Thứ Tư, 1 tháng 2, 2017

Ready to sign but my associate says they (Tesla) will go Bankrupt... part 1

  • Aug 9, 2016
    Swissmoneychf
    Hey all,

    (again excuse my english, doing my best to be understandable)

    so, I'm about to sign next week to get my Model S soon and my associate keeps saying that it's a really bad idea, that I should wait because Tesla is not far from Bankrupt... He doesn't know anything about Tesla, Musk etc. but he's into the "stock options" thing. Buying selling etc and he says that the banks ain't happy with Tesla and he won't buy one before waiting 2-3 years.

    Personally, I can't even imagine that, regarding to all the money they're spending to grow but well, I don't know. I've read and seen a lot about Musk and Tesla and the start wasn't very good for them. Don't know what to think.

    Let's say Tesla goes Bankrupt, what will happen to people who bought their cars ? Where are we gonna repair and make the services ? What about the Superchargers ?

    I'm pretty sure that many of you will laugh reading this, but by keeping telling me that he starts to scare me just before my contract beeing signed.

    Give me please some arguments to tell him that he's totally (or partially) wrong.

    Thank's guys !
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  • Aug 9, 2016
    MikingCO
    I'm a Tesla owner and investor. I don't think they're going bankrupt.

    The good news is that if they do go bankrupt the company won't simply evaporate. They've built too much of a brand. Someone will acquire them. That means that service, support, development etc will likely continue on even if Musk goes bust.

    The risk here is really really low. The American ICE manufacturers were MUCH closer to going bankrupt in 2008/2009 than Tesla is today and people still bought their cars.
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  • Aug 9, 2016
    mspisars
    Tesla has been "going bankrupt" for more then 10 years... that didn't stop over 500,000 from ordering from them (including the Model 3 reservations)!
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  • Aug 9, 2016
    Electric Dream
    Tell him I told you to tell him to mind his own business.
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  • Aug 9, 2016
    Swissmoneychf
    That's the type of answers I'm looking for, thanks :)
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  • Aug 9, 2016
    ABCCBA
    @Swissmoneychf There is a difference between filing for bankruptcy and going out of business. Tesla Motors will never go out of business in our lifetimes. However, their debt will be so staggering after the Model 3 goes into production that it is possible that they will need to restructure their debt through a bankruptcy filing.

    Operationally, nothing will change. Cars will be sold, Owners will still get serviced, superchargers will still work, etc. Stockholders and debtholders will get screwed.

    There are many examples of this: General Motors, Delta Airlines, etc. All are much better off once they shed the existing shareholders and debt.


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  • Aug 9, 2016
    stevem
    I'm not an investment banker or great at reading financial reports.

    When people say "Look how much money they are losing. They lose $20K on every car", I usually counter with "but look how much money they are investing". Which usually from the negative crowd "You just don't understand finance, it doesn't work like that".

    But what makes sense to me (and I'm not a mind reader or know the inner workings of Tesla) is "Elon and his team look at all the financials of the company (probably daily). They see what they have coming in and have long range forecasts. His goal is not to make cars for 2 or 3 years and then close the company. So they see all this and they are investing hard. We may think we know the finances, and we read the financial reports or hear about banks and think we know what's going to happen to the company. But we don't know as much as Elon. And all I know is that I would NOT bet against Elon Musk."
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  • Aug 9, 2016
    Gentilly7
    Your associate is a stock guy so none of this makes since to him, from a stock perspective. Let's say worst case scenario Tesla files for bankruptcy because they no longer have enough cash to stay afloat. Highly unlikely but hey, it is possible. Well given the amount of enthusiasm and loyal cult following around Tesla, any and every investor would be lining up to acquire or pitch some sort of financial backing deal. Buffet would be first in line. Apple may not have interest in buying Tesla now but a financially weak Tesla with all of the technology included would be too tempting to resist. Apple has way more money than they have innovation these days lol. So Tesla will never go away, even if they did run out of money.

    Sure they are not really turning a profit yet but that is usually the case with highly innovative start ups. They are paying the cost to be Boss now. The key is that they are not just producing the same kind of cars you can get from the more profitable auto makers. Their products are truly in a league of their own right now.
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  • Aug 9, 2016
    Krugerrand
    Why? Because it supports your current position of wanting a Model S and the proximity to you following through on that want?

