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Musk: Tesla Faced Severe Threat of Death

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[vc_row][vc_column][vc_column_text]Tesla CEO Elon Musk said the company faced a “severe threat of death” due to the Model 3 production ramp. In fact, Tesla was “within single-digit weeks” of dying, he told Axios on HBO.

Tesla struggled, but overcame to hit its production targets in June, and turned a profit in October for the first time since 2016.

“Essentially, the company was bleeding money like crazy and if we didn’t solve these problems over a short period of time we would die,” Musk said on the show. “It was extremely difficult.”

You may remember that Musk was sleeping at the factory during the the most severe production crunch. He called the period “extremely painful.”

“It hurts my brain and my heart,” Musk said, reflecting on the strain put on himself and workers.

“I just did it because if I didn’t do it, then [there was a] good chance Tesla would die,” Musk said.

Watch the clip below.[/vc_column_text][vc_video link=”https://www.youtube.com/watch?v=tRb6kQE7uYc” video_title=”1″][/vc_column][/vc_row]

 
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In some ways, this is exaggerated by Elon. If really desperately needed, the company could have got money from outside sources to push through the production issues. The fact is that Elon and upper management really did not want to do that. That gamble and brutally hard work paid off and there is no doubt that it was dicey but it was only death if they didn't dip into outside funding.
 
In some ways, this is exaggerated by Elon. If really desperately needed, the company could have got money from outside sources to push through the production issues. The fact is that Elon and upper management really did not want to do that. That gamble and brutally hard work paid off and there is no doubt that it was dicey but it was only death if they didn't dip into outside funding.
Agreed. Elon has a tendency sometimes to place himself into Hero status by using hyberbole.
I was hoping this article would help the stock tank for no reason today so I could grab some, but no luck.
 
Single digit probably meant 9.999 weeks. That's over half a quarter. That's acting as if they had the same cash burn but didn't sell a single S, X, or 3 the entire time.

They could have easily done a capital raise. Even if the stock would drop to high 100s, it would be back up to 300 once Q3 was done in the worst case scenario.

They could have sold Tesla cereal, Tesla Christmas ornaments, Tesla girl scout cookies, and the public would be eating that up.

Elon's factual wrong here.

In his head however, he might believe he is down on chips and that might be how he amps himself up for fights.

In either case, Q3 was smashing. I believe Q4 will be the same.

Also - I don't think people will pick a Bolt versus Model 3 in Q12019 even if the Model 3 is $3750 more.

Value is what you get, not what you pay.
 
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This certainly gives shorts ammunition to say “I told you so!”.

But ultimately it doesn’t matter because Tesla made it. I guess if shorts want to take solace in the fact they were “almost right” even though they are ultimately wrong, so be it. I guess that’s one way for some of them to deal with their massive losses.

It’s like saying, “I almost won the lottery”. Well....you didn’t...did you....
 
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Wow. Trolling Musk is a cottage industry within even TMC??

Just to be clear, I hardly agree with everything Elon does and says. He is at times a bit of a drama queen, but nobody seems to be giving Musk much real credit here. Many of these comments appear to miss the forest for the trees. I challenge any of you Monday morning quarterbacks to achieve a tiny fraction of what Musk has achieved here. From scratch he has built the leading form of 'disruptive technology' In the United States, resisted the endless pressure from investors and his board for the more traditional short-term-jack-up-the-profits-for-the-next-quarter ethos that is so dominant in corporate America, developed the necessary (and very expensive) infrastructure to support that disruptive technology (which has contributed significantly to his poor bottom line until this last quarter), and built the best car anyone has ever seen for reasonable money in the Model 3.

The sales of that car are exploding, and there's every indication it's going to be at least as popular if not more popular in Europe and Asia. It is, as we are speaking, starting the genuine transformation of the transportation industry. And while EV technology does not solve the problem of dirty power generation, it's pretty obvious it's a necessary part of a long-term solution away from a climate catastrophe that is only gaining momentum. Musk gets all this – how many billionaire corporate leaders in the United States do? How many have their heads in the sand and are promoting denial of all these issues? Why aren't you guys going after them? For that matter, how many industries in the United States actually produce and manufacture a technology that is class leading? Other than Tesla, I can't think of another company. I'm sure there has to be another one, but it does not jump to mind.

While it is always easy to find flaws in and then devalue someone you initially put up on a pedestal, and tech geniuses are no exception to that rule, and I'm sure this post will be disagreed with by many, I do not believe Musk is in this principally for the money, but rather to achieve his vision of a transition to a sustainable transportation architecture/network. That and making money are hardly mutually exclusive (just the opposite), but it's pretty clear he's committed to giving every Tesla customer an excellent value for their money. This ethos penetrates many if not most sectors of Tesla, at least in my experience with numerous sales and service people,over the time of our ownership experience. And that's a really good sign. Again not something you can say about every American corporate structure – in fact this might be one of the exceptions that proves the rule.

So let's cut Musk some slack.
 
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Incredible that some people here even go against negative Tesla facts when the friggin CEO of the company itself states them......

Lol, I was just thinking that myself. I agree that there were possibilities for raising cash on the short term, but they are *all* very undesirable costing the company significantly. The main point is that there was potential for things going completely to hell in a hand basket if they had continued to have production problems. I think that is what Elon was really stressing, the fact that it was literally do-or-die in terms of raising the production rates and optimizing the the mix of delivered vehicles.

Tesla no longer has a knife at its throat, but it still has significant hurtles ahead. There are bond payments to be made and profit levels to be achieved all while continued investments in new facilities are made. I fully expect to see a repeat of all this drama when the Y comes to production. They will have a revenue base from the model 3, but knowing how they have done things in the past I expect that will all be consumed by other projects in addition to the Y production line leaving them again close to running out of cash.

