A way Tesla could convert preorders to cash

[henderrj]

A boatload of people have, in effect, added the combined equivalent of more than a million shares of Tesla stock with Model 3 preorders. To meet the demand Tesla seems poised to offer actual additional shares. But there may be another way for the Stanford poster child to raise these needed funds. Having myself stood in line for three hours this would certainly pique my interest.

“Dear Tesla Model 3 reservation holder. If you turn your preorder into a hard order with an additional non-refundable deposit of $5000 you will receive Supercharger access for free when you configure your car.” Of course they could use many features – autopilot would be a definite draw.

Maybe they have levels – for $1,000 you get supercharger access, for $5,000 you get also get autopilot, add on another couple grand and you get the heads up display (if that actually materializes). Okay, maybe a chart of options to be gained for free – a buffet of electric tech!

To be helpful they’d have to get this money soon so some offerings could not be listed.

One caveat – they must not let people jump the live by converting now. This would create animosity amongst the many faithful who have begun savings accounts for the purchase of their Tesla.

Hmm, that’s a last thought. “Help us oh people! Convert to a hard order and anything you put down we’ll pay prime plus X percentage like any savings account.” Hey, Musk did Paypal, right? This couldn’t be that hard. Save up the money and save the planet in one fell swoop!

Perhaps this should have been in the investment forum. Oh well.

Thoughts?

 

[Dwdnjck]

Good idea.

 

[Petra]

...and for your generous contribution of only $8000, you'll get everything we just talked about as well as a DVD of Andrea Bocelli live in concert so that you can relive these precious moments again and again. Remember, all of this is only made possible by contributions from viewers like you.

 

[Rockster]

I think it's a great idea. My only concern is that the spin doctors in the media will respond with headlines that cry, "Tesla Desperate for Cash, Offers Incentives to Prevent Cancelations"

 

[kort677]

why is any more promotion necessary? he already has 300k+ deposits for a car that doesn't really exist yet cars that are 18 months+ out from the first one being delivered and the current orders will take over a year to complete. it appears that he has already crowd funded his business needs for awhile.

 

[henderrj]

I think it's a great idea. My only concern is that the spin doctors in the media will respond with headlines that cry, "Tesla Desperate for Cash, Offers Incentives to Prevent Cancelations"

They are out there! But even the infamous Seeking Alpha short selling contributors have backed off for the moment.

The probability is that Tesla could not raise enough with my idea. Not that it's not a great idea! (Put that in in case Elon actually reads this!) But they probably will have to do an offering of some sort anyway. Maybe one for the new China/France/Mexico factory?

 

[henderrj]

why is any more promotion necessary? he already has 300k+ deposits for a car that doesn't really exist yet cars that are 18 months+ out from the first one being delivered and the current orders will take over a year to complete. it appears that he has already crowd funded his business needs for awhile.

I wasn't thinking promotion - I was thinking cash. If Tesla is to build another factory it'll take a billion to get it off the ground. If we are all correct that Tesla can sell all the Model 3s it can make then it would behove them to build another facility as soon as possible. That was the problem I was trying to help solve.

 

[MP3Mike]

why is any more promotion necessary? he already has 300k+ deposits for a car that doesn't really exist yet cars that are 18 months+ out from the first one being delivered and the current orders will take over a year to complete. it appears that he has already crowd funded his business needs for awhile.

But can they really spend the money? It has to stay listed on the books as a liability since it is 100% refundable at any time. By converting to a hard order they could actually use the money.

 

[kort677]

But can they really spend the money? It has to stay listed on the books as a liability since it is 100% refundable at any time. By converting to a hard order they could actually use the money.

maybe you're correct. I'm not a CPA so I can't argue with you with any certainty of being right

 

[David 90274]

Tesla can already spend the cash from the reservations. The funds are not in escrow. The appearance of a liability on the balance sheet doesn't stop them. Companies also show bank loans as liabilities but they certainly spend the cash from those.

In theory you could lose the $1000 for your reservation if Tesla went bankrupt (suddenly, before you could request its return). Not only is this incredibly unlikely at this point but even if it did your claim to recover it would trump most other creditors or stakeholders.

 

[kort677]

your claim to recover it would trump most other creditors or stakeholders.

until some court or governmental agency rules otherwise, see GM bondholders
GM and the Truth About One of America's Biggest Bankruptcies

 

[jeffhre]

"A way Tesla could convert preorders to cash"

I assume you mean beyond the 300 million USD that they already have taken in?

 

[henderrj]

Yes, it will take a significantly greater amount of capital if Model 3s are to roll out of more places than Fremont or fly out any faster., don't you think?