    Facts:

    People (all sorts) who have various levels of Tesla knowledge/intel have been predicting bankruptcy for years. To date they've all been wrong.
    Tesla has been on the brink of bankruptcy twice that the public knows about (end 2008, beginning 2013). That information wasn't known by the public until after the fact, when Tesla was more financially stable.
    Car manufacturing is capital intensive and no new car manufacturer has succeeded for several decades.
    Tesla is positioning itself to become a $1 trillion valued company - can we say extraordinarily capital intensive?
    Elon Musk is intelligent, pragmatic, ballsy, hubristic at times, determined, and has surrounded himself with like-minded individuals who have a clear focus for the future of mankind on this planet.
    The car, what it represents, and how it transforms the driving experience, is on a whole other level of phenomenal. That's got to be worth the risk right there, no?
    People who know nothing about something but talk as though they have a clue, at best, makes themselves look incredibly foolish.
    Many of us weren't happy with the banks in 2008, and still aren't happy with the banks today. They make mistakes too (sometimes on purpose) and aren't some untouchable entity.
    Your associate is missing out on an incredible experience and poisoning the air you breathe. Be sure to rub that in his face. Every. Single. Day.
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  • Aug 9, 2016
    Austin Powers
    No. Tesla, is 'too big to fail' by now :D
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  • Aug 9, 2016
    Swissmoneychf
    Ehm, no. Because it's argued :)

    Worth the risk, I guess. In my case it's a 120k car, would be stupid to pay that money for something that you don't even know if the service centers will still be open in 2 years, but now with the explanations I feel much more comfortable with the idea of owning a Tesla. He knows better than me, that's why I was looking for some real explanations from people who are into these things so next time I can explain him too.

    Thank's.

    (sorry for not answering every post individually, thank you guys for your helpful comments)
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  • Aug 9, 2016
    mikeash
    Companies in trouble don't typically have a product reservation backlog that's 3x larger than the total the company has delivered over its entire ten year life.
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  • Aug 9, 2016
    reuted
    In response to the 400k orders Tesla is seeking to accelerate growth to be able to satisfy the unexpected high level of orders. Tesla does this by spending / investing faster. What Tesla is doing right now is really hard to scale up at their speed. Yes it is likely to create a cash crunch. By the same token it will be really hard to replicate. Note Tesla is able to sell cars at more then double the margin of just about everybody else.

    Last not least: Our swiss relatives are not a big fan of us driving an elon mobile. Mostly they argue that the power generation creates more pollution than an efficient ICE.

    Just go for it. The car is just great great fun to drive. I used to bike through the alps. Follow the lead of solarimpulse and feel good about it, enjoy the superb handling with no noise in spite of a few people who may take some time to "approve"?
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  • Aug 9, 2016
    Swissmoneychf
    Indeed, but what will happen if they delay the delivery ? And regarding to the comments I've seen, it's gonna happen. That's one of the points we were discussing with my associate. He says that if the deliver is delayed again (many customer were unhappy with the Roadster already), the stocks are going to loose value etc. But well, wait and see.
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  • Aug 9, 2016
    gene
    Swissmoneychf, you and your associate might watch this video just released yesterday. It will give you both confidence.

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  • Aug 9, 2016
    supratachophobia
    Another investor / multiple Tesla owner. I do not believe they are going bankrupt, especially after touring the Fremont factory and Reno Gigafactory. Now, they might stop producing cars in 10 years and just make energy generation/storage products. But that's far from bankruptcy.
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  • Aug 9, 2016
    Johann Koeber
    Well, yes delivery of the M3 might be delayed.

    But the roadster is a good example: the car is so good that people have put up with the delay and were very happy they did.

    Tesla has the most dedicated customers in the industry. The cars are just SO good.

    Go for it and do not worry. We are there beside you.
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  • Aug 9, 2016
    WannabeOwner
    If I was nervous I would have leased. But I wasn't, so I paid cash :)
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  • Aug 9, 2016
    Waiting4M3
    Delays will impact the stock price temporarily but it has nothing to do with the long term health of the company. If any large traditional car company is competing seriously with Tesla then the delay would worry me more, but as is, all those guys are shooting after targets 5 years behind Tesla. Just look at how BMW's "why wait for Tesla" advertisement failed. Short term stock price fluctuation is not your problem if you just want to buy the car. Let the banks and option traders play their Russian roulette every day, grab a drink, enjoy the carnage.
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  • Aug 9, 2016
    sandpiper
    I agree. Personally, I think there's a 50/50 chance that Tesla is an independent company in 5 years, but it really doesn't matter. The worst case scenario, I think, is as follows:

    1. Tesla can't get the cash to complete the Model 3, Gigafactory etc... Elon and group would realize this long before it becomes public.
    2. Elon and group start quietly fishing around for some deep pockets.
    3. Some public rumblings come out and the stock starts to tank.
    4. At some point the stock becomes attractive enough that somebody - Apple / Google / Mercedes / Chinese buyer decides to buy them out. Existing shareholders might take a bit of a bath.
    5. Tesla brand, service, support and Superchargers continue, perhaps even with Elon in a somewhat chastened role.

    The company/brand/technology is too big and valuable for it to completely die now. Nothing is more valuable than an enthusiastic mob of fans that are willing to reach deep into their pockets to pay a premium to buy your product.
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  • Aug 9, 2016
    robertvg
    They have 400.000 pre-orders. What bank would not want to invest in that ?
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  • Aug 9, 2016
    ecarfan
    I think you answered your own question.
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  • Aug 9, 2016
    rscott0
    If they file for Chapter 11 bankruptcy, that just means that they can restructure their debt, and the company can continue running (if the court and/or creditors OK it). Most likely, the company continues running. Worst case, the assets get sold. Perhaps another car company buys all the assets, in which case they will make sure cars can be repaired/serviced. Absolute worst case, the assets get sold, and there are no service/repair centers, in which case a market will open up for it.
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  • Aug 9, 2016
    techmaven
    Roadster is ancient history.

