Elon Musk's Tesla, Inc. has been having some problems recently. But one easy-to-overlook problem is the debt incurred by its SolarCity subsidiary:
But 16 months after Chief Executive Officer Elon Musk kicked up controversy by acquiring the solar-panel installer founded by two of his cousins, its obligations are a strain on Tesla's finances. The $2 billion purchase came with a $2.9 billion debt load, and a chunk of that is soon coming due. That's bad timing for a company churning through about $6,500 a minute and trying to stave off the need for another capital raise. "SolarCity debt may not be the immediate cause of Tesla's problems, but it certainly isn't helping right now," said Alexander Diaz-Matos, an analyst at credit research firm Covenant Review LLC.
[...] Tesla's debt runs the gamut -- convertible bonds, promissory notes, term loans, cash-equity debt, asset-backed securities. Most of the total is tied to Tesla the automaker. But the energy unit, which includes the solar business, accounts for 27 of the 29 maturities set to come due through 2019.
[...] In recent months, Tesla's solar business lost the residential-solar throne to rival Sunrun Inc., a San Francisco-based installer with a market capitalization about half the SolarCity purchase price. Tesla ceded market share as it attempted to boost energy-unit profitability and scrapped SolarCity's costly door-to-door retail sales strategy. That was a smart move, according to Ross Gerber, co-founder of Gerber Kawasaki Wealth & Investment Management, which oversees more than $10 million in Tesla shares and options. He criticized the SolarCity deal but is still bullish on the company and Musk. "SolarCity was probably going to go bankrupt," Gerber said.
[...] For his part, Musk hasn't wavered from his commitment to turn Tesla into a one-stop shop selling solar panels to capture power, devices to store the energy and cars that can be charged in the garage. The company started producing photovoltaic glass tiles in December at a factory in Buffalo, New York, and has begun selling solar at some of its own stores and through retailer Home Depot Inc.
At least Tesla production is higher than ever.
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Auto production is hard:
Having racked up its first quarter of burning through more than $1 billion of cash in the three months ending in June, Tesla topped that with $1.4 billion of negative free cash flow in the third quarter. In the past two quarters, therefore, Tesla has burned through more cash than the previous six combined. More importantly, it has burned through roughly four out of every five of the $3.2 billion dollars it has raised since late March through selling new equity and convertible debt and its debut in the high-yield bond market.
Consequently, debt has soared. Even just using debt with recourse to the company, on a net basis it has almost tripled since the start of the year to $3.36 billion.This would matter less if the primary objective of sucking in most of that external funding -- mass production of the Model 3 -- was fast approaching. Instead, it has receded further.
When Musk first talked about production targets for the Model 3 in 2016, they implied Tesla would be producing roughly 3,800 to 7,600 a week in the second half of 2017. By July of this year, Musk was guiding toward production hitting about 5,000 a week by the end of December. I estimated at the time that this implied a second-half average of maybe 1,400 a week.
Now, Musk estimates production might hit 5,000 a week by the end of the first quarter of 2018. As for this year, it might be in "the thousands" by the time New Year's Eve rolls around. He refused to say what the current run rate was. But I would estimate Tesla will be lucky to produce 10,000 Model 3 vehicles in total this year, or an average of 400 a week for the second half -- roughly 5 to 10 percent of the original guidance. As for the earlier target of 10,000 a week in 2018 ...
Also at NYT and MarketWatch.
Previously: Tesla Adds Lots of Certified Pre-Owned Model S Vehicles for Under $40,000 with New Warranty
Time to Bash Tesla Model 3
Tesla Reportedly Teaming Up With AMD for Custom AI Chip
Tesla Fires Hundreds of Employees
Tesla Model X driver dies in Mountain View crash
Submitted via IRC for Fnord666
The driver of a Tesla Model X has died following a highway crash in Mountain View, leaving a number of safety questions.
