I don't care about any of this. He could literally go out and dick down every investor and it wouldn't change the fact that the money shows up despite the fact he has the most shorted company literally ever, he still can raise a ton of cash at great terms on a whim.


dfgg,

You're ignoring the fact that Tesla is generally a much more risky company than others in the same rating. See the piece I provided for a few reasons why they should be trading at a higher rate than other companies with the same rating, the fact they're getting a better rate is really a testament to Musk being Musk.

What are the realistic odds of bankruptcy by the time these bonds come due? Have to be > 20% even if you're a bull.

They're $20 billion in debt, and most of their assets are worthless to third parties, especially in 2-3 years when Tesla's battery technology is becoming obsolete, replaced by higher voltage (and hence faster charging), integrated units, possibly even on a new technology base like solid state or lithium air.

The next recession, as recessions do, is going to dry up luxury car demand - which Tesla is at $40K-$100K/car. It will also dry up credit, just as their first major debts are coming due. I don't see how they survive the next recession, given that they need to accumulate $100 billion or so in capital just to ramp up to a mere fraction of what Toyota does, and they can't make profit in a recession. Where does the money come from?

And there's no reason anyone would acquire them except for staff, which can be lured away far cheaper, and will desert Tesla like rats on a sinking ship. No one is paying $20 or even $10 billion to take on $30-$40 billion in debt by that time.

I mean, do you have an argument against this? To me these bonds seem risky even if you're the biggest of bulls.

Agree that trusting bond ratings is a little silly, but they're still a rough guide to the highest upside imo. Bond ratings like in 2007 tend to underestimate the downside, not the safety.

They may not be able to sell their battery technology since its a trade secret that may or may not be owned by Panasonic as well.

Part of the problem with running a company that is involved with all sorts of weird dealings and obfuscates their technology and relies on handwaving is that we don't really know what IP they actually possess. Just like we have no idea if a supercharger actually works, or how. Is it even automated? No one knows! Cause we've never actually seen one working!

I think TS is correct since what do they have that is valuable if they're imploding? A ****ty SDC technology? Battery technology that Panasonic owns? No dash + iPad and plastic seat design?

You should offer a subscription service recommending what bonds to buy based on your determination of how dumb the bond raters are. Sounds like you'd make a killing. Of course, if that was really worth something you'd be pretty wealthy right now and wouldn't need to sell that info, would you.

Yea.

Blah blah meow chow low interest rate environment whatever.

5.25% is crazy imo.

Not just 5.25% but "it has protections you would normally see with investment grade bonds". The coupon is a record low for bonds of its rating and maturity.

In recent tesla bear faceplant news, just the other day Einhorn was defending his Tesla short that has hurt his fund in 2017 by saying:

Einhorn said Tuesday on a conference call discussing results at Greenlight Capital Re Ltd., the Cayman Islands-based insurer where he oversees investments. “It’s currently only capitalized for the next three quarters. As Tesla attempts to achieve scale for the Model 3, it will depend on the capital markets’ willingness to fund it.”

So he said they needed to raise capital, and they raised capital, and that's a faceplant?


Did you know that three quarters ago Elon said he doesn't foresee the need to raise capital to launch the model 3.


They have raised capital 3 times since then.


Does that make Elon a liar or just really really unfamiliar with what kind of resources his plan requires?

Do the bulls at least admit Elon openly lies? I can get behind the idea that you are ok with it but to think he isn't a liar, no small accusation, seems crazy to me.

No, the bearish context was that he doubted the capital markets "willingness" to further fund the Model 3 ramp. And a few days later Tesla gets oversubscribed extremely favorable bond terms from the capital markets.


What quote are you referring to? I've tracked these down from bears before and they usually leave out the context and their implication is wrong.



Elon is often overly optimistic about timing ect, but that isn't the same as lying. There is a pretty big difference between missing really ambitious goals and lying. He is human so I don't really doubt that he has lied before...

https://www.google.com/amp/s/seeking...all-transcript

" Our current plan – our current financial plan does not require any capital raise for Model 3 at all. "

Again the context does not support your assertion.

Actual context and quote:

Ryan Brinkman - JPMorgan Securities LLC

Okay. And then the follow-up to that is just in regards to the amended S-4 that you filed a couple weeks back. There was some changed language in there from, Tesla is currently planning to raise additional funds by the end of the year to now stating that you expect adequate liquidity through the – at least the end of the year, I think it says. So what was the primary change, would you say? Does it relate to this CapEx issue that we're talking about here or to higher earnings or to another factor?