    One of the issues is to define late. Tesla is expecting to sell a lot of Model 3's in 2017. If they are a bit late, they sell a lot of Model 3's in 2017. If they are very late, they sell a lot of Model 3's in 2018.

    Now, some people that are not in the position to know the facts on the ground have surmised any number of delays going to 2020.

    If Tesla doesn't sell the Model 3 in vast quantities in 2017 and 2018, then they have a lot of battery storage to sell at potentially higher profit.
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  • Aug 9, 2016
    stopcrazypp
    Even if Tesla goes bankrupt, the brand and technology has so much value and the cars have so much demand, it would be easy to find a buyer to pick it up.

    This is unlike Fisker and Aptera which only had niche demand and little brand value.
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  • Aug 9, 2016
    Superloud
    Tesla owner here. Love my car. Want tesla to succeed. Invested in TSLA at around $41...so please don't jump down my throat here :)

    Just a couple days ago I saw an info graphic in the latest car and driver that IIRC said that tesla would have a mere 0.2% market share in 2017.

    To play the devil's advocate. I'd be interested to hear opinions on why a company with only 0.2% market share is too big to fail?

    Or, perhaps said another way, tesla's market cap right now is about 34B. I certainly agree that it's just a matter of price, that someone (i.e. Apple) would buy out tesla before it went to zero. But, if it really comes to that, and current owners only account for such a small % of the market, I'm not so convinced that The new owner is going to keep all service centers running etc.

    For the record, I don't think tesla is going to die. I just don't know if tesla has reached too big to fail status yet. And I don't think too loved to fail is a thing...
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  • Aug 9, 2016
    Chopr147
    Stock-market people seem to be baffled by tesla. The stock looks terrible, they spend like a drunken sailor and yet they have a cult following of people eager to invest. How can this be? Some investers see the future potential but it does not appear to be many and I have to agree. Too many things need to go right for Tesla to become the big shaker in town, and yet I believe in them. Go figure :)
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  • Aug 9, 2016
    dss33
    Not sure if you've refuted the relatives yet (sticky, I know) but there are so many ways this is incorrect. Fundamentally, from an efficiency standpoint, lots of little things burning fuel (ICE cars) are going to be far more inefficient than one big thing (power plant) burning fuel to produce electricity. Additionally, there are tons of alternative sources of energy that contribute to the grid, so it's very likely, that most people aren't getting all or even most of their power from coal/natural gas/petroleum when it comes to electricity. For me personally, the solar on our roof powers everything in our home AND charges the car...so there's that. And I know I'm not alone.
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  • Aug 9, 2016
    Cal1
    Thank you so much for taking the time to make this recording and posting. I'm very sorry no one acknowledged this (that I can see) GREAT interview, very down to earth and insightful. Exactly what most serious investors would like to hear. Andrea, I used to work for Janus MF's and had more than a few internal breifings with fund managers/analysts. The best were exactly like you. Very down to earth and normal.

    Again thanks for taking the time!
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  • Aug 9, 2016
    gavine
    In Musk we Trust
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  • Aug 9, 2016
    Eclectic
    When we were considering buying our first Tesla (way back when they were very rarely seen cars, even in the Bay Area) I had a concern about spending over $100,000 on a car from a company that basically had no real track record of mass market vehicle production. I still bought the car, figuring that the worst that happens is I lose the $100k and am stuck with the auto-equivalent of an 8-track. Today, I think that the odds of Tesla disappearing are far lower.

    Look, you could buy a Mercedes and have it turn out to be a horribly unreliable car. Unless you have lemon law protection, you're stuck with it. So if you want a Tesla, buy one.

    Whether Tesla SHOULD go bankrupt at some point in the short to mid term is another question entirely...
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  • Aug 9, 2016
    gimmi80
    It's funny because less then 2 minutes before reading this thread I saw a Fisker Karma driving just in front of me.
    Beautiful blue color like the one in this picture.
    The driver did not look worried at all.
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  • Aug 9, 2016
    ElectricLove
    When you are talking billions of dollars 400,000 on pre-order doesn't really make it a "sure thing", its very risky, they haven't demonstrated an ability to turn profit by selling and servicing cars... So maybe they can sell another 1M cars and spend more to manufacture those 1M than they can recoup selling them... What bank would want to invest in that?

    Now, I'm a tesla-nut and know they'll be around regardless, just suggesting that a bank may not be as quick to invest in them as we tesla-fans would be... I don't have billions of dollars in my pocket or I'd be right there with TESLA doing exactly what they are doing with them!!! The banks have that money and haven't demonstrated that they are willing to do that on some of the highly speculative ventures coming out of TESLA-land...
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  • Aug 9, 2016
    ecarfan
    Is this the same person who you said "knows nothing about Tesla"? It sounds like the same person because he is acting as if the Roadster is Teslas current mass production vehicle and there are a lot of unhappy customers. Which is untrue.

