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2017 Investor Roundtable:General Discussion

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22522

Active Member
Jun 6, 2016
1,707
3,154
Texas
The simpler explanation is a typo.
Model 3 is engineered to be easy to make, why would they put in complicated and unproven stuff?
I agree.

But that presumes someone made a mistake. Best to explore all good faith first. The hub on a disc is pretty big. Might be able to get something out of that...
 

scaesare

Well-Known Member
Mar 14, 2013
8,280
13,365
NoVA
This is supposed to be a shot of the front suspension on the Model 3. No axle shaft going to the wheel, so no generator/motor unless they are wheel motors, which is extremely unlikely.

img_0884-png.240182
Indeed.

Nor is there evidence of the significant (likely orange) wiring harness that would be necessary to feed a hub motor, whereas we can see the small black brake line leading towards the wheel hub.
 

DragonWatch

Small FootPrint
Aug 22, 2016
1,030
3,419
Mother Earth (Grapeview, WA)
Tip on computers: buy a "workstation". They are built to last much longer than laptops: about 10 years. And individual components can be replaced if they break. You don't want quite the top of the line: the sweet spot is about two CPU options down from the top of the line and about two memory size options down. Install Linux to avoid software-induced obsolescence (so, get one with hardware which is Linux-supported).

Laptops are hopless, I gave up on them.

Thanks for the reminder. I was trying not be so wordy on my end. My current tower is eking out eight years and I had it built to my specifications primarily so my wife if so desired could load autocad on and not burden the machine. I have resisted ms 10, keeping ms 7. Now that we are retired, I am no longer teaching, so my dependence on ms and ms word & excel are no longer dictated to support my computer classes. This last week my father-in-law had to have an outside tech replace the power supply in his two year old desktop machine his son purchased for him two years ago:-( I used to tell my students to get a used machine, load Linux and install Open Office to cover most of their computing needs or their customers:) I will have to honor my own words and brave the change myself by putting my money where my mouth is as I actually move forward and replace my tower in the next couple of years. Shouldn't need that Russian made antivirus either:)
 
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schonelucht

Well-Known Member
Mar 10, 2014
5,080
8,770
Nederland
Ok that makes sense thank you. My analysis assumes ~200m diluted shares anyway.

Total, I presume? Seems reasonable. That's another 30 million shares or $1.1B or so at current prices. Seems reasonable. Would be interesting to see how many quarters $1B covers. But it seems Tesla doesn't break out stock based compensation in R&D and SG&A anymore in their quarterlies. Or am I missing something big?

17Q2 10-Q said:
In June 2017, we issued 1,163,442 shares of our common stock pursuant to exchange agreements entered into with holders of $144.8 million in aggregate principal amount of the 2018 Notes (see Note 11, Convertible and Long-Term Debt Obligations ). As a result, we recorded an increase to additional paid-in capital of $141.8 million. In addition, we amended and settled early the associated portions of the bond hedges and warrants entered into in connection with the 2018 Notes, resulting in a net payment to us of $43.6 million in cash, which was recorded as an increase to additional paid-in capital.

$185,4M additional paid in capital for 1,163,422 shares, so stock issued in June 2017 was at a little less than $160/share.
 

ValueAnalyst

Closed
Aug 25, 2016
5,371
11,124
World
Total, I presume? Seems reasonable. That's another 30 million shares or $1.1B or so at current prices. Seems reasonable. Would be interesting to see how many quarters $1B covers. But it seems Tesla doesn't break out stock based compensation in R&D and SG&A anymore in their quarterlies. Or am I missing something big?

Yes total, but I didn't sit down and calculate it. Simply, I think the SP will be high enough for all converts to convert, and Tesla will achieve all milestones for all equity plans. So I assume full dilution and some more awards going forward for additional hires, but enough stock buybacks starting in 2019 to limit dilution from stock-based comp.
 

SwTslaGrl

Member
Oct 23, 2016
601
2,382
Sweden
It'll be interesting at the Semi reveal what the plans are, pilot production, vehicle evaluation at fleet owners, the feedback loop and production plans. I think strategy could be different from cars?
 

TradingInvest

Active Member
Mar 8, 2017
1,696
13,659
USA
It'll be interesting at the Semi reveal what the plans are, pilot production, vehicle evaluation at fleet owners, the feedback loop and production plans. I think strategy could be different from cars?

