Per Elon:

"The demand for -- it's important to appreciate that the demand for Model 3 is insanely high. The inhibitor is affordability.

It's just like people literally don't have the money to buy the car. It's got nothing to do with desire. They just don't have enough money in their bank account. If the car can be made more affordable, the demand is extraordinary."

-- They can sell tons for $5000 imo

Musk gets sized up by a well-lived geriatric.

LA Times article: Musk talked to New York about transit tunnels from Manhattan to JFK.

Boring presented it as a subway using electric vehicles without a high voltage 3rd rail. New York engineers were concerned about ventilation, impact on existing tunnels, and emergency response.

Link: https://www.latimes.com/business/la-...214-story.html

Boring Company is another genius con to get substantial public money for long periods with no accountability. Guy is a talented money hustler and fraudster and politicians fall hook line and sinker for big-thinking stuff like that backed by celebrity and PR opportunities.

Musk has successfully ridden the gravy train to tens of billions dollars of taxpayer money. All of his companies require it to survive. Says it all really.

I wonder how much taxpayer money he's gotten between tesla, spacex, solar city, boring...

Possible Trade Idea

Setup: US Model 3 sales are in a confirmed collapse (MDR, their #1 market in the world is moving ~1 car a day in Feb). Stock is piling up, mild price cuts have no effect.

Tesla Move: Offer a Model 3 lease, self-financed. They cannot get a lease partner here as any candidate will be most concerned with possible residual values, Tesla has 3 strikes: 1 Ultra low build quality, no ability to service correctly, possible recall landmines, etc. 2 Limited history as company, no benchmark for future used demand. 3 Softening general auto market: Industry sales have slowed, lower quality loans (Tesla lessor converts would naturally be weaker) starting to get late, companies generally looking to de-risk.

Result: Tesla isn't bringing in cash anyway on cars that don't move. The lease deal doesn't help this but it does allow Elon a few points: He can continue the illusion of demand. Sets up a re-structuring due to 'short term liquidity concerns' as opposed to insurmountable structural/demand issues. These give him a chance to continue on with Tesla 2.0.

Timing: Lease deal would have to come out soon, nothing short of huge price cuts will move existing stock. Re-structuring would then come a quarter later or so. This would all need to be done quickly before the reality of the all time bear case (better competition) becomes hard sales figures. By late 2019/early 2020 the E-tron and EQC will kill X, S will face the Taycan as well as being a status joke (how can you lease a 90k car your neighbor first did 7 years ago?). Model 3 will not recover and the FIT differential will only makes things worse.

Trade: Wait for the lease deal to be announced, load into 20-30% OOTM puts expiring in 6 months.

The lease idea is interesting,... but doesn't get to the heart of the problem. Musk is going to have to seriously consider the single passenger market to truly increase demand. Cheaper to manufacture and larger addressable market. Single seater that only needs motorcycle insurance and doesn't require a drivers license for <$20k. He'll take deposits for $200 so the financiers line back up, and proceed to his twitter where the followers throw him a virtual parade.

You're smoking some pretty good stuff if you think Wall Street expects Musk to meet the 350k target on Model 3.

People are thinking more like 250/260... basically the current production levels of Nevada plant and then another ramp up early/mid 2020 from Shanghai (because nobody really thinks that plant will be ready this year with Musk saying late 2019.)

You can see Model 3 demand is still outstripping supply. A quick glance at used model 3 listings suggest used ones are sold at near new prices and supply is constrained relative to number of new model 3s sold last year. We know why US deliveries fell in January: Musk kept cars in US to book the sales for last quarter then started putting cars on a 1 month+ journey to Europe.

It's not proof Model 3 demand will remain strong enough to take the supply this year. But still, people are stretching when they say slow Jan deliveries prove demand has fallen off a cliff.

Model 3 demand in the usa is dead (at current prices).

That doesn't mean 0, but it's also not enough to support 200k+/year USA - feel free to assume another 40k euro and 10k china (even though actual pre-orders in those places are much lower) to get to your magical 250k.

If you don't believe the anecdotal evidence of thousands of 3s piled up at Tesla centers and offsite lots in the USA, go to the website yourself and choose any configuration/options. ALL are available for Feb delivery which means they are already built and just waiting for buyers.

The demand cliff is real - get ready for gimmicks to obscure it: more price drops, leases, blame it on weather, shady fleet sales, trade wars, logisitics, shift of focus to Y/semi/more efficient supercharging...going to be fun.

Why do you just make **** up? What's going on?

These are delivery dates as of three days ago:



For every single Model 3 variant available, including custom config, you can order it today and have it delivered in 1-2 weeks. This after only 6000 deliveries in January. And while 2/3 of production at least is supposed to be on ships to Europe.

On top of that, they just fired 2/3 of US delivery staff. Which requires 8 weeks of severance pay. Which means they don't expect demand to even meet the low levels in 2018 again.

Demand in the US is currently dead. This is proof. Whether it will pick up in spring remains to be seen, but Tesla themselves don't believe it will by their firings. And I don't blame them. Demand dying this quickly after 2+ years of hype and buildup is a really bad sign.

What the hell is going on here? Does any bull have any plausible explanation for why 2018 M3 sales as tracked by the industry standard tracking service are 30,000 less than claimed by Tesla/InsideEVs?



Registration data also backs up a massive discrepancy between claimed deliveries and registrations. A discrepancy which does NOT exist for Model S and X.

I generally ignore these kinds of things but I can't think of a valid reason for why this discrepancy might exist. Can any bulls?