    I suggest you do some basic research yourself about Tesla, and after a brief period of time you are likely to know much more than the person you keep referring to.

    Tesla is growing at an extraordinary rate, in vehicle production output, in showrooms and Service Centers, in Supercharger locations, and now in establishing Tesla Energy and building the Gigafactory. The idea that Tesla is going to go bankrupt is laughable. The company builds cars to order on a mass scale: people first put down a deposit, then they wait several weeks, then they get their car. No other manufacturer in the world has achieved that on the scale Tesla has. And now the company has hundreds of thousands of reservation deposits for a car that none of those people have driven or even seen in person, and only a tiny fraction of them have actually sat in the car! That has never happened in the entire history of the automobile industry.

    I hope you can appreciate how remarkable the Tesla story is up to this point.
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  • Aug 9, 2016
    electracity
    Tesla could go bankrupt, especially in a severe economic downturn. But the brand and the company is very valuable and would continue probably as part of a bigger company, like google. Lease can be a good option for the risk averse, especially with high tech.
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  • Aug 9, 2016
    SeminoleFSU
    Where does he go to get it fixed or serviced? That's when the worry comes...
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  • Aug 9, 2016
    EinSV
    @Cal1 -- there is a separate thread on the Andrea James interview in case you are interested: Andrea James interview 8/8/16

    For those who are concerned that Tesla might not be around in a few years, or those just interested in learning more about Tesla, I HIGHLY recommend this interview. Andrea has been studying Tesla deeply for the past six years and understands Tesla's business and prospects as well as anyone. She is also a very engaging and lively speaker.

    Personally, I would be much more concerned with legacy automakers saddled with massive investments in outdated ICE technology going bankrupt than Tesla.
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  • Aug 9, 2016
    TaoJones
    Please have your associate short TSLA with all of his available funds.

    Meanwhile, as one who is long TSLA and also as one who expects to own 4 or 5 of these cars before they take my license away (after which it looks like ridesharing in Teslas instead), I'd say...

    Welcome to the party - you will probably not regret your decision to drive one of the best cars ever made. The driving experience itself, especially over great distances, is unparalleled.
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  • Aug 9, 2016
    jerry33
    The naysayers have been saying that for more years than Shiansa has stood on the plains. I don't worry about it.
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  • Aug 9, 2016
    buckerine
    They build great product and have such a following by now that even if they did go bankrupt, they'd likely get bailed out by a competitor. This is not a commodity product. They have such a wealth of expertise in battery and electric car development. Just buy it if you like it.
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  • Aug 9, 2016
    Ciaopec
    If Tesla goes out of business, I'll buy your car so I have something to drive in Europe. All you will need to do is garage it and keep it charged for me! o_O
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  • Aug 9, 2016
    gavine
    And all of this with zero advertising.
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  • Aug 9, 2016
    Drivin
    You need to think of this differently.

    You can either listen to your co-worker, who doesn't seem that familiar with Tesla, random internet people on a car club site - or the obvious shorts who post negative things about Tesla's prospects in this thread, or you can listen to Elon Musk, a multibillionaire who Stanley modeled Tony Stark off of (from Iron Man).

    Musk believes that Tesla can be a Trillion dollar company (google it, it is true!) which is about 50x bigger than today.

    Rather than thinking about a car then, take the 100k and buy Tesla stock. It will eventually be worth $5,000,000 if Musk is right! Sell stock, pay taxes, then buy yourself and your family and friends each a car!

    Sound difficult? Not really.

    If you bought Tesla stock when the S was first available, you would have around 9x your money today.
    If you bought Apple stock instead of buying the first iPod, you would have 100x more money today (for each iPod you didn't buy).

    Think differently
    Think long term.
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  • Aug 9, 2016
    PtG62901
    Tesla will do great, unless they can't get enough lithium to fulfill their battery needs. If that happens, it could be rough. OTOH, if Tesla succeeds, which I think it will, they are going to take market share from existing auto manufacturers and it is likely some of them go bankrupt. The world is changing.
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  • Aug 9, 2016
    Caboom
    Ditto!!
    I have stock in the co. and i also sold puts at 100 way out at 2017 for exact reasons above. If the stock tanks because company cant raise cash on it's own the company is going to be acquired without a doubt. I have been trading in and out of Tesla and been selling puts since 2013 and have never had any option calls. The reason i sell is i would love to buy Tesla at 100 or below because it would be so attractive a buy for an established co (mentioned above) that the stock would rebound. So rest assured your car will always be taken care of. Even if Tesla for some crazy reason went away...there are enough vehicles for a secondary market in terms of parts and repair to exist. Right now the monopoly is on Tesla side and they also leverage the political climate where they are liberally supported by the US Govt who is fully bought into the green economy.
    Buy and enjoy!
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  • Aug 9, 2016
    Skipdd
    Remember Amazon. Stock watchers scratched their heads as Amazon lost money year after year. Instead of taking profit they made large investments back into the business. Suddenly, that thing called Cloud is hugely profitable, turning the whole company profitable, and Amazon is the market leader. And their online business dwarfs everyone else. Walmart is now buying Jet in a new bid to stay competitive. Tesla like Amazon is a market disruptor. I'm betting on them to win.
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  • Aug 9, 2016
    NikeWings
    I find it odd that you are rattled and scared by someone whose expertise you do not respect. Why isn't your colleague defending his position instead of you defending yours, and why do you feel the need to convince him otherwise (totally or partially)? There are endless stories of people with various motives saying the sky is falling......Herbalife is a $1B example. Do your own diligence, make a decision and move on. And if you are truly serious about a TSLA financial analysis, then here are a few pieces to begin your effort.
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  • Aug 9, 2016
    NeverFollow
    Tesla has so much a vision and took so much lead from any other car companies,
    in particular some famous 100+ years old car companies.

    Only a big recession and a crash of the stock market could affect it.
    And if so, well Apple could then took over it, but Tesla would not die.
    I would not say the same of any of the three American car companies.

    The Model S is already the most car popular EV in US, sold twice as much as the Leaf which is three time cheaper.

    The Model S also dominate the sale of the luxury market taking all the sales from other ICE luxury car companies.

    For the very long term, there will be more competitions coming from other car companies,
    but with a US market of 17 million of cars, and other markets in the world, there is still way for growing.

    The only worry is the kind of saturation of the number of car owners able to plug their car at home.
    Solution for charging car car parked at night in the street need to be promoted, using wireless technology for example.
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  • Aug 10, 2016
    wdolson
    I've only skimmed the thread, so excuse me if someone already said this. There is a difference between a company strategically running in the red and a company on the ropes. If Tesla runs in the red by choice. If they cut back on R&D and capital expenditures the company would be immediately profitable. They make a per car profit that is much larger than just about any company in the industry. They just have a massive R&D and capital expansion budget compared to their revenue.

    I wrote my analysis on the ways start ups go bankrupt and how Tesla doesn't really fit any of the scenarios:
    Why I Think Tesla is Unlikely to Fail

    The only scenarios where Tesla goes bankrupt at this point is if the world economy craters again or if they make some massive blunder with the Model 3. After the M3 reveal I'm even more confident the latter won't happen. There is really no other scenario where Tesla goes out of business.

    If Tesla was to go out of business, somebody would probably buy the assets and milk them for all they were worth. Tesla averages over $20K profit per car built. That's a handy return for someone who just wants to build and support them with no R&D or capital expansion until the public tires of them and quits buying them.

    Look at what happened to DeLorean which built far fewer cars than Tesla, but had a similar cache about them (less deserved IMO). There have been independent companies making parts to keep them running and a company in Texas bought the name and sort of resurrected the car. They are going to build some new DeLoreans in the next few years. That company has also been the biggest source of parts for keeping the remaining cars running.

    There are too many Teslas out there now for them to become abandoned completely. Somebody will step forward to support them.

    In any case, I expect Tesla to be around for a long time to come. If the M3 is the hit I think it might be, Tesla could end up being the biggest car company in the world in 20-30 years and some of the biggest names on the road today will be gone, swept away by the largest industrial disruption in history.
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  • Aug 10, 2016
    WannabeOwner
    Personally I don't care if my car is powered entirely by the dirtiest electricity (Coal?) provided that, over time, my electricity supply becomes more green. Its Chicken & Egg - need more green electricity, also need to fix the vehicle fleet to make it more green, both can proceed at the same time IMHO. I have PV on my roof, so I'm probably carbon-neutral ... but I ain't using my own electricity, per se.

    We replaced all our fire-breathing gas-guzzling sports cars with 3x VW BlueMotion Eco cars, a deliberate act to be more green. Look where that got me: shafted. Plus VW has no intention of helping me out [i.e. any European customer] (other than upgrading the firmware in the cars) so I am stuck with Finance I can't get out of early [without penalty cost] and possible diminished value.

    Big, established, too-big-to-fail companies make bad decisions and tank too ...
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  • Aug 10, 2016
    jerry33
    1. Lithium is a very common element. A few years ago when the Model S first started someone indicated that it would take 11 million cars per year to put a dent in the potential supply.

    2. Lithium in batteries is 100% recyclable. The Gigafactory was designed with recycling facilities. Lithium supply won't be a problem.
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  • Aug 10, 2016
    wdolson
    3. Lithium-ion batteries have very little lithium in them. An entire 90 KWh battery pack has less than 5 Kg (11 lb) of lithium in it. The entire pack is over 1300 lb, about 700 lbs of which is the batteries alone. It's less than 2%.

    Tesla uses a lithium, nickel, cobalt, aluminum oxide cell. The newer cells have a small amount of silicon. 9% is cobalt, less than 2% lithium, and the anode is graphite (carbon). Cobalt is hard to come by in the US, it's one of the few minerals that isn't found in abundance here. Canada has better reserves than the US, but Cuba has the best reserves in the western hemisphere, though Australia and the Congo have the best reserves in the world.