Ryan Brinkman - JPMorgan Securities LLC

....

Elon Reeve Musk - Tesla Motors, Inc.

One thing that's worth mentioning and, certainly, I would take this with a grain of salt and not like it's – like sometimes, I'll say things which I think are sort of speculation or my best guess but they are not – it's different from a promise. Our current plan – our current financial plan does not require any capital raise for Model 3 at all. So now that's different from saying whether we should raise capital or not to account for uncertainty to have a larger buffer and to sort of de-risk the business. So – and then we also feel pretty good having examined the SolarCity financials that looks like SolarCity will actually be, I believe, neutral but perhaps a cash contributor in the fourth quarter in a small way.

But again, does not – do not take this to the bank, this is not a promise. This is like – this is what appears to be the case. So contingent upon shareholder approval, we expect SolarCity to be somewhere between neutral and a cash contributor in the fourth quarter. And yeah, I mean things are looking good. Yeah. It's not to say that there's some darkness ahead, they look really quite good right now. It seems like we probably weren't wanted to capital raise even in Q1. I'm not saying we won't, but probably not. And yeah – so we're looking quite promising.


-----

Now you characterized this exchange as

That's completely false. The question was asked in Q3 about Tesla saying it didn't need to raise money through the end of the year, which they didn't. Elon says they currently have a plan that doesn't require capital raises for the model 3, which he points out is entirely different than saying they wont raise capital if they get favorable terms, which they have gotten. Very favorable terms in their cap raises in 2017.

The junk bond raise timing was definitely well timed, and somewhat lucky given market conditions

The rest of your post doesn't warrant any sort of response, you are going to believe what you want to believe

Lower than that, probably 7-10%. Bankruptcy will not be a problem with Tesla. Maybe they'll be bought with a haircut on the debt but even that I think is not super realistic.

Of course there are no counter arguments because it's all made up. You always talk about 2-3 years with some inane speculation. You don't know much about battery technology and Tesla's technology as of today is one of the best in the world. Now, maybe this is all Panasonic but they have a partnership and Panasonic will not go away.

Bond ratings are not very good at projecting the upside. They are a good tool to compare across the board because some effects tend to average out over a larger sample. They are a terrible guidance for individual instruments. Also, they are most certainly not allowed to take into account the likeliness of Tesla being bought by some car manufacturer.

Maybe the brand? Volkswagen would buy them in a heartbeat. We have the chairman of Volkswagen on the record talking about how their competition in the new world is Tesla. Yet, you guys go ahead and pretend like there is nothing there.

Tesla has the best assisted driving system in the world. They will most likely have the first fleet wide self driving system (they are the only ones who have a plausible plan for that).

The supercharging network is one of a kind. Besides a lot of talk, the other major car companies have not even come close to starting such a project.

Tesla has so much going for itself that the mere fact you guys believe they will not be bought by any of the majors is delusional.

It actually means the opposite. Tesla is giving very little protection. Normally, junk bonds need to be secured by more assets and restrictions for further debt raising than investment grade bonds. In this case, Tesla has given very little protection but investors still bought it.

This is laughable. You got owned, but maybe that was your attempt of adding something insightful to the conversation and see how it ended.

We know for a fact that Mission E has half the charge time of a Tesla. It'll be available commercially in a year and a half. We know that Toyota is putting solid state lithium batteries (with all their advantages) into production.

It's incredibly naive to think that Tesla have a battery lead.
There is nothing there. No car maker is paying tens of billions + taking on 10s of billions more in debt, for what exactly? Tesla are behind on autonomous driving, wedded to a soon obsolete battery technology, and are far behind on things like robotic use. They have nothing to offer any car maker except staff.

Tesla only just solved automatic breaking - which was imlemented over a decade ago. They are a clown show and far, far behind, with no path to catch up.
This is comedic, not to mention false. You don't even keep up with this thread, let alone the news. Tesla's "super"charger network is already becoming obsolete.

Right. So they're going to pay $XX billion plus take on $30+ billion in debt - their entire market cap - for a cuckshow that loses money doing less than 10% of their output? Put down the joint, son.

The only thing valuable that Tesla has is staff. And they'll be lured away as Tesla implodes.

Again, stuff that is supposed to happen years from now will make Tesla obsolete. I came into this thread when you said the same thing about Apple entering the market. See how this played out.