Source: https://www.engadget.com/2018/03/24/tesla-model-x-driver-dies-in-mountain-view-crash/
Tesla Crash: Model X Was In Autopilot Mode, Firm Says
In a post on its website, the electric-car maker said computer logs retrieved from the wrecked SUV show that Tesla's driver-assisting Autopilot technology was engaged and that the driver doesn't appear to have grabbed the steering wheel in the seconds before the crash.
The car's 38-year-old driver died after the vehicle hit a concrete lane divider on a Northern California freeway and caught fire. The accident happened March 23.
[...] In its Friday post, Tesla said the crashed Model X's computer logs show that the driver's hands weren't detected on the steering wheel for 6 seconds prior to the accident. It said they also show the driver had "about five seconds and 150 meters of unobstructed view of the concrete divider" before the crash but that "no action was taken."
The company cited various statistics in defending Autopilot in the post and said there's no doubt the technology makes vehicles safer than traditional cars.
"Over a year ago," the post said, "our first iteration of Autopilot was found by the US government to reduce crash rates by as much as 40 percent. Internal data confirms that recent updates to Autopilot have improved system reliability."
"Tesla Autopilot does not prevent all accidents -- such a standard would be impossible -- but it makes them much less likely to occur," the post reads. "It unequivocally makes the world safer for the vehicle occupants, pedestrians and cyclists."
(Score: 3, Informative) by NewNic on Saturday April 07 2018, @12:23AM (3 children)
If you ever thought that Bloomberg was presenting facts in a neutral way, just go over to their Tesla Model 3 tracker page, where they estimate production based on VINs. [bloomberg.com]
So, they show production at 987 cars in the final week of Q1, when Tesla already announced that the production that week was 2020. Secondly, someone else noticed that Tesla registered 3000 Model 3 VINs just this week, which, according to their own methodology should show a big uptick in production. More likely, now that they have been shown to be lying, they have abandoned the page.
Clearly, Bloomberg has an agenda here: bringing false information. I assume that they are being paid by either another Auto manufacturer or one of the hedge funds that is short on Tesla.
Remember this incident next time you read any news item by Bloomberg. It's quite clear that they don't let facts get in the way of an agenda they are pushing.
lib·er·tar·i·an·ism ˌlibərˈterēənizəm/ noun: Magical thinking that useful idiots mistake for serious political theory
(Score: 2, Insightful) by takyon on Saturday April 07 2018, @12:35AM (2 children)
To be clear, you have nothing to actually say about the actual article's contents.
Maybe the point of the model to verify what Tesla is saying. And Tesla has made many lofty production targets and missed them too.
Updated at: April 06, 2018
Bloomberg could be lying. Or you could be overdosing on Musky taint. Maybe we should build a statistical model.
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]
(Score: 3, Informative) by NewNic on Saturday April 07 2018, @03:29AM (1 child)
Tesla has made predictions and missed them. However, exaggerating the past week's production numbers in a press release is the sort of thing that gets CEOs of public companies sent to jail. So, in this case, I believe Tesla.
I hadn't noticed the update date. That makes it even worse: Bloomberg knows that their figures are wrong yet fails to note this.
Keep on taking your investment advice from Bloomberg if you want, but I believe they are being disingenuous because they have an agenda. Now that their model has been shown to be wildly inaccurate, they are moving on to another target: Solar City.
Credibility is important for news organizations. I have shown above that Bloomberg has none.
lib·er·tar·i·an·ism ˌlibərˈterēənizəm/ noun: Magical thinking that useful idiots mistake for serious political theory
(Score: 2, Informative) by tonyPick on Saturday April 07 2018, @08:19AM
Sure, but playing tricks by highlighting a specific outlier burst in production, or toying with your definitions of "produced" are fair the kind of thing companies will do in press releases.
And the kicker here is that the VIN figures Bloomberg are basing this on _have_ to be accurate - every Tesla produced needs a registered VIN. The only problem there is that as a rolling average it will have lag to large changes, and the registration is batched (more info on cleantechnica) [cleantechnica.com].
