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My biggest takeaway from this article is that Tesla's very aggressive, forward-looking growth plan could be absolutely destroyed by a recession in the US econom

My biggest takeaway from this article is that Tesla's very aggressive, forward-looking growth plan could be absolutely destroyed by a recession in the US economy. Durant's companies ran fine with him as CEO until recession hit and he ran out of money. What happens to Tesla if a recession hits? All of their products, while undoubtedly groundbreaking, are luxury goods purchased with discretionary income. Even the Model 3 - reliable, commodity transportation can be had for far less than $35,000. How will Tesla handle the pool of buyers for a $75,000 sedan and $900/mo lessees shrinking dramatically? Of course all auto manufacturers face this problem. But a company run by an aggressive, visionary CEO like Musk faces far more risk.

forkLding 8y ago
My takeaway building on yours is that Tesla could survive but Elon Musk would be booted out in a recession. Lets not forget that Tesla has impressive IPs wanted by generally most car companies and very well-trained staff, factories and huge customer demand (over-subscribing their orders) so if Tesla was to be sold for cheap in a recessionary period, any car company would raise money to buy Tesla.
- adanto6840 8y ago
  Interesting point, seems obvious but isn't something I had directly thought about when considering Tesla's value. I would wonder how long that demand holds, consumer "brand desire" if you will, if Elon is no longer at the helm. Maybe it wouldn't be affected much right away, but would it once they focused more on execution instead of innovation perhaps? Nonetheless, is an interesting line of thought.
- hsribei 8y ago
  _Can_ Elon Musk be booted if the board wanted to? I'd bet he still has a ton of control.
  - forkLding 8y ago
    Ranges from either a Steve Jobs booted out of Apple to Travis Kalanick from Uber. Based on those, if a board really wanted to boot you out, they will work hard to cut off any control as Steve Jobs had to wait quite a while and then get his company Next bought to come back.
icebraining 8y ago
If anything, their problem is that Tesla is not luxurious enough. Luxurious brands resist recessions better than mid-level brands.
- enraged_camel 8y ago
  That is correct. The type of people who can comfortably afford $300,000 cars tend to not be affected by recessions.
- dx034 8y ago
  In that case, the main competition is not GM or Ford but Porsche. If their electric line is good enough, many Tesla buyers that will remain loyal through a recession could wander off.
icelancer 8y ago
Tesla did experience a recession in the early years of the company when trying to raise money and sell prototype visions. It nearly crushed the company but they came out on the other side. Today they're much better capitalized and Elon structured debt specifically to guard against dips in the economy. Not saying he can't be wiped out with one or two bad decisions + a recession, but this isn't new territory for Tesla.
- Judgmentality 8y ago
  > and Elon structured debt specifically to guard against dips in the economy Please elaborate. Everything I've heard suggests the opposite.
- Nokinside 8y ago
  >better capitalized and Elon structured debt specifically This goes against everything I know about Tesla's finances. You really have to provides sources if you want us to believe this.
  - adsfasdfsad111 8y ago
    lol, easy. just stop reading zerohedge.
- querulous 8y ago
  musk took over as CEO in october 2008; the height of the recession. prior to that he was board chairman
loceng 8y ago
Unless it's a global recession, I imagine they'll be able to find money. Also, Tesla and Elon aren't just an electric vehicle company and a founder of a single company either, and this might give him the credibility and belief in him for a recession to be moot.
prostoalex 8y ago
Tesla has multiple revenue streams though. Solar installations (via SolarCity acquisition) should ramp up during recession if they still provide cost savings to consumers compared to utility rates. Semi trucks are also a product line that at scale should be able to deliver savings to large delivery fleets.
- Spooky23 8y ago
  Solar installations are a very competitive market. Semis are great, but Tesla manufactures very few.
- argonaut 8y ago
  Recessions generally cause oil prices to fall.
- std_throwaway 8y ago
  You have to pay most up-front for solar. If you don't have the money at hand, forget about getting a credit when recession strikes. It's a good investment if you expect money devaluation without high interest rates but in a recession you expect deflation first and cash is king.
prmths 8y ago
> All of their products, while undoubtedly groundbreaking But that's not true. None of their products are groundbreaking. It's all decades old battery tech. What was revolutionary was musk's ability to brand old tech as new/hip and get the government to bail out and subsidize Tesla. What tesla is great at is marketing and attaining government funding. Just like solar city. > How will Tesla handle the pool of buyers for a $75,000 sedan and $900/mo lessees shrinking dramatically? It'll go bankrupt or get a bailout. https://techcrunch.com/2009/06/23/the-government-comes-through-for-tesla-with-a-465-million-loan-for-its-electric-sedan/ https://techcrunch.com/2009/06/23/the-government-comes-throu... People forget that we've already seen this movie before with TSLA. It was saved from bankruptcy by Obama. I doubt Trump will come to Musk's rescue. Also, TSLA's biggest problem isn't a recession. Just like solar city's biggest problem wasn't a recession. It's low energy prices and removal of favorable government policies along with our love of large vehicles. http://6abc.com/automotive/ford-getting-rid-of-all-its-cars-but-2/3393707/ http://6abc.com/automotive/ford-getting-rid-of-all-its-cars-... TSLA might be doing well in norway, but it's just a blip in the rest of europe, north america and china. It's a testament to musk that he is able to keep such a marginal and ineffective company in the spotlight day after day. The guy is truly one of the great marketers of our time.