My speculation: the Semis will use their own high powered SupperCharging stations, not battery swap or truck swap. Because the plan is to enable autonomous driving down the road. The truck will have more than one electric connectors to allow high speed charging. All other vehicles can use these new charging stations. There is a small chance that Tesla can continue to own all the Semis, the truck operators just lease/rent them.
 

stealthology

Member
Jan 24, 2013
467
642
Hawaii
I'm just the messenger:

(10:38:37 AM): The following is a press release from Standard & Poor's:

-- Palo Alto, Calif.-based manufacturer of electric vehicles and energy products Tesla Inc. plans to issue $1.5 billion of senior unsecured notes due in 2025.

-- We affirmed our 'B-' ratings on Tesla despite the higher debt leverage following the proposed offering to reflect its improved liquidity. The offering will provide the company with an adequate cushion to fund its upcoming maturities and significant capital expenditures (capex) over the next 12-18 months following the launch of its Model 3.

-- The negative outlook reflects the company's increased execution challenges over the next 12 months that raise risks related to the sustainability of its capital structure, especially if the company appears unlikely to meet its operational and financial goals related to the Model 3. TSLA
 
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Curt Renz

Well-Known Member
Mar 5, 2013
6,501
84,162
USA
I'm just the messenger:

Here's more from today's S&P note regarding its rating of Tesla debt. The bold font at the end is due to me:
______________________


NEW YORK (S&P Global Ratings) Aug. 7, 2017--S&P Global Ratings today affirmed

its 'B-' long-term corporate credit rating on Tesla Inc. The outlook is

negative.

At the same time, we assigned our 'B-' issue-level ratings to its proposed

$1.5 billion of senior unsecured notes due in 2025. The '3' recovery rating

indicates our expectation of meaningful recovery (50%-70%; rounded estimate:

60%) in the event of a payment default.

We also affirmed our 'B-' issue-level ratings on its existing senior unsecured

debt and revised our recovery ratings to '3' (50%-70%; rounded estimate: 60%)

from '4'.

The affirmation reflects Tesla's improved liquidity cushion, which in our view

somewhat offsets the substantial risk related to the rapid scale-up of its

Model 3 production and the significantly high debt burden on its balance

sheet. Given the recent launch of the Model 3, scale of Tesla's battery

manufacturing investments, the public perception of its technology, and its

access to the capital markets, the company's financial commitments appear

sustainable for now--albeit with significant execution risks.

The negative outlook on Tesla reflects the company's increased execution risks

over the next 12 months and the lack of visibility around when it will sustain

positive FOCF, which could cause us to downgrade it over the next 12 months.

We could lower our ratings on Tesla if execution issues related to the Model 3

launch later this year or the ongoing expansion of its Models S and X

production lead to significant cost overruns. We could also downgrade the

company if it appears unlikely that Tesla will refinance its upcoming

maturities and sustain a liquidity cushion of at least $1.5 billion as it

funds its capital-intensive operations over the next 12 months. This could

lead us to believe that Tesla's financial commitments are unsustainable over

the long-term.

We could revise our outlook on Tesla to stable if the company is able to

sustain its liquidity position and we see a credible pathway for it to

generate marginally positive FOCF following its aggressive production ramp-up

over the next 12 months. We would also need to believe that the company's

improved market position is sustainable.

Longer term, we also believe that any upward rating momentum would be based on

a sustained track record of successful execution toward its operating and

financial targets on sales and gross margins. We believe the company's high

level of vertical integration offers a credible pathway for the company to

achieve meaningful scale over the long term, allowing it to achieve a higher

return on capital as its battery costs decline.
 

ValueAnalyst

Closed
Aug 25, 2016
5,371
11,124
World
Here's more from today's S&P note regarding its rating of Tesla debt. The bold font at the end is due to me:
______________________


NEW YORK (S&P Global Ratings) Aug. 7, 2017--S&P Global Ratings today affirmed

its 'B-' long-term corporate credit rating on Tesla Inc. The outlook is

negative.

At the same time, we assigned our 'B-' issue-level ratings to its proposed

$1.5 billion of senior unsecured notes due in 2025. The '3' recovery rating

indicates our expectation of meaningful recovery (50%-70%; rounded estimate:

60%) in the event of a payment default.

We also affirmed our 'B-' issue-level ratings on its existing senior unsecured

debt and revised our recovery ratings to '3' (50%-70%; rounded estimate: 60%)

from '4'.

The affirmation reflects Tesla's improved liquidity cushion, which in our view

somewhat offsets the substantial risk related to the rapid scale-up of its

Model 3 production and the significantly high debt burden on its balance

sheet. Given the recent launch of the Model 3, scale of Tesla's battery

manufacturing investments, the public perception of its technology, and its

access to the capital markets, the company's financial commitments appear

sustainable for now--albeit with significant execution risks.