    For the foreseeable future, the world cobalt production is more critical for making batteries than lithium supplies. New chemistries may change that, but that's the bottleneck today.
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  • Aug 10, 2016
    jbcarioca
    This thread does not really need more, but there are a couple important issues to add.

    European 2020 emission standards and US 2025 fuel economy standards will demand alternatives that are vastly more efficient and cleaner. That is forcing the massive investments by most major motor vehicle manufacturers.

    Tesla and BYD have the only currently scalable BEV capacity worldwide. That excludes Nissan, which will be there imminently. Every other automaker is in serious need of new capacity, new designs and attractive options.

    If Tesla encountered problems either Daimler Benz or Toyota would probably rush to buy them before bankruptcy. Both have had Tesla supplied technology (MB B class EV, Toyota RAV4 EV) both once owned 10% of Tesla. There would probably be a bidding war with many major automakers plus Google involved. In any event we owners will be well protected.

    Wdolson above points out we probably would not suffer even if Tesla went out of business, which is by far the least probable outcome.

    Finally, dealing with securities is an entirely different question. There rumor and emotion create turbulence. TSLA is a volatile stock, but Tesla has enormous capacity to raise money. It could, if pressed, even adopt the conventional dealer distribution model which would instantly allow it to record sales on shipment rather than end buyer delivery. It could sell and lease back Superchargers, Service Centers and Stores, or sell those to third parties too.

    Many alternatives would exist far before bankruptcy or even near-bankruptcy. Now that existing production has passed the critical 50,000 per year (Porsche, Jaguar, Land Rover were all there not long ago and transformed themselves with no small drama, but owners were not affected). Just to be honest Inwill not discuss Saab, but support is not difficult even for them. Tesla has a much more compelling position than did any of those.
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  • Aug 10, 2016
    ItsNotAboutTheMoney
    Unlike some others here, I actually think there's a greater than 50% chance that Tesla will fail, but that doesn't mean that it will be liquidated, and that its parts can no longer be manufactured. It also doesn't mean that the vehicle will have a severe failure early enough in its life that that it inconveniences you.

    I don't own a Model S or X. I have a Model 3 reservation and intend to buy a low-end Model 3 (if Tesla makes it for the original price, or I can buy a slightly better spec with a tax credit.)
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  • Aug 10, 2016
    RobStark
    Because it is the largest manufacturing employer in California.

    Besides Google, which made Musk an offer to buy Tesla in 2013, California's Governor would likely not let Tesla fail.
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  • Aug 10, 2016
    wdolson
    I'm not sure if Tesla is the largest manufacturing employer, but they are the among the highest profile manufacturers in California. The Los Angeles area has the highest density of manufacturing jobs in the US.

    One reason Elon Musk put SpaceX where he did was because of the aerospace talent in the Los Angeles area. At one time the Long Beach, El Sugundo, Inglewood area had Northrop, Douglas, and North American aircraft factories. Burbank had Lockheed. Hughes Aircraft was also in the area, though not a major manufacturer. Right after Pearl Harbor the War Department looked at where all the aircraft were built and had heartburn that over 75% of US aircraft building capability was within range of carrier aircraft off the Pacific Coast (between the concentration in Los Angeles plus Consolidated in San Diego and Boeing in Seattle).

    But I'm picking nits. I do agree with you that the state government would step in to prop up Tesla if nobody else did. The company is way too important to allow to fail.
    �
  • Aug 10, 2016
    RobStark
    I tried googling the data, I could not find the article I read several months ago but Tesla is now the largest manufacturing Employer in the State of California.

    Boeing was for a time but they have moved lots of jobs out of state.
    �
  • Aug 10, 2016
    smsprague
    I was never worried. But if the purchase of Solar City goes through, I would be concerned.
    �
  • Aug 10, 2016
    jerry33
    The thing about Solar City is that they purchased a factory in New York (IIRC) not that long ago, but they haven't started producing the next-gen panels in it (or at least I haven't heard about if they had--I don't follow Solar City all that closely). I wish it had a different name though. Now we have three SC acronyms associated with Tesla.
    �
  • Aug 10, 2016
    John Stuckey
    Myself, like many in the wings who have not pre-ordered a 3 will be glad to buy a 3 that someone ordered in 2016.
    �
  • Aug 10, 2016
    PtG62901
    You sound so authoritative, it is a shame you are wrong. Please, do the research before you post. Is There Enough Lithium to Maintain the Growth of the Lithium-Ion Battery Market?
    �
  • Aug 10, 2016
    Akikiki
    Tell your associate to bite your onion. We don't care what he thinks.
    �
  • Aug 10, 2016
    xav-
    50x bigger does not mean the stock will go up 50 times. Tesla is not apple. It's an automaker. it has much bigger capital needs. It can't just produce a million products overnight. How do you think Tesla is going to pay for that model 3? Think the cash flows from the mode s will be enough? Its gonna print, print and print more.
    �
  • Aug 10, 2016
    alseTrick
  • Aug 10, 2016
    wdolson
    I tried to find something too. Boeing inherited the plant from McDonnell Douglas in the merger. When the MD-80/90 production ended they closed down the plant and sold the property.

