Tesla Needs To Raise An Additional $3 Billion To Bring Model 3 Production To Reality

See my previous posts about Tesla's dependency on cash sources other than sales to stay alive. Capital markets (selling shares) is one of the ways Tesla stays alive, and continuously tapping the stock market to survive is not a sustainable business model. It's just one of the many reasons why I'm wary of Tesla Motors. I still keep hoping I'm wrong.

Agree with your sentiment Steve. One roots for a young startup, but wonders about the financial risk and ability to execute on their promises. An elephant in the room is that $3B in convertible debt. A good portion of it is due to roll over in the next few years, right on top of the Model 3 production ramp up. If it converts to stock that is a further dilution of the shareholders beyond the new 11% mentioned in the article. Perhaps a 15% to 20% total which could be reflected in a stock price decline of that magnitude. If it rolls over as debt the interest could go way up reflecting the risk. Musk has stated that he on has 5% of his net worth in Tesla. The question is how much more will he put in.

Tesla is unlikely to put in anything - because his net worth is largely in ownership of a couple of corporations - The car company and the space company.

I have already said that Tesla has a number of problems - and not only do I have reservations about its financing - I continue to have reservations about its "sales" model as well. AND with the Bolt likely beating it to general market - and low gas prices as well - a lot depends on how California treats EV's in the future - most of the perks are scheduled to dry up. With competition comes price competition - and I suspect that a number of Europeans will also be in the mix by the time the model 3 comes to market.

$3,000,000,000 divided by $500 deposit = 6,000,000 customer deposits. Does that sound like a successful business plan...didn't think so either!

Are you saying the $3B comes from customer deposits? Not clear what you mean.

Musk did say that refundable customer deposits were not something to use to fund capital plant development. He is correct on that one.

Just in case there is a question about what is convertible debt, it is an investment made in a company by bankers et. al. that has an interest rate payable to those investors while it outstanding. Just like a loan, repayment is due on a set date, meaning that the company has to come with the cash. Ideally the company is gaining cash from product sales at repayment time and does not have to go out and borrow again. It also may be converted into company stock as a repayment and if the stock is higher it can be good deal. In case of bankruptcy convertibles get paid before stockholders from any funds remaining so it offers more security than stock.

Ohh I thought Tesla was building really expensive convertibles...

Do you think one could cut the roof off a Model S? A project for the next SEMA maybe with suicide doors ala the 1962 Lincoln Continental.

TSLA burned over $2 billion of cash in the last 12 months. Now that run rate will increase massively. It will be interesting to see how this plays out, particularly if there is a global recession or if the cost of capital massively increases due to higher risk premia.

Did someone here actually suggest that the Chevy Bolt would be a competitive threat to Tesla? That's funny. Tesla owns the electric car market. GM owns a reputation for producing crap.