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I actually really want to buy a Model 3 but these stories that Tesla has a bridge note due in March that they may not be able to cover have me concerned. If I b

by throwaway2016a 8y ago

I actually really want to buy a Model 3 but these stories that Tesla has a bridge note due in March that they may not be able to cover have me concerned. If I buy a car I want to make sure the company is around to service it. I don't see this article covering that particular article. In fact the word "debt" appears nowhere in it. Edit: I'm actually asking someone to prove the debt issue wrong if they can. It is literally the only thing keeping me from buying.

sabareesh 8y ago
I am thinking all the other car makers going to be extinct. All the other auto makers are struggling now to make mass market electric car and 90 % that is going to be the future for good.
cowmix 8y ago
Huge Tesla fan here but this is the one thing that has me up at night too. I would like someone to "show me the way" on this topic too.
lozaning 8y ago
I hope Tesla succeeds, but I cant deny I'd love to pick up a 3 on the super cheap because Tesla went belly up.
- MrEfficiency 8y ago
  This sounds good until you realize you bought a first generation vehicle(unreliable parts) and a company that is no longer producing them.
  - wil421 8y ago
    It’s a serious concern. I bought an special anniversary edition of a car, had something hit me on the highway a month after, and had to wait a month for the manufacturer to make the special parts.
  - microtherion 8y ago
    But surely Tesla's vast dealer network would remain available to perform any maintenance for the indefinite future </s>.
  - stephengillie 8y ago
    This must be reflected in insurance rates. How much more does it cost to insure a Model 3 than a Camry?
  - tardo99 8y ago
    It's very unlikely that Tesla will disappear. The bear/short case here is just that the stock goes to $0 because it's overvalued. The company will not die.
  - lozaning 8y ago
    Nah, Im going full Rich rebuilds style. Buy 3 of them for a couple grand each, frankenstein them together into one working vehicle. Not rooting for Tesla to go out of business, but the result of it could be a ton of cheap EV parts hitting the market.
bfwi 8y ago
The CEO has shown willingness to fund Tesla Motors and SpaceX with almost all his personal funds. If I remember correctly, he is worth more than Tesla's debt, and unless he is somehow unable to liquidate enough assets to cover that debt, it won't be the end of Tesla.
- JumpCrisscross 8y ago
  > he is worth more than Tesla's debt Most of Elon's net worth is in illiquid SpaceX stock and Tesla shares.
  - bfwi 8y ago
    Why is the Tesla stock illiquid? It's publicly traded. I'm sure he could sell SpaceX stock on the secondary market quite easily. SpaceX has never lacked in interest from investors.
    - JumpCrisscross 8y ago
      > Why is the Tesla stock illiquid? It's publicly traded. Pardon me, imprecise phrasing. SpaceX stock is illiquid. Tesla stock is liquid, but if Tesla is having financial difficulties its stock will go down. If Elon can sell Tesla shares, Tesla can sell Tesla shares. > I'm sure he could sell SpaceX stock on the secondary market quite easily Not "quite easily". One, he's a super material insider. That makes the process more complicated for everyone involved. (It would be difficult to avoid giving everyone else the right to participate on the same terms.) Two, he's a super material insider. The fact that he's selling will scare away many buyers. Three, he's a super material insider. His selling SpaceX stock to prop up Tesla screams that nobody is willing to finance Tesla in the open market. It would immediately lead to a rout.
      - bfwi 8y ago
        I'm not convinced that selling some of his SpaceX stock on the secondary market is difficult, or that selling some of his Tesla stocks would cause a rout, especially when the immediate consequence would be paying back the debt, thereby saving the company. But I hope some experts (e.g. stock analysts) would comment on this scenario, I think it's interesting.
nickik 8y ago
Its extremly unrealistic that this would happen. First of all, with the Model 3 sails they now have a huge revenue stream. Secondly, I think its pretty unquestionalble that they could easly raise more money. If they were willing to issue more stock.
tssva 8y ago
The note due in March is convertible. They can cover it with cash, issuing stock or a combination of the two. It should be a concern for stock owners because it might mean dilution of their position but shouldn't be a concern as far as being a company ending event.
- jonknee 8y ago
  > They can cover it with cash, issuing stock or a combination of the two. They're convertible notes with a fixed conversion rate, Tesla doesn't get to decide on what the noteholder wants. If the stock price isn't high enough whoever is holding the notes will demand cash (cash that Tesla doesn't have).
  - alonmower 8y ago
    I think the above comment was claiming that they could issue stock to generate the cash that they'd use to pay back the convertible notes with
    - jonknee 8y ago
      On the second quarter call this year, Elon Musk stated: > “We’ll not be raising any equity at any point... I have no expectation of doing so; do not plan to do so.” Issuing new shares would be a disaster. Far more likely is they come up with a way to roll the debt forward.
- smogcutter 8y ago
  And presumably that risk is already priced in to the stock. It's not as if investors will be caught be surprise.
_ph_ 8y ago
A very important milestone will be the numbers for Q3, which will be announced early November. If Tesla is, as expected, no longer loses significant amounts money or even is slightly profitable, the outlook should be very good. The Model 3 production volume is up, there should be some volume increase in Q4 and that means a lot of revenue. Based on that, renewing the credit shouldn't be too difficult in March. The credit due is about 900 million, while Tesla has a quarterly revenue of more than 5 billion.
paulornothing 8y ago
That never once crossed my mind, and doesn't bother me now. I've only had my 3 for two weeks and I'm definitely happy I didn't buy a new Audi A4 instead.
omgwtfbyobbq 8y ago
If you're worried, I'd wait until the Q3 earnings call early next month. Their short term finances mostly hinge on the Model 3's margin.

sabareesh 8y ago

I am thinking all the other car makers going to be extinct. All the other auto makers are struggling now to make mass market electric car and 90 % that is going to be the future for good.

cowmix 8y ago

Huge Tesla fan here but this is the one thing that has me up at night too. I would like someone to "show me the way" on this topic too.

lozaning 8y ago

I hope Tesla succeeds, but I cant deny I'd love to pick up a 3 on the super cheap because Tesla went belly up.