Bought some puts. So from what I gather TESLA owes a huge debt payment in March. They plan to pay for it with cash and stock. However the stock right now isn't as high as it needs to be to make the payment??? If there is trouble I feel like the bubble is due to burst. Elon can't keep this going forever. I see a lot of bull posts on reddit that are eerily similiar to the type of posts during crypto last year. Not saying I want TESLA to fail or anything like that but I can understand the bear case from what I've been reading.

It is the bondholders option to take cash or stock, but the stock needs to be above $359 for it to be worthwhile to take stock. So they will want all cash - $920 million.

Now, according to the end of Q4 report they have plenty of cash to pay this. But looking a bit closer at the interest they received during Q4 on their cash balance, it shows that the cash _during_ the quarter was much less than the balance at the end (window dressing for the report).

So while I think they will make the payment it's going to hurt their liquidity badly and we'll see other rash measures: another round of layoffs, price reductions, more delayed refunds/registrations, more disputes about warranties/batteries, delaying referral rewards, service deteriorating, etc.

There will be nearly nothing left to invest in growth, R&D for new models, etc. This doesn't mean insta-bankruptcy as some bears hope, but as the growth story vanishes the stock price will have to more reflect the reality - nobody will pay 80x earnings for a no-growth car company.

I assume the cult is still intact enough for a pretty good run up when they successfully make their debt payment, which will be a good spot to get back in short?

No doubt. I expect a pump on the bond payment, a pump on the 35k M3 - "they did it! a 35k car!" (nevermind if it's profitable or not). A pump on fake europe numbers. A pump on the model Y reveal.

The stock is a minefield for shorts, especially those with short duration puts. But I'm short for the long game. As long as they don't raise billions via new equity or debt funding, eventually some of the cult will start to see the reality and the stock price will come down.

And then that gets you to the circular, borderline-conspiratorial reasoning of the shorts. "They would have raised money by now if they could, so they can't, and they won't. And if they don't ever raise more money they're dead. And they would have raised money by now if they could, because they know they'll die if they don't."

I'm not really concerned about "can't vs won't" on the fundraise. I'm probably more in the 'can't' side, but the outcome is the same. They need cash to invest in growth and aren't getting it for whatever reason.

Growth companies roll over debt, not pay a huge % of cash balance to pay it off. Growth companies don't have 2 (soon to be 3) rounds of layoffs in 6 months. Growth companies have increasing capex and r&d; tesla's has fallen off a cliff (probably to improve quarterly numbers, which is fine but not for long term growth).

Can't or won't is a distraction, it really doesn't matter.

Musk's raising money via Chinese banks and he will raise again at some point. It's not the first time Musk waits until he absolutely needed the money YESTERDAY before he raises.

hell he's probably doing it in part to troll the shorts

If he's trolling the shorts by delaying he's doing a terrible job. Tesla is down 1% YTD while the Nasdaq is up 12%. Even the cult is getting restless.

Also he mentioned on the Q4 call borrowing $500 mil from china banks to build the china factory, but that doesn't help the overall business - they need to raise 2-3 Billion or more to develop models Y, semi, roadster, build out superchargers, service centers, etc.

It's not circular, it's probabilistic.

P(Musk wouldn't raise when he can and not raising money does long term needless harm to the company) <80% imo at the most generous take. The assumption being that he's not insane and that M3 demand is as high as he claims (i.e. he can sell all cars he make up to 10/week).
Really? Name the other times? Name one other time? You just wholesale make **** up. Musk has always raised well in advance of need. And that's provable. This is 10 years of Tesla's working capital history:



Musk has been at the verge of bankruptcy as a very small company and couldn't get funding and had to go begging and lying to get funding, but that's not the same thing as deliberately "waiting until the last minute".

He's never let working capital even get negative before, let alone at a time when the stock price is so high AND he needs working capital more than ever for major expansion. Musk claimed that Tesla were "single digit weeks away from dying" last year...and they ended up building a makeshift line in a tent and not increasing SG&A just as they pushed out 2x more cars...to horrible consequences for customers. How does this make sense?

Musk is:

- Insane and incompetent as a CEO, harming Tesla's brand and long term future and risking "single digit weeks from dying" when he can easily raise OR
- Can't raise.

If you see a third way of explaining it, I'm all ears.

Normalize that chart by revenue and things become a lot less alarming. You see the working capital go negative after model S production starts in 2012, after model X in 2015, and then again after model 3. And of course you'd expect that to happen, it's natural. Constant, unrelenting growth without periods of consolidating and learning from and integrating experience is insane. The dip is much larger in 2018 than 2012 but their revenues are also many times higher.

More evidence of 10,000+ M3 sitting around in inventory:

https://twitter.com/JakeLangford6/st...88624966045696

Some impressive research there.

Nice link. We now have 5 independent pieces of strong evidence:

- Sales desperation hitting every email and phone number they had in December
- 1-2 week (basically instant) delivery times since December
- US inventory piling up from 2 different sources DESPITE shiploads of production going to Europe
- Cutting 2/3 of US delivery staff which makes zero sense if deliveries will recover in the next 8 weeks given severance pay cost
- Musk continually extending the "last day" to order for 2018

None of these things happen in a world where there is >500K/year demand (the worst case demand in a recession Musk even claimed) and they're producing at a rate if 220K/year. Together they are cased closed.

We now know for a fact that demand has been lower than supply since December and stone dead since January 1.

We also know that Europe has only 20K orders.

What happens next?

Tesla just verified all the parking lot sleuthing shorts have been doing the last 6 months. Here it is broken down by location: https://twitter.com/JamesSantelli1/s...610919424?s=19

Also reports that many observed VINs aren't in the database. As well as many off the grid storage lots.

Bulls and Keeeeed will continue to keep heads buried firmly in the sand.