In an yet another FUD article in Seeking Alpha, I noticed the following quote attribute to NY Times:
In March of 2009, when Tesla was gearing up to produce the Model S (at a time when CEO Elon Musk promised that the base model would cost only $57,400 before tax credits), The New York Times ran a story with the following passage:
Tesla is also financing the development of the Model S with deposits from people on the waiting list, who can pay $40,000 to reserve one of the first 2,000 cars or $5,000 for later cars.
For those who are worried about what will happen to their deposits if the car is never produced, since the money will be spent on development and not held in escrow, Mr. Musk said: "The worst-case scenario is they would lose their money. They are at risk."
Is this true? I always thoughts deposits are maintained and accounted separately and cannot be considered as revenue until the sale is completed and as such Tesla cannot touch those funds.
It's not revenue, it's a liability like a loan and accounted for on the balance sheet as such. If the company goes bankrupt, people who paid deposits line up like other creditors in hopes of getting some portion back.