The negative outlook on Tesla reflects the company's increased execution risks

over the next 12 months and the lack of visibility around when it will sustain

positive FOCF, which could cause us to downgrade it over the next 12 months.

We could lower our ratings on Tesla if execution issues related to the Model 3

launch later this year or the ongoing expansion of its Models S and X

production lead to significant cost overruns. We could also downgrade the

company if it appears unlikely that Tesla will refinance its upcoming

maturities and sustain a liquidity cushion of at least $1.5 billion as it

funds its capital-intensive operations over the next 12 months. This could

lead us to believe that Tesla's financial commitments are unsustainable over

the long-term.

We could revise our outlook on Tesla to stable if the company is able to

sustain its liquidity position and we see a credible pathway for it to

generate marginally positive FOCF following its aggressive production ramp-up

over the next 12 months. We would also need to believe that the company's

improved market position is sustainable.

Longer term, we also believe that any upward rating momentum would be based on

a sustained track record of successful execution toward its operating and

financial targets on sales and gross margins. We believe the company's high

level of vertical integration offers a credible pathway for the company to

achieve meaningful scale over the long term, allowing it to achieve a higher

return on capital as its battery costs decline.

This is fair. If Tesla executes close to its guidance through 1Q18, I would expect at least one notch credit rating upgrades.
 

TradingInvest

Active Member
Mar 8, 2017
1,696
13,659
USA
I heard a rumor the base Model 3 uses a very small battery pack (of course these days there are lots of fake news on the internet). I view it as bullish that Tesla doesn't talk about Model 3's battery capacity. It's a sign that it uses less batteries and has higher efficiency. If it's confirmed, it's bullish for 3 reasons: a. Lower Model 3 cost; b. Lower (battery) warranty cost; c. Reduces car's weight.
 

stealthology

Member
Jan 24, 2013
467
642
Hawaii
FWIW

(11:22:31 AM):
Tesla Model 3 an `Outright Challenge' to Big 3: Morgan Stanley
By Bailey Lipschultz
(Bloomberg) -- Tesla is “no longer a mere annoyance to incumbent auto players”, but an “outright challenge to the status quo,” Morgan Stanley analystAdam Jonas (equalweight, PT $305) writes in note to clients discussing Model 3.
Target for 500k units “may not be as much of a stretch” as once thought; rev. would roughly triple if reached Current Model 3 design will likely be the “most basic version you will ever see” Model 3 is a “big disruptor,” successful launch may be priced in to TSLA shares but doubts competitor prices are sufficiently discounted TSLA’s charging infrastructure offers a critical competitive advantage as its “cult following” could enter a new dimension
TSLA 8 buys, 11 holds, 6 sells; avg PT $310: Bloomberg data

(11:29:39 AM): *TESLA OUTLOOK STABLE BY MOODY'S
(11:29:45 AM): *MOODY'S ASSIGNS B2 CFR TO TESLA, B3 TO UNSECURED NOTES; OUTLOOK
(11:29:57 AM): The B2 CFR reflects Moody's expectation that the launch, production ramp up, and market acceptance of the Model 3 will be successful enough to achieve approximately 300,000 unit sales during 2018 (a full-year sales rate averaging about 5,500 per week) with a gross margin approximating 25%. This level of sales and profitability would enable Tesla to strengthen its performance from sizable losses to an operating position that supports the B2 CFR. The B2 rating is further supported by Moody's expectation than in the event of severe financial or operating stress, Tesla's brand name, production facilities, and product lineup would have considerable value to another automotive OEM or technology firm targeting the electric vehicle and mobility markets.
 
Last edited:

Reciprocity

Active Member
Feb 27, 2017
4,160
10,905
Chicagoland
I heard a rumor the base Model 3 uses a very small battery pack (of course these days there are lots of fake news on the internet). I view it as bullish that Tesla doesn't talk about Model 3's battery capacity. It's a sign that it uses less batteries and has higher efficiency. If it's confirmed, it's bullish for 3 reasons: a. Lower Model 3 cost; b. Lower (battery) warranty cost; c. Reduces car's weight.

And d. More cars can be produced from a single GF.

Edit: good for capex efficiency, if that wasn't obvious.
 
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Alketi

Member
May 3, 2016
875
2,434
U.S.
I heard a rumor the base Model 3 uses a very small battery pack (of course these days there are lots of fake news on the internet). I view it as bullish that Tesla doesn't talk about Model 3's battery capacity. It's a sign that it uses less batteries and has higher efficiency. If it's confirmed, it's bullish for 3 reasons: a. Lower Model 3 cost; b. Lower (battery) warranty cost; c. Reduces car's weight.
The Model 3 pack sizes are approximately 55 / 80. From the recent EPA documents.
 
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