Plus when you look at the "Total Model 3 Production" graphs the official Tesla quarterly reporting is also tracked against Bloomberg's VIN based estimates, and the estimates are lining up with what Tesla actually did.
And this kind of tracking matters because Musk has been... misleading before, such when they were hitting about 120 a month and told investors they were "confident" of doing 20,000 units a month by the end of 2017 [mashable.com] but they told the government that at best they were actually expecting less than half that [thetruthaboutcars.com].
(Score: 0, Flamebait) by Anonymous Coward on Saturday April 07 2018, @02:35AM (3 children)
Last I checked, SolarCity wasn't willing to make a normal sale. By that I mean a cash-equivalent one-time transaction, after which the seller has no ongoing relation to the buyer.
Instead, you made some weird deal to let SolarCity install panels on your roof that they would own, and you'd buy power from them, and they would have the right to any profit from selling power to the utility company. You couldn't be off-grid. You couldn't be without SolarCity having an internet connection into the equipment at your house. You couldn't even simply sell your house; SolarCity had the right to reject the buyer and demand termination fees.
That is just a NO from me. All of it is completely unacceptable.
(Score: 3, Informative) by NewNic on Saturday April 07 2018, @05:03AM
"Interesting"? A simple web search shows that the AC is wrong.
Tesla does sell solar systems, as well as offering leases and loans.
https://www.tesla.com/support/energy/learn/solar-panels/cost-and-payment-options?energy_redirect=true [tesla.com]
The one contract type they don't seem to offer is the one the parent objects to: a power purchase agreement.
lib·er·tar·i·an·ism ˌlibərˈterēənizəm/ noun: Magical thinking that useful idiots mistake for serious political theory
(Score: 3, Interesting) by anubi on Saturday April 07 2018, @07:51AM (1 child)
Yeh, I remember talking to some reps too... I could never seem to get past their need for all this customer-lock-in and businesstalk and get down to purchase and installation.
I have this big outdoor patio, that needs replacing. I wanted them to simply replace the patio, and design it for solar panels, so that I did not have to mess with drilling any holes in my house roof. So what if I have a patio big as the house? I want to be able to access below panel for wiring maintenance. What I wanted them to do was install the panels in such a way I got the raw panel power... I did NOT want any sort of "grid tie". I had full intention of storing any excess electrical energy as thermal, as in ice bank, transferring heat by a propane-based heat transfer refrigeration loop - using a maximal power point transfer controller to the refrigerant pump ( three phase BLDC motor ).
I was to take full responsibility that my "invention" would work. I know it will work if I build it. I have been doing refrigeration long enough to know what will work and what will not.
I know I will have to build the MPPT controller. But I do these things. The idea some technical thing does not yet exist does not scare me. As long as I know how to make one.
I could not get to first base with the salespeople. One trick pony.
"Prove all things; hold fast that which is good." [KJV: I Thessalonians 5:21]
(Score: 0) by Anonymous Coward on Saturday April 07 2018, @12:36PM
The sales reps are trained monkeys who have been trained to talk to a certain demographic to which you do not belong: The proles.
When you start talking about designing a novel system, they don't have a script.
Consider emailing Tesla about what you want to do, and let them know that they need a department of engineers who are willing to work with customers like you to customize the system.
(Score: 2) by Gaaark on Saturday April 07 2018, @03:03AM (8 children)
> Tesla's debt runs the gamut -- convertible bonds, promissory notes, term loans, cash-equity debt, asset-backed securities.
Sounds like something our own real-the-Donald would know about. Walk into a bank and walk out with a loan, without any credit check at all, just "I'm Donald Trump!"
"I'm Elon Musk!...gimme!"
--- Please remind me if I haven't been civil to you: I'm channeling MDC. I have always been here. ---Gaaark 2.0 --
(Score: 1, Disagree) by anubi on Saturday April 07 2018, @07:56AM (7 children)
I'd rather give to Elon Musk any day over most "investment" stuff I see.