MrEfficiency 8y ago
This sounds good until you realize you bought a first generation vehicle(unreliable parts) and a company that is no longer producing them.
- wil421 8y ago
  It’s a serious concern. I bought an special anniversary edition of a car, had something hit me on the highway a month after, and had to wait a month for the manufacturer to make the special parts.
- microtherion 8y ago
  But surely Tesla's vast dealer network would remain available to perform any maintenance for the indefinite future </s>.
- stephengillie 8y ago
  This must be reflected in insurance rates. How much more does it cost to insure a Model 3 than a Camry?
- tardo99 8y ago
  It's very unlikely that Tesla will disappear. The bear/short case here is just that the stock goes to $0 because it's overvalued. The company will not die.
- lozaning 8y ago
  Nah, Im going full Rich rebuilds style. Buy 3 of them for a couple grand each, frankenstein them together into one working vehicle. Not rooting for Tesla to go out of business, but the result of it could be a ton of cheap EV parts hitting the market.

bfwi 8y ago

The CEO has shown willingness to fund Tesla Motors and SpaceX with almost all his personal funds. If I remember correctly, he is worth more than Tesla's debt, and unless he is somehow unable to liquidate enough assets to cover that debt, it won't be the end of Tesla.

JumpCrisscross 8y ago
> he is worth more than Tesla's debt Most of Elon's net worth is in illiquid SpaceX stock and Tesla shares.
- bfwi 8y ago
  Why is the Tesla stock illiquid? It's publicly traded. I'm sure he could sell SpaceX stock on the secondary market quite easily. SpaceX has never lacked in interest from investors.
  - JumpCrisscross 8y ago
    > Why is the Tesla stock illiquid? It's publicly traded. Pardon me, imprecise phrasing. SpaceX stock is illiquid. Tesla stock is liquid, but if Tesla is having financial difficulties its stock will go down. If Elon can sell Tesla shares, Tesla can sell Tesla shares. > I'm sure he could sell SpaceX stock on the secondary market quite easily Not "quite easily". One, he's a super material insider. That makes the process more complicated for everyone involved. (It would be difficult to avoid giving everyone else the right to participate on the same terms.) Two, he's a super material insider. The fact that he's selling will scare away many buyers. Three, he's a super material insider. His selling SpaceX stock to prop up Tesla screams that nobody is willing to finance Tesla in the open market. It would immediately lead to a rout.
    - bfwi 8y ago
      I'm not convinced that selling some of his SpaceX stock on the secondary market is difficult, or that selling some of his Tesla stocks would cause a rout, especially when the immediate consequence would be paying back the debt, thereby saving the company. But I hope some experts (e.g. stock analysts) would comment on this scenario, I think it's interesting.

nickik 8y ago

Its extremly unrealistic that this would happen. First of all, with the Model 3 sails they now have a huge revenue stream. Secondly, I think its pretty unquestionalble that they could easly raise more money. If they were willing to issue more stock.

tssva 8y ago

The note due in March is convertible. They can cover it with cash, issuing stock or a combination of the two. It should be a concern for stock owners because it might mean dilution of their position but shouldn't be a concern as far as being a company ending event.

jonknee 8y ago
> They can cover it with cash, issuing stock or a combination of the two. They're convertible notes with a fixed conversion rate, Tesla doesn't get to decide on what the noteholder wants. If the stock price isn't high enough whoever is holding the notes will demand cash (cash that Tesla doesn't have).
- alonmower 8y ago
  I think the above comment was claiming that they could issue stock to generate the cash that they'd use to pay back the convertible notes with
  - jonknee 8y ago
    On the second quarter call this year, Elon Musk stated: > “We’ll not be raising any equity at any point... I have no expectation of doing so; do not plan to do so.” Issuing new shares would be a disaster. Far more likely is they come up with a way to roll the debt forward.
smogcutter 8y ago
And presumably that risk is already priced in to the stock. It's not as if investors will be caught be surprise.

_ph_ 8y ago

A very important milestone will be the numbers for Q3, which will be announced early November. If Tesla is, as expected, no longer loses significant amounts money or even is slightly profitable, the outlook should be very good. The Model 3 production volume is up, there should be some volume increase in Q4 and that means a lot of revenue. Based on that, renewing the credit shouldn't be too difficult in March. The credit due is about 900 million, while Tesla has a quarterly revenue of more than 5 billion.

paulornothing 8y ago

That never once crossed my mind, and doesn't bother me now. I've only had my 3 for two weeks and I'm definitely happy I didn't buy a new Audi A4 instead.

omgwtfbyobbq 8y ago

If you're worried, I'd wait until the Q3 earnings call early next month. Their short term finances mostly hinge on the Model 3's margin.