2015. 09:48 AM | 1 Like Like |Link to Comment
  • Tesla: Gigafactory Tipping Point [View article]
    "Bryce - Brilliant.
    Why purchase a 3 year old BMW M5 when you can buy a new BMW 320i for the same price? Wow. BMW is in trouble. Great logic"

    Knock it all you want, I am just trying to understand how the valuations will work.

    Let's try this again. If the Model 3 has the same range as my 3 year old Model S, then the new Model S will have a substantially greater range, than the used one, and a different battery, is that right? Then why would it be worth 50% of its original purchase price after 3 years, if the New Model S costs about the same as the old one?
    Mar 5, 2015. 09:29 AM | 2 Likes Like |Link to Comment
  • Tesla: Debt Growth Chief Among Its Demons [View article]
    "Tesla has several hundred million in leases on its books that can be securitzed if there is a need for cash.

    Tesla will be cash flow positive by the end of year once Model X is ramping up and strongly cash flow positive next year."

    Maybe you can explain the leases you speak of. Tesla has received over $900 million in cash the last two years in conjunction with their operating leases. I don't see much that can be securitized.

    They will be cash flow positive by year end. Based upon what numbers?
    Mar 4, 2015. 06:13 PM | 8 Likes Like |Link to Comment
  • Tesla: Gigafactory Tipping Point [View article]

    " Suppose Tesla offers two variants:
    1. $42,500 - 250 mile range w/ some modest upgrades"

    Why would I buy a 3 year old Tesla Model S with 265 mile range when I could buy a new Model 3 for $42,500 with about the same range? Looks to me Like Tesla would be on the hook for the resale value guarantee liability for a ton of Model Ses. I pay $100k for it but 3 years later it's not worth $50K because the Model III, new, is only $42,500 with the same range.
    Mar 4, 2015. 05:32 PM | Likes Like |Link to Comment
  • Tesla: Gigafactory Tipping Point [View article]
    I thought it was 170 miles for 30 min at 65 mph in 70 degree weather.
    Mar 4, 2015. 04:10 PM | Likes Like |Link to Comment
  • Tesla: Gigafactory Tipping Point [View article]
    That's cool as far as the price of the new Model S staying where it is at. But it doesn't bode well for the older, less technologically advanced 3 year old Model S. I would anticipate the resale value of it declining due to older technology. Why would I pay half the price of a more technologically advanced Model S for an older one with less range, when I can lease the new one?

    $1.5 billion in CAPEX but only spending $1 billion in cash, with no equity or debt issue. That means they are planning on $500 million or more in positive operating cash flow this year. I'll believe it when it starts showing up on the financials.
    Mar 4, 2015. 02:45 PM | Likes Like |Link to Comment
  • Tesla Can Stop 'Fear, Uncertainty, Doubt' Regarding Demand - But Will It? [View article]
    "What do you imagine will become of your bearish followers salivating on your prognostications of bankruptcy over $86 million of negative OCF which at that burn rate would take Tesla 20 Years worth of cash at bank. That is despite the obvious fact that this cash outlay from operations represents a fraction of the R&D for the Model X and is more than covered by the $217 million accounts receivable due directly back in the bank. "

    The problem is not one year's OCF, but the last 6 out 7 years have been negative. Looking at the cash flow statement, there was an increase in accounts receivable (A/R) of $183 million but, then, there was an increase in accounts payable of $253 million and an increase in accrued liabilities of $162 million. So, CFO could have been worse if they hadn't increased their liabilities. But, you could, perhaps, explain both the increase in A/R and liabilities was as a result of very significant growth. And the deferred revenue, resale value guarantee, and customer deposits are already baked into the CFO number.

    You can scoff at the $57 million in negative CFO number for 2014, but my question is when will this turn to positive cash flow? I am not expecting it to this year. $2 billion in debt becomes payable 2018 and 2019. They don't have an unlimited amount of time to turn this around.

    In regards to the $217 million in A/R covering expenses, I will direct you to the balance sheet where it shows $778 million in current liabilities and $269 million in accrued liabilities. The bills to be paid dwarf A/R.

    In regards to the $86 million of negative OCF in 4th qtr, or $57 million negative OCF for the year taking 20 years to use up their $1.9 billion of cash, you forget that they have investing activities to be paid for as well. In 2014, that amounted to $ 1 billion. That amount has to come out of OCF, cash or assets on hand, or debt or equity. OCF is not an option since it was negative. So, at that rate, all cash would be consumed in a little less than 2 years. It's my understanding 2015 capital expenditures will be about $1.5 billion. So, Tesla will need to issue equity or borrow before year end, IMO.

    Estimated sales for February were 1,150 vehicles. Better hope that is a wrong estimate or I don't see Tesla hitting their 55 K sales figure this year. Then there is the question of why the heck is their finished goods inventory increasing at such an alarming rate. It could mean demand is slowing down and inventory of unsold cars is building.
    Mar 4, 2015. 02:10 PM | Likes Like |Link to Comment
  • Checking in on U.S. electric vehicle sales [View news story]
    David RG,

    My understanding was 50K Model S and 5K Model X this year.
    Mar 4, 2015. 10:06 AM | Likes Like |Link to Comment
  • Checking in on U.S. electric vehicle sales [View news story]
    So, how does Tesla reach its goal of 50,000 Model S sold this year with barely over 1,000 sold in February? They need to sell 4,000, not 1150.
    Mar 4, 2015. 09:32 AM | 2 Likes Like |Link to Comment
  • Tesla: Gigafactory Tipping Point [View article]
    So where will Tesla get the cash to do all of this? No profits yet with all the expansion going on and Tesla is very dependent on external funding for its growth. I see this year as having negative cash flow again due to the growth. The $1.9 billion of cash on the books won't be sufficient to pay for all of this. What will Tesla do, have another equity offering?

    IF it gets cheaper to manufacture an EV, what will that do to the price of the Model S and X? IF they lower the price of these vehicles, seems to me the resale value of these models, that are 3 years old, will decline substantially due to both the lowered retail price for a new one and the older technology in the used vehicles. That would create real liabilities to Tesla on the sale/lease transactions, wouldn't it?
    Mar 4, 2015. 08:56 AM | 2 Likes Like |Link to Comment