Even if Elon did not deliver a good, he pushed the advancement of our technical skills.
I have damn near the same respect for Elon as I have for Tesla. Visionary.
I do not begrudge him one cent.
He is one of maybe three one-percenters that I have no problem whatsoever with income inequality, because I feel he does something useful with his assets... not just accumulation for financing family brats.
"Prove all things; hold fast that which is good." [KJV: I Thessalonians 5:21]
(Score: 4, Interesting) by bobthecimmerian on Saturday April 07 2018, @12:36PM (6 children)
While I love the innovation Musk is driving, the articles about employee treatment at Tesla Motors are disturbing. Musk looks like he's operating the same way Bezos and countless before him did - grind your laborers into powder to extract a profit from the market, and then try to make up for it by doing other good things. That may end up good for society as a whole and nice in the history books, but it sure does suck for the people that get hurt.
On the other hand, at least it's not the early 20th century when the Rockefellers and others would just have workers that tried to complain or organize gunned down. So we have that going for us.
(Score: 3, Interesting) by khallow on Saturday April 07 2018, @01:52PM (5 children)
And what's supposed to be bad about that? No one is forced to work there. And one of the "good things" is being paid well - which is why it happens in the first place.
That's life. Everything we do and need requires risk of death and injury on someone's part, frequently not our own. Even the food we eat once was alive.
(Score: 2) by bobthecimmerian on Sunday April 08 2018, @04:33PM (4 children)
Just because the market allows something, that doesn't mean it's morally right. Having the right to quit isn't that valuable when you need to keep your medical benefits and there are no other employers offering enough money to cover your expenses.
And if it's impossible for a business or industry to succeed without causing human suffering (not counting things like dental procedures that inescapably involve some pain to fix problems), the industry doesn't deserve to exist.
The people crying, "Natural selection in society is fine!" are just lucky. For every disciplined, intelligent, hard-working person that succeeds there are many just as bright and just as hard-working that fail. "Fuck you, I got mine" is not an intelligent response to the losers.
(Score: 1) by khallow on Monday April 09 2018, @04:54AM (3 children)
Why is that supposed to be relevant? Let us keep in mind that markets exist in the first place because they serve the wants and needs of the market participants. That is a morally right thing to do. There are several ways markets can go wrong (externalities being the traditional example), but merely delivering what people want is not one of those things.
That applies to you and your endeavors as well. What is the fix for your situation? Suicide?
Now, we've gone from markets to social Darwinism? The obvious rebuttal to the above line of crap is come up with something better first. Markets work. Morality untethered from reality does not.
(Score: 2) by bobthecimmerian on Monday April 09 2018, @04:59PM (2 children)
The market is social Darwinism.
And markets don't exist to service the wants and needs of the participants. They serve the wants and needs of a few lucky participants, everyone has the choice of 'attempt to participate or starve'. That's not free association in any meaningful way.
(Score: 1) by khallow on Monday April 09 2018, @06:45PM
We can easily show this is false. For example, using a dictionary, social Darwinism [oxforddictionaries.com] means:
Meanwhile, market [oxforddictionaries.com] means:
So notice the complete absence of markets in the definition of social Darwinism. And notice the emphasis on trade, demand for trade, and places for trade in the definitions of market. As one would expect, we have very different definitions for very different things.
(Score: 1) by khallow on Monday April 09 2018, @07:09PM
So who is the "lucky" few that you participate for in these markets, sacrificing your interests?
Is starving better than participating? I'm curious in a very sarcastic way. I hope also you're not one of those social contract people who doesn't actually believe in voluntary participation.
So how much of your budget is food? For me, it's under 20%, and I have a fairly low income. When participation in the market (such as the job market) means that you can easily meet your needs, then what's the point of complaining? You aren't going to need any less, if you don't have a convenient market to help you meet your needs.