    Tesla could be the largest manufacturing employer in the state at this point. I looked for information on who was the biggest, but couldn't find anything definitive.

    There is some overlap of acronyms around here. I find it confusing sometimes. Not only are there two meanings and soon to be three for SC, FWD can mean Front Wheel Drive or Falcon Wing Doors.
    �
  • Aug 10, 2016
    wdolson
    The article sites out of date numbers for the world reserves. The USGS number is about 13 million tons (metric) of lithium, but that was 2009 (that number jives with the 365 X 37000 tons in the article). Much more has been found since, Wyoming is estimated to have 18 million tons alone. Current estimates of world reserves is around 39 million tons.
    Lithium - Wikipedia, the free encyclopedia

    Lithium is extremely common in the universe and we have just begun to prospect for mine-able deposits. At one time John D Rockefeller said that he would personally drink any oil found west of the Mississippi. This was a year or two before Spindletop (the first big find in Texas).

    We also don't know for sure that EV batteries in the distant future will use lithium. It's possible lithium will continue to be used for hundreds of years or it could be an obsolete chemistry in 50 years. Add to that in the next century we will be able to mine the asteroids for minerals. Elon is targeting getting humans to Mars in his lifetime, but once we have the tech to get people to Mars and back, we will have the tech to get mining ships to the asteroid belt too. The asteroids are further out, but you don't have to contend with a gravity well when you get there.
    �
  • Aug 11, 2016
    Matias


    You know, company goes to bankrupt when it can't pay its bills. I don't think it is completely impossible for Tesla to run in that situation.


    I could theorize the following event; all the cash goes to Gigafactory and Model 3 ramp up. At the same time there is some critical design flaw which forces Tesla to recall and stop deliveries and at the same time global sentiment on market goes negative and Tesla can�t get new capital.


    I�m not saying it is likely. I�m saying it is not impossible.
    �
  • Aug 11, 2016
    PtG62901
    Unfortunately, the problem is getting the pure enough amount Tesla needs, to the factory, at the right price, without breaking environmental laws. We will see if they can do it, looks about 50/50. Please explain the market pricing fluxuation in the price of Lithium for us. What is the price today per ton, vs the price a year ago? See any problems there?
    �
  • Aug 11, 2016
    lolachampcar
    Funny.
    �
  • Aug 11, 2016
    Odebek
    That article says that there is enough lithium to support 100x current demand for 17 years. That is more than enough time to replace the entire global fleet of automobiles. From that point forward, the battery packs are 100% recyclable, and we will need fewer cars globally due to partial ownership/autonomous/ride sharing... That is all without active mining for new Lithium deposits... I don't think Lithium will be the issue.
    �
  • Aug 11, 2016
    wdolson
    I can't find the video of Elon and JB answering a question about the rising cost of lithium, but I did find this article about it:
    Elon Musk: Our lithium ion batteries should be called Nickel-Graphite�

    I recall in the video Elon was asked how the rising price of lithium would impact Tesla's costs. He said it was minimal because less than 2% of the battery is lithium. JB Straubel chimed in saying that li-ion batteries should be called nickel-graphite or something similar. Elon called lithium the salt on the salad. JB also commented after that they are much more concerned about the cost and supply of cobalt.

    That's what I remember seeing anyway. The article is close to what I remember.

    Every ICE car made today in every developed country has platinum in its catalytic converter and that has been the case in the United States for 40 years. Most of the rest of the world has adopted them since. Whereas lithium is very common, platinum is one of the rarest naturally occurring elements and it is very difficult to process from ore. It's very expensive, currently almost $38K USD a kilo. Only 3-7 grams are required to make a catalytic converter, but just the platinum in one can cost over $200 USD.

    There are around 100 million cars and light trucks built a year. If every one had 5g of platinum in the catalytic converter, that's 500 metric tons of platinum a year required by the auto industry. Worldwide production (as of 2012) was 179 tons a year according to Wikipedia. The car industry manages to make that many catalytic converters a year because of platinum recycling. New production can't keep up with demand.

    Lithium is 4000 times more common in the Earth's crust than platinum. You need about 4 Kg of lithium to make a battery pack the size of a Model S/X 90 KWh. That is about 800 times more platinum than needed to make a catalytic converter for an ICE, but it's a material that is much more abundant and much easier to process into it's final form than platinum is.

    We have enough lithium to keep us going for now. We don't know what the next big battery chemistry will be. In 40-50 years we may turning up our noses at puny li-ion batteries in favor of a much better technology.
    �
  • Aug 11, 2016
    rscott0
    Wikipedia shows that Tesla had some 13,000 employees in 2015 (not sure what % are CA).