You can claim whatever you want about the future. The world is as it is right now. This supercharging network has not even been deployed anywhere (actually the plan is to have 2000 stations by 2020, Tesla has more than double that right now and plans to have five-fold by the end of THIS year). The Mission E will come out maybe two years from now, maybe not, we don't know. It'll be twice as expensive as a Tesla Model S. I mean what are you trying to claim? That a company will be able to improve something like charging if customers are willing to pay a lot more for it? Of course, what a ridiculous argument to make.

Where is your GM Bolt? How did this work out? Contrary to you, I follow this thread and remember what was said. You made bold claims about the Bolt, you made bold claims about Apple entering the market, nothing has worked out. But then you come with your articles about something happening years from now.

It's tedious to argue with you, because you don't want to learn, you desperately try to be right. So far, your batting average is pretty bad.

We're discussing the bonds, which go out to 2025. Thus the future of Tesla is what is in question. If you want to discuss the now:

- Tesla cannot profitably make cars and lose huge amounts of cash
- They are priced the same as Ford, who makes 50x as many cars and billions in profit and returns a 4% dividiend
- Tesla have been far behind on every production target they set, and have got every profit forecast hilariously wrong, losing large amounts of cash instead of becoming profitable
- Tesla are $20 billion in debt and have little of worth in terms of assets that third parties would want
- Tesla's autonomous driving effort is so non-existent that they only just got automatic braking working. Tesla have been far far behind on all autonomous driving claims and are far behind the competition.

Do you really want to talk about now? I'd be glad to.

I mentioned the Mission E because it's an example of a far superior battery design.

GM are trying to avoid selling the Bolt. They're deliberately throttling it -up until last month it's only been offered in a few states where there are regulations about a certain number of green cars. Despite that, it sold 8000 units in 6 months.

As for the future, and your claims about autonomy, GM are far, far ahead.

https://electrek.co/2017/06/13/gm-se...chevy-bolt-ev/

Spurious,

How much is another company worth a fraction of what Tesla currently is going to reasonably pay?

Weirdly Tesla may have the best driver assist program and also one of the worst (if not the worst) SDC programs. I don't think you get to any of these scenarios with bankruptcy while simultaneously holding world class products. You're not accounting for path dependence in outcomes.

I think it is a bit rich to say that Tesla has no assets of value. And some of those liabilities are junior to the junk bonds. That said the deal is still kind of stupid.

For starters they currently have $6 billion in current assets, of which $3 billion is cash. And $8 billion in capital assets with the latest robotic equipment basically. And $6 billion in solar assets. Will this cover liabilities? Most likely not, but to say it is close to worthless is laughably wrong.

I don't think many here are arguing that Tesla's market cap is very reasonable. But saying Tesla is worthless, or Musk is a total loser, are the claims that were laughable.

And saying that the Model 3 sucks because Porsche could possibly have a better car ready several years from now that is at least twice as expensive is also quite laughable. They only plan to sell about 20k a year as well! A real Tesla killer alright.

I don't know if their autonomous driving capacities suck, but if I have to go by your track record so far, that is probably innacurate too.

Also the market is forward looking. I suggest that if Tesla is printing billions in cash 1-2 years from now, we make a sticky thread in BFI with all of Toothsayers overly confident quotes claiming Musk is a total loser and fraud, below a screenshot of Tesla's income statement.

I agree, however, no one ever said anything of the sort.

I've extensively documented the terrible state of their autonomous driving. I argued black and blue with heltok, saying they were far behind, and was ridiculed for it even though it was completely obvious from the evidence that they were far behind. Now they all agree with me, that Tesla are far behind.

Tesla are already printing billions in cash. Do you mean billions in profit? Give me a date when they'll have "billions" in profit? How many billions? How many years?

Should we apply the same logic to the Enron bears? Share price soared, assets and income went up for years, the management were praised as gods, outdoing the "old world" business model. We know how that ended. Similar story with Valeant recently.

My core long term thesis is that Tesla has no competitive advantage in car making vs the majors, and many competitive disadvantages. And that all of Tesla's praise comes from a performance electric drive, and has little do with Tesla itself, which mostly sucks at making cars well. Batteries will become commoditized, which means the competition is going to be solely in the building the top end of the car. Which the majors have down to a fine art and science, with all efficiencies squeezed out. They destroy Musk on "building the machine that builds the machine". They also destroy him on autonomous driving.

What's you're left with is brand name (Musk is a PR genius, no question) and interior/exterior design. Tesla stinks at the former and excels at the latter.

