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Lease vs. Finance in "Tesla goes bankrupt" worst case scenario

Discussion in 'Model S: Ordering, Production, Delivery' started by rog, Feb 25, 2016.

  1. rog

    rog Member

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    I agree that this question had much more relevance 2 years ago. However, I do not agree that Tesla is on par with GM in that regard (and in many others). Tesla operates in a niche market, with virtually no product diversification. GM is a totally different animal - if EVs will not come out of the niche, GM couldn't care less. Tesla however - different story, no?
     
  2. bswn1

    bswn1 Member

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    I'm not saying Tesla is equivalent to GM, I'm saying the question is virtually the same on a comparison basis.

    If GM (or insert any other large market cap publicly traded entity) went belly up, they'd enter into bankruptcy, probably reorg or get bought by another company. The owners of the cars probably wouldn't suffer in any way.

    Exact same thing with Tesla now that it is a public company with a large market cap.

    2+ years ago, you'd probably be having a very different conversation about what bankruptcy means for the company and the owners of their cars.
     
  3. Sandy

    Sandy Member

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    I also think that a very tangible problem would be the demise of the "free" supercharger network. Either someone would purchase the infrastructure and charge for it (no pun intended), or it would become a relic of a distant age of beautiful cars and fall into disrepair.
     
  4. bonaire

    bonaire Active Member

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    Without a swing to profitability, Tesla is "virtually bankrupt" right now. But so is the USA if you compare debt and GDP and ability to reverse that. However, if sales ramp up and they can turn revenue into profits, it is subsided into a minor worry.

    But why wouldn't GM or Toyota or someone sweep in and buy out the company at a discount and keep it running? Toyota could use the plethora of ZEV credits available to them by selling the cars going forward.

    I doubt there will be bankruptcy. I do think they need to go to market for more money at some point this year or next to prepare for the equipment needs of a higher-volume Model 3. I see a need for a few more Billion dollars to prepare for end of 2017 Model 3 rollout.
     
  5. jbcarioca

    jbcarioca Active Member

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    I'm slow commenting in support because I had to check some facts. One Fisker owner shares an adviser with me. That one remains in daily use and has maintenance still happening. Another acquaintance of mine bought a new Fiscer and eventually sold it after two years at 65% of initial price. I have no idea if there is anything like a reliable market for them, but despite huge design and building flaws, an out-of-business battery provider and manufacturer, the cars are still functional and do sell.

    obviously the Tesla vehicles would have much better results because of complete and well-documented service manuals, a fleet of more than 150,000 vehicles even if Tesla failed next year, and well-documented parts replacement processes.

    Still, there are too many S's to give them much rarity value.

    Finally, I think the odds of actually going out of business are vanishingly small. The value of Tesla as a going concern would almost certainly produce a buyer, probably a major car company, thus obviating the OP's major risks. Isn't that a more probable outcome of such a disaster scenario?
     
  6. cpa

    cpa Active Member

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    As I mentioned upstream, the Supercharger network is not a viable profit center. It is primarily a marketing expense for Tesla. Let's just disregard the construction costs and focus on the ongoing operating costs. Lease payments are made on most locations, while repairs, electricity charges and property taxes are paid on all of them. No white knight is going to acquire this network and then figure out how to install a fee-based structure, maintain the units anywhere near as well as Tesla does today, and make a reasonable return on their investment.

    It is not clear just how valuable the Supercharging concept is today. There are no competing manufacturers out there that have long-distance BEVs in the pipeline (at least to my knowledge, save the Bolt.) There are too few Teslas on the road. So, the tangible Supercharger assets are probably not even worth NBV in a bankruptcy sale. The intangible assets are likely more valuable than the hardware. However, tomorrow might be a different story. If Tesla goes under in 5-6 years, there will be many more Teslas on the road, and there will possibly be a few conventional manufacturers who have entered the fray with their 200-300 mile BEVs. Then, a third party might feel that there is enough current and future demand for Superchargers. Accordingly, then the infrastructure along with the patents will be worth a lot more as a money maker.
     
  7. EXOTIC1

    EXOTIC1 Member

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    I think the Fisker karma still has followers/buyers in part to it's exotic looks and very limited run less than 2k cars. I saw 2 sell at recent Barrett Jackson for upper 50's. I think Tesla's will always have a solid resale as it doesn't have the exotic look but it's a much better vehicle. I firmly believe in them being around for a long time.
     
  8. neroden

    neroden Model S Owner and Frustrated Tesla Fan

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    At this point a bankruptcy would simply wipe out stockholders and bondholders. I think there is *no* chance of the company being broken up. It has too much value as a going concern; some big company awash in cash would simply buy the whole thing at a fire-sale price.
     
  9. jbcarioca

    jbcarioca Active Member

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    There is not enough detail in Tesla financials to confirm your supposition. It is not implausible that the Superchargers might be a profit center now, depending on the assumptions made for: 1) financial reserves created at vehicle sale for Supercharger use and 2) actual operating costs assumed for network. Without much more data I do not think we can guess whether or not they are a profit center today or will be sometime soon. The Supercharging cost accounting could easily be structured as any other unlimited use prepaid subscription model works. There are examples from internet use, telecommunications, even electricity supply has had a few such examples in one place or another around the world. Of course, the better the Supercharger network looks the worse the per car margins look. As it is nearly all the analyst evaluations of Tesla have been much too superficial to even distinguish the impact of the Tesla direct model income recognition (only upon final user purchase and payment) vs the typical car manufacturer income recognition upon shipment to dealer. There is a gigantic difference in timing, among other things and Tesla WIP looks much higher too.

    Bluntly, this entire thread is predicated on a fallacious set of assumptions that are Lutz-like. Imagining the Supercharger network is far beyond the capabilities of any of these "analysts". BTW, I do not suggest Tesla is free of serious challenges, just that the typical reviewers have no clues.
     

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