    From America's Career InfoNet: Largest Employers there are a lot of companies with more employees, but for manufacturing, Tesla could be the highest. I'm not sure how timely that list is.
    �
  • Aug 11, 2016
    roblab
    It always interests me to see how many people think that Tesla people may not have thought of something, or are planning to do something illegal and they must be watched. They might go bankrupt! After all they have done and are doing, and doing right, doing quickly, doing better than any hundred year old company with no guts or motivation, weeelll, its just humorous. I'm sure anyone sitting at a computer for a half an hour can see that they will fail within the next 6 months.
    �
  • Aug 11, 2016
    Akikiki
    roblab, + 1,000%
    �
  • Aug 11, 2016
    wdolson
    That doesn't make the distinction between manufacturing workers and people doing everything else. They have a design studio in So Cal with no manufacturing people at all, sales and service staff on every populated continent, and an engineering and administrative workforce in Palo Alto, CA. They may have as many as 2-3000 people at the factory, but I would be surprised if their production workforce was the majority of employees.

    Tesla is white collar heavy compared to other car companies. Not only are the sales and service people all Tesla employees and in other car companies those people work for the franchise owners, but they also spend more on R&D proportionally than any other car company and that means their ratio of R&D people to manufacturing people is higher.

    That will change with time as their production expands and their fleet matures. A large car company is only putting a major R&D effort into 10-20% of their fleet at any time (as well as working on tweaks to the rest of the fleet). Tesla is currently working on doubling their platforms in production and they will be demonstrating prototypes of several other vehicles in the next year. Not only that, but they are running and expanding a chain of "gas stations" as well as branching into the stationary storage business.
    �
  • Aug 11, 2016
    Chopr147
    All very good points and hard to fathom. Superchargers worldwide! as well as sales staff worldwide! It is a huge operation considering they have only sold what, 120,000 cars
    �
  • Aug 11, 2016
    wdolson
    They are well over that. The VIN numbers for Model Ss being assigned today are over 150,000 and the X is up above 12,000. So the actual number built is a little over 50% more than your estimate.

    One reason the S and X cost what they do is they need to employ more people per car sold than other car makers. The M3 changes that equation somewhat. If Tesla meets their scaling schedule, they will go from production numbers 5% of Subaru's to more than Subraur's world sales volume in 4 years. Subaru is the smallest of the major auto makers in the US with worldwide volume just under 1 million cars a year.
    �
  • Aug 12, 2016
    Chopr147
    Your right I am way off. My S on order VIN is over 150k Duh! I was thinking US sales but even then I am still way off. :) I believe that is more like 80k area.
    �
  • Aug 12, 2016
    wdolson
    I think most of the Xs sold thus far have been sold in the US, but inside EVs has 76,431 Ss sold in the US as of the end of July. It's interesting the overall S sales appears to be right at 50% of those built. It's been that way since I started tracking it about a year ago. They are probably selling a little more than 1/2 overseas right now because almost all of the first two years' production was sold in the US.
    �
  • Aug 12, 2016
    S'toon
  • Aug 18, 2016
    Swissmoneychf
    Thank you guys for the advices.

    Here we go:

    [?IMG]

    I don't know when it's gonna be delivered, I chose the grey next gen seats and it says mid-2017, wait & see.
    �
  • Aug 18, 2016
    AmpedRealtor
    I see little risk. As others have said, if Tesla runs into major trouble it will most likely be acquired by Google or Apple. I don't see a Chinese company buying Tesla, but if they do, I'll be selling mine faster than preacher's wife can eat her pancake breakfast.
    �
  • Aug 18, 2016
    BaileyDog12
    I want someone to make the argument that we should think of Tesla like a bank. Too big to fail under the right administration. All jokes aside, I think MikingCO is correct. Buying a Tesla car is low risk in terms of buying a car for the reasons mentioned. Bankruptcy in the United States is badly misunderstood. Tesla would be bought out via an M&A before bankruptcy ever happened. Even if it did, you're looking at a chapter 11 with buyers clamoring to buy Tesla or viable parts of it or Tesla would just keep operating while deferring creditor payments for a while to turn the corner.

    The car purchase and stock purchase are not one and the same.

    I think if Tesla did file for chapter 11 if access to cash runs out, current investors would get slaughtered but Tesla would operate in bankruptcy for quite a while and not have to worry about making any payments to specific creditors so it could continue to operate and turn the corner to profitability. I have a feeling Tesla would get there, re-emerge from bankruptcy and the company would emerge very strong with a new class of investors ready to reap the benefits of investing in the reorganized company. People and institutions holding the stock now could get battered or completely wiped out though while Telsa rises to new heights post bankruptcy.

    EDIT: someone above already beat me too the "too big to fail argument!"
    �
  • Aug 31, 2016
    Ramisanders
    Like a boss
    �
  • Aug 31, 2016
    Ramisanders
    Thanks for starting this post. I had share with one of my clients yesterday how excited I was for getting the model X and he rain on my parade by giving me a financial report.

    I did get worried and started doing my own research and I did see that he was right about the numbers.

    So I'm glad I found this thread and thank you everyone for sharing. I agree with all of you guys and now i to feel confident in signing the dotted line.
    �
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