No need to attract capital anymore - but perhaps wiser?

[Cloxxki]

Really, for a car company (albeit not exclusively), TSLA doesn't have that much debt on the books relative to achieve sales, even when accepting 18Q3 as a long term ceiling of sorts.
There's now sufficient profit to build GF3 in China and do so quickly, apparently. No need for more debt or an equity issuance.

With the head start that Tesla somehow still holds in BEV's, competitors slowly getting underway securing battery capacity seemingly the main bottleneck for legacy BEV implementation more so than demand even at needlessly elevated price points... Why not double down? GF4 should be in Europe, and can it wait, really? I can see Europe getting mostly assembly with China doing drive trains, wheels, tyres, brakes, steering wheels, screens, circuitry, wiring harnesses, etc.
But, USA seems to simply need accelerated production. And not just on the expensive coast. Which is far from Europe anyway. GF1 might be a decent alternative as a do-all manufacturing city. But it needs labor, quality labor. And with housing prices going through the roof, decent cost workers will be in short supply.
GF1 needs to be expanded regardless of another factory in North America to be built or not. Why not invest in housing?
Is Li-ion supply secured, properly, for potential accelerated groth? And if so, should it not all be used?

With a $50-60B market cap, isn't funding a whole new GF on top of existing plans, or an expedited one, quite cheap to do? Barely any dilution for a very significant capacity increase.
GF's are quickly becoming a copy/paste solution. The China one NEEDS to be an easy build now. Production easy to ramp, as it's been done already, by themselves.
Seems to me the cheaper model needs to come sooner rather than later. That's where the real business is, and that's what VW and the Asians are really gunning for. And while Model 3 production is well too slow, a proper effort for a simpler car still should be doable. Especially when hiring external production geniuses or teaming up with the likes of Toyota. again.

Just growing as fast as profits come, to me seems needlessly slow. Did Tesla somehow succumb to the corporate ways of just being short-term profit focused? How fast they manage to grow from here will define the role of the company in a market that is gradually transitioning to BEV's. Today it's just a drop in the bucket. It will not for long. There IS a headstart. Why give that up?

 

[TradingInvest]

Really, for a car company (albeit not exclusively), TSLA doesn't have that much debt on the books relative to achieve sales, even when accepting 18Q3 as a long term ceiling of sorts.
There's now sufficient profit to build GF3 in China and do so quickly, apparently. No need for more debt or an equity issuance.

With the head start that Tesla somehow still holds in BEV's, competitors slowly getting underway securing battery capacity seemingly the main bottleneck for legacy BEV implementation more so than demand even at needlessly elevated price points... Why not double down? GF4 should be in Europe, and can it wait, really? I can see Europe getting mostly assembly with China doing drive trains, wheels, tyres, brakes, steering wheels, screens, circuitry, wiring harnesses, etc.
But, USA seems to simply need accelerated production. And not just on the expensive coast. Which is far from Europe anyway. GF1 might be a decent alternative as a do-all manufacturing city. But it needs labor, quality labor. And with housing prices going through the roof, decent cost workers will be in short supply.
GF1 needs to be expanded regardless of another factory in North America to be built or not. Why not invest in housing?
Is Li-ion supply secured, properly, for potential accelerated groth? And if so, should it not all be used?

With a $50-60B market cap, isn't funding a whole new GF on top of existing plans, or an expedited one, quite cheap to do? Barely any dilution for a very significant capacity increase.
GF's are quickly becoming a copy/paste solution. The China one NEEDS to be an easy build now. Production easy to ramp, as it's been done already, by themselves.
Seems to me the cheaper model needs to come sooner rather than later. That's where the real business is, and that's what VW and the Asians are really gunning for. And while Model 3 production is well too slow, a proper effort for a simpler car still should be doable. Especially when hiring external production geniuses or teaming up with the likes of Toyota. again.

Just growing as fast as profits come, to me seems needlessly slow. Did Tesla somehow succumb to the corporate ways of just being short-term profit focused? How fast they manage to grow from here will define the role of the company in a market that is gradually transitioning to BEV's. Today it's just a drop in the bucket. It will not for long. There IS a headstart. Why give that up?

Tesla knows the stock is going to appreciate significantly in the next 5~10 years, likely 10~20 fold upside. Diluting stock now doesn't make sