Welcome to Tesla Motors Club
Discuss Tesla's Model S, Model 3, Model X, Model Y, Cybertruck, Roadster and More.
Register

Deepak Ahuja: "Our expectation is that we will establish shop via warehouse line ....

This site may earn commission on affiliate links.
Another thing to consider about direct leases is how the cash flows coordinate with debt repayment. For example, revenue this year should be about $6B, and with 50% growth we should see $9B in 2016. Now lets suppose that 1/3 of sales are directly leased. So $3B is leased in 2016, so from 2016 to 2018 about $500M is recieved in each year. The leases expire in 2019 and assuming that the residual value is at least 50% (a very conservative assumption), then the cash flow from these leases in 2019 will be inexcess of $1,500M. But in that same year, a bond principle payment of $800M comes due. So we see that cars leased in 2016 can assure that 2019 bonds will be paid.

But what about cars leased in 2015? Following similar math, these should give Tesla a $1B cash flow in 2018. What, oh what, might Tesla do with that? The Gigafactory is built and Model 3 is ramping up nicely. I'm thinking that Tesla is pouring this $1B into a new factory yet to be named. What will Tesla do in 2020 with $2.25B from cars leased in 2017? So while bears mock Tesla for all the money they're losing, Tesla is quietly queuing up the future cash flows it needs to sustain annual growth at 50% or better.
 
Another thing to consider about direct leases is how the cash flows coordinate with debt repayment. For example, revenue this year should be about $6B, and with 50% growth we should see $9B in 2016. Now lets suppose that 1/3 of sales are directly leased. So $3B is leased in 2016, so from 2016 to 2018 about $500M is recieved in each year. The leases expire in 2019 and assuming that the residual value is at least 50% (a very conservative assumption), then the cash flow from these leases in 2019 will be inexcess of $1,500M. But in that same year, a bond principle payment of $800M comes due. So we see that cars leased in 2016 can assure that 2019 bonds will be paid.

But what about cars leased in 2015? Following similar math, these should give Tesla a $1B cash flow in 2018. What, oh what, might Tesla do with that? The Gigafactory is built and Model 3 is ramping up nicely. I'm thinking that Tesla is pouring this $1B into a new factory yet to be named. What will Tesla do in 2020 with $2.25B from cars leased in 2017? So while bears mock Tesla for all the money they're losing, Tesla is quietly queuing up the future cash flows it needs to sustain annual growth at 50% or better.

This is the wonderful stuff that I was trying to find out.

Thanks for your contribution to this thread.
 
Yes, as far as the Bears at SA are concerned, they are either clueless, or willfully writing garbage. It isn't clear which one it is. It isn't only SA, of course, the WSJ wrote an editorial a few days ago where they trotted out the cash burn without any explanation. It was a hit piece, of course. I expected better from the WSJ, but I guess everyone has their bête noires.

Knowing Tesla as well as we do, it just goes to show, again, that you can't believe things written on the Internet without your own independent investigation.