Elon Musk’s empire: Countdown | The Economist

[mblakele]

http://www.economist.com/news/busin...-dropping-inventive-and-combustible-his-space

Apologies if this has already been posted. The article discusses Tesla, SolarCity, SpaceX, and Musk's personal finances.

 

[Papafox]

This article is about an implosion of Musk's personal finances and the finances of his companies through a cash crunch. It is a best-case scenario in the eyes of the shorts. It's their dream, and it's likely to never happen.

Part of the author's problem is that he doesn't understand what is about to transpire in the next few weeks. The Economist author suggests that Musk will resume his old game of talking about new sources of future revenue and hope that discussion will calm the waters. It won't and Musk won't place his emphasis there, either. Rather, he is smart enough to know that investors are most interested right now in seeing Tesla and SolarCity de-risked so that the short term goal of launching Model 3 on time is not impeded. He will show a de-risking by:showing that:
* Tesla will be cash-flow positive and GAAP-profitable (or nearly so) in Q3, and TE products being produced in bulk will allow 2017 core businesses to be consistently profitable (though not always cash-flow positive because of all the Cap Ex for rapid expansion)
* The new autopilot 2.0 will increase GM on Tesla vehicles, not decrease it
* Recent events have led to a serious increase in demand for S and X, which allows for higher GMs by cutting out X 60D and requiring air suspension on all Model Xs
* Panasonic has stepped up to the plate and volunteered to do the heavy financial lifting to get the Buffalo factory producing products
* Give guidance that Q4 will be even better for Tesla in terms of profitability
* Show how infrastructure currently paid for (gigafactory, for example) will start producing great quantities of revenue prior to Model 3 launch because Tesla Energy will come alive in a big way once 2170 cells start rolling off the Panasonic portion of the gigafactory
* Show how the basic business model of SolarCity has already been significantly de-risked, merely through association with Tesla. PPA contracts can now be monetized and used to produce cash when needed
* Show that the move from short-term-financed PPAs at SolarCity are going away and being replaced by payment by buyer spending on solar roofs, which will provide a nice profit margin and will encourage the sale of other TE products

The bottom line is that by successfully showing how the current plan is being significantly de-risked, Musk will succeed in raising more capital for Tesla and taking all this talk of cash-crunch off the table.

 

[luca]

did someone find all medias from UK have strongly hostile attitude to Tesla and Elon musk, eg reuter the economist...

 

[mblakele]

did someone find all medias from UK have strongly hostile attitude to Tesla and Elon musk, eg reuter the economist...

I don't know a lot about the culture at Reuters, but it was founded by a German émigré. While its headquarters are in London, its current ownership is a Canadian corporation with HQ in NYC. In other words it's global, like so many organizations.

The Economist Group has significant ownership by British, German, and Italian interests. The magazine has a clear editorial bias, and doesn't try to hide it. In this case I think the article was tilted against Musk because of questions about corporate governance. This is basically the "Musk is bailing out his cronies at SolarCity" perspective. From the article:

Musk Inc also carries echoes of Asian and Italian business federations, which pool resources and people: SolarCity uses batteries made by Tesla, for example, and SpaceX has made loans to SolarCity. Mr Musk is the chairman of all three firms, which share some directors. His cousins manage SolarCity. Fidelity, a big asset manager, owns large stakes in each of the trio.​

The Economist deplores this kind of thing, preferring transparency and independent governance. That might be a British bias: fair play and all that. And if Tesla and SolarCity were mature, profitable companies I'd agree. But today an investment in Tesla is a bet on Musk. You either let him get on with it, or you sell up and invest in something else. For myself I'm long TSLA, so I voted for the merger.

 

[Brando]

Watch how well UK elites manage their companies.
See why UK world world leader in auto industry.
I find little in the Economist worth reading.

 

[luca]

Watch how well UK elites manage their companies.
See why UK world world leader in auto industry.
I find little in the Economist worth reading.

There is no UK auto industry

All UK carmaker are already bankrupt and sold to foreigner

 

[MitchJi]

Watch how well UK elites manage their companies.
See why UK world world leader in auto industry.
I find little in the Economist worth reading.

Many of the worst cars ever made were British cars. What killed the British car industry was producing terrible cars.

Producing better quality cars enabled the Japanese to get a lot of the American market, vs lower quality American cars. Compared to American cars British cars were absolute junk.

 

[30seconds]

Economist has been historically skeptical of many new tech growth areas. Took them years to admit that the internet was a big deal. Only recently have they started to come around about renewable energy.

 

[mblakele]

Economist has been historically skeptical of many new tech growth areas. Took them years to admit that the internet was a big deal. Only recently have they started to come around about renewable energy.

To be fair they've been vocal about climate change for some time. Where they're skeptical, it's often because the numbers don't add up.

 

[Cosmacelf]

The Economist is a shadow of its former self. I stopped reading it about 16 years ago. Every time I pick up a copy to glance at the stories, I'm reminded why I gave up reading it.

 

[Paddy]

Living in the UK, there is a lot of -ve press about Tesla in the UK. I assumed that the -ve press was universal across all geographies.

I often read apple news, and I sometimes wonder whether that is rigged to be anti tesla!

 

[mark.lawler]

Years ago I was once reading an article in The Economist that was talking about "...a trade dispute in 1812." It took me a couple of paragraphs for the lightbulb to go off. This "trade dispute" they were talking about was actually The War of 1812! Hell, they burned down our White House! That told me everything I needed to know about any bias The Economist might have...

 

[mblakele]

Years ago I was once reading an article in The Economist that was talking about "...a trade dispute in 1812." It took me a couple of paragraphs for the lightbulb to go off. This "trade dispute" they were talking about was actually The War of 1812! Hell, they burned down our White House! That told me everything I needed to know about any bias The Economist might have...