forkLding 8y ago

My takeaway building on yours is that Tesla could survive but Elon Musk would be booted out in a recession. Lets not forget that Tesla has impressive IPs wanted by generally most car companies and very well-trained staff, factories and huge customer demand (over-subscribing their orders) so if Tesla was to be sold for cheap in a recessionary period, any car company would raise money to buy Tesla.

adanto6840 8y ago
Interesting point, seems obvious but isn't something I had directly thought about when considering Tesla's value. I would wonder how long that demand holds, consumer "brand desire" if you will, if Elon is no longer at the helm. Maybe it wouldn't be affected much right away, but would it once they focused more on execution instead of innovation perhaps? Nonetheless, is an interesting line of thought.
hsribei 8y ago
_Can_ Elon Musk be booted if the board wanted to? I'd bet he still has a ton of control.
- forkLding 8y ago
  Ranges from either a Steve Jobs booted out of Apple to Travis Kalanick from Uber. Based on those, if a board really wanted to boot you out, they will work hard to cut off any control as Steve Jobs had to wait quite a while and then get his company Next bought to come back.

icebraining 8y ago

If anything, their problem is that Tesla is not luxurious enough. Luxurious brands resist recessions better than mid-level brands.

enraged_camel 8y ago
That is correct. The type of people who can comfortably afford $300,000 cars tend to not be affected by recessions.
dx034 8y ago
In that case, the main competition is not GM or Ford but Porsche. If their electric line is good enough, many Tesla buyers that will remain loyal through a recession could wander off.

icelancer 8y ago

Tesla did experience a recession in the early years of the company when trying to raise money and sell prototype visions. It nearly crushed the company but they came out on the other side. Today they're much better capitalized and Elon structured debt specifically to guard against dips in the economy. Not saying he can't be wiped out with one or two bad decisions + a recession, but this isn't new territory for Tesla.

Judgmentality 8y ago
> and Elon structured debt specifically to guard against dips in the economy Please elaborate. Everything I've heard suggests the opposite.
Nokinside 8y ago
>better capitalized and Elon structured debt specifically This goes against everything I know about Tesla's finances. You really have to provides sources if you want us to believe this.
- adsfasdfsad111 8y ago
  lol, easy. just stop reading zerohedge.
querulous 8y ago
musk took over as CEO in october 2008; the height of the recession. prior to that he was board chairman

loceng 8y ago

Unless it's a global recession, I imagine they'll be able to find money. Also, Tesla and Elon aren't just an electric vehicle company and a founder of a single company either, and this might give him the credibility and belief in him for a recession to be moot.

prostoalex 8y ago

Tesla has multiple revenue streams though. Solar installations (via SolarCity acquisition) should ramp up during recession if they still provide cost savings to consumers compared to utility rates. Semi trucks are also a product line that at scale should be able to deliver savings to large delivery fleets.

Spooky23 8y ago
Solar installations are a very competitive market. Semis are great, but Tesla manufactures very few.
argonaut 8y ago
Recessions generally cause oil prices to fall.
std_throwaway 8y ago
You have to pay most up-front for solar. If you don't have the money at hand, forget about getting a credit when recession strikes. It's a good investment if you expect money devaluation without high interest rates but in a recession you expect deflation first and cash is king.

prmths 8y ago

> All of their products, while undoubtedly groundbreaking But that's not true. None of their products are groundbreaking. It's all decades old battery tech. What was revolutionary was musk's ability to brand old tech as new/hip and get the government to bail out and subsidize Tesla. What tesla is great at is marketing and attaining government funding. Just like solar city. > How will Tesla handle the pool of buyers for a $75,000 sedan and $900/mo lessees shrinking dramatically? It'll go bankrupt or get a bailout. https://techcrunch.com/2009/06/23/the-government-comes-through-for-tesla-with-a-465-million-loan-for-its-electric-sedan/ https://techcrunch.com/2009/06/23/the-government-comes-throu... People forget that we've already seen this movie before with TSLA. It was saved from bankruptcy by Obama. I doubt Trump will come to Musk's rescue. Also, TSLA's biggest problem isn't a recession. Just like solar city's biggest problem wasn't a recession. It's low energy prices and removal of favorable government policies along with our love of large vehicles. http://6abc.com/automotive/ford-getting-rid-of-all-its-cars-but-2/3393707/ http://6abc.com/automotive/ford-getting-rid-of-all-its-cars-... TSLA might be doing well in norway, but it's just a blip in the rest of europe, north america and china. It's a testament to musk that he is able to keep such a marginal and ineffective company in the spotlight day after day. The guy is truly one of the great marketers of our time.