If you want to put together a long term bull thesis on brand name and superior asthetic design/cool gadgets, then do. At least it would be rational.

However, future battery advantages, autonomous driving advantages, manufacturing advantages, are a complete fiction. Tesla are on the wrong side of all of these. If bulls wanted to prove themselves rational, they'd admit that.

Really hope Tesla succeeds, will be hilarious to see TS in a few years say stuff like "But excluding SpaceX and Tesla, what has Musk accomplished, really? TOTAL FRAUD"

I know. And you can mention all you want about something that is irrelevant. The Porsche Mission E will be a lot more expensive than a Tesla. This is all irrelevant to the future of Tesla. Plus, they have not sold a single unit of it. I don't think it has been driven on public streets, so maybe in the end it will be a completely different product.

Hahaha this is hilarious. So they are deliberately not selling it. What are you trying to prove here? Do you want to go back to our discussions where I told you that a dealer network was not going to help them? Also, GM is not ahead on anything except the bankruptcy counter.

Btw, Musk is deliberately delaying production and missing target dates because he doesn't want to own the competition too hard.

I am specifically looking at Volkswagen as a potential buyer and would say in a time of crisis they'd probably pay around $30bn for what Tesla currently is.

Maybe something like Softbank as well. Chinese companies for sure and this will most likely trigger the US government to react.

But I think a situation where Tesla is going bankrupt to be really unlikely. There is not a whole lot at stake. They have a huge cash burn because they accelerate and want to get to market asap. The reality is that they can reduce the cash burn and be fine. The other major car companies are so far behind and unwilling to get into electric cars.

They are already caught by surprise when Tesla Grohmann Engineering stopped delivering them machines because they use all production capacity for internal purposes. So your claim is far fetched to say the least.

What's comical and far fetched is your belief that there's substantial efficiency juice to be squeezed out of a multi trillion dollar industry with global competition. You think Musk is finding some way to beat this?



That's just comical bro. This isn't like rocket building, a small flabby industry that lives off the government and was ripe for disruption.

Whatever our differences in opinion on other things, you are being clowned hard if you believe the Musk spin about "the machine that builds the machine" and that it's giving him some advantages over the majors. He's far behind on efficiency, and worse, taking the route of vertical integration, which will guarantee expensive obsolescence in the years to come.

He has bought the company that is supplying the cartel with machines. They stopped delivering the machines to them and they've been caught by surprise. That's what I was referring to.

I get what you're referring to. Just how many machines do you think this tiny company sells? Are you aware that there are tens of thousands of advanced robots being added to automotive factories every year? Grohlmann Engineering is a nothing player with next to no revenue who supplies minor components, which is why Tesla was able to buy it on the cheap.

The idea that there's fat in this is comical.

By the way, proof that Musk is either a liar or suffering grandiose delusions. Listen to his claim here:



Starting a 1:00
"If Tesla doesn't succeed, the conclusion of the car industry is going to be that electric cars are a total failure"

How crazy is this clown? Or how dishonest? EV sales are increasing exponentially, there will be a million sold this year, and no one thinks anything is going to arrest that.

I don't agree with this. I have also argued extensively.

Fwiw what I think about Teslas SDC is that
1. They started from behind and with their autopilot for Model S they were pretty much the leading auto manufacturer in LKA-technology. So they improved very fast with a pretty small team. Now they have a medium sized team and experience.
2. Autopilot 1 was impressive for its time. There were some issues with Autopilot 2, they have improved the quality, but not as fast as I had hoped. There has been some blamegame with Mobileye about the end of the collaboration, it is unclear who is to blame.
3. The SDC video was pretty impressive given that they seemed to be using production hardware. There were some issues, but mostly on the car acting a bit overly cautious. Increased amount of data should improve performance over time. It is unclear if this video was staged, ie if it was a lucky run among many failed runs. If I would bet it would be that it was not staged. But I don't know and I think people who claim to know most likely actually don't know.
4. I think Tesla have a great position in the SDC race. Waymo might be the leader right now, but Tesla are gaining fast and Waymo seems to be struggling with going from prototype to product. Cruise, Drive.ai, Comma.ai etc did some impressive stuff also, but they still don't deliver yet. Tesla still claims that the cars they deliver will have SDC, if they do then they will be the leader.
5. I think Tesla's current setup could be sufficient for LVL5. But there is a risk that they will have to change some hardware and do a lot more software to reach ASIL D, this seems to be what has been slowing down Waymo.