I will say that I expect the involvement of Elon Musk in the electric car industry has probably advanced BEVs by a decade if not more. I am not at all sure if any of the other car makers would be nearly as advanced as they are if they were just competing against each other rather than against Tesla and Elon Musk.
 
Wow. Trolling Musk is a cottage industry within even TMC??

Just to be clear, I hardly agree with everything Elon does and says. He is at times a bit of a drama queen, but nobody seems to be giving Musk much real credit here. Many of these comments appear to miss the forest for the trees. I challenge any of you Monday morning quarterbacks to achieve a tiny fraction of what Musk has achieved here. From scratch he has built the leading form of 'disruptive technology' In the United States, resisted the endless pressure from investors and his board for the more traditional short-term-jack-up-the-profits-for-the-next-quarter ethos that is so dominant in corporate America, developed the necessary (and very expensive) infrastructure to support that disruptive technology (which has contributed significantly to his poor bottom line until this last quarter), and built the best car anyone has ever seen for reasonable money in the Model 3.

The sales of that car are exploding, and there's every indication it's going to be at least as popular if not more popular in Europe and Asia. It is, as we are speaking, starting the genuine transformation of the transportation industry. And while EV technology does not solve the problem of dirty power generation, it's pretty obvious it's a necessary part of a long-term solution away from a climate catastrophe that is only gaining momentum. Musk gets all this – how many billionaire corporate leaders in the United States do? How many have their heads in the sand and are promoting denial of all these issues? Why aren't you guys going after them? For that matter, how many industries in the United States actually produce and manufacture a technology that is class leading? Other than Tesla, I can't think of another company. I'm sure there has to be another one, but it does not jump to mind.

While it is always easy to find flaws in and then devalue someone you initially put up on a pedestal, and tech geniuses are no exception to that rule, and I'm sure this post will be disagreed with by many, I do not believe Musk is in this principally for the money, but rather to achieve his vision of a transition to a sustainable transportation architecture/network. That and making money are hardly mutually exclusive (just the opposite), but it's pretty clear he's committed to giving every Tesla customer an excellent value for their money. This ethos penetrates many if not most sectors of Tesla, at least in my experience with numerous sales and service people,over the time of our ownership experience. And that's a really good sign. Again not something you can say about every American corporate structure – in fact this might be one of the exceptions that proves the rule.

So let's cut Musk some slack.

Tesla stayed multiple times that no capital is needed. Therefore at that time no one considered death as a possibility.
More probable is that Musk is playing with propabilities and while possibility was real it was an unlikely outcome.
 
In some ways, this is exaggerated by Elon. If really desperately needed, the company could have got money from outside sources to push through the production issues. The fact is that Elon and upper management really did not want to do that. That gamble and brutally hard work paid off and there is no doubt that it was dicey but it was only death if they didn't dip into outside funding.

Borrowing more money at that point would have been very expensive. The cash problems were caused by production problems, so it'd have been asking someone to bet on them fixing it.

In addition, asking for more money because they couldn't fix production would have been a negative signal to prospective customers, who'd effectively be making the same bet.

I don't think they're not out of the woods until the SR is available. But the tax credit upsell means that they're in a position where doubt over their ability to produce the SR could actually be helpful to sales of the LR and MR right now. Ironic to be in a position where they'd actually plead poverty.
 
Tesla stayed multiple times that no capital is needed. Therefore at that time no one considered death as a possibility.
More probable is that Musk is playing with propabilities and while possibility was real it was an unlikely outcome.

There is a big difference between capital and cash. Yes, they had enough cash to make it through. I don't recall the exact numbers, but the cash burn rate with low deliveries would have run the company dry in just one or two quarters. Once the company becomes significantly profitable (which they still aren't) they can finance their capital needs from the profits. But that is why they want to deliver 10,000 model 3 autos a week.
 
Borrowing more money at that point would have been very expensive. The cash problems were caused by production problems, so it'd have been asking someone to bet on them fixing it.

In addition, asking for more money because they couldn't fix production would have been a negative signal to prospective customers, who'd effectively be making the same bet.

I don't think they're not out of the woods until the SR is available. But the tax credit upsell means that they're in a position where doubt over their ability to produce the SR could actually be helpful.

By SR I assume you mean the short range battery? I don't think their future depends on the SR. Yes, it will lower the selling price but it will also lower their margins. I think producing the SR is more of an image problem than a profitability problem. GM is selling ~$35,000 Bolts and not making any money on them. It won't help Tesla to sell $35,000 model 3s if they don't make very much if any profit.

Tesla will be out of the woods when they can make and sell 10,000 model 3 units a week with any battery.
 
There is a big difference between capital and cash. Yes, they had enough cash to make it through. I don't recall the exact numbers, but the cash burn rate with low deliveries would have run the company dry in just one or two quarters. Once the company becomes significantly profitable (which they still aren't) they can finance their capital needs from the profits. But that is why they want to deliver 10,000 model 3 autos a week.

As he mentioned, in the Recode interview, they had to guess production rates and place orders with suppliers. Can't pay the suppliers if cars aren't being built. That's where the cash burn and the begging letter for suppliers to give them a break came from.
 
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Borrowing more money at that point would have been very expensive. The cash problems were caused by production problems, so it'd have been asking someone to bet on them fixing it.

In addition, asking for more money because they couldn't fix production would have been a negative signal to prospective customers, who'd effectively be making the same bet.

I don't think they're not out of the woods until the SR is available. But the tax credit upsell means that they're in a position where doubt over their ability to produce the SR could actually be helpful to sales of the LR and MR right now. Ironic to be in a position where they'd actually plead poverty.

The Axios people asked him to clarify what he meant and it was exactly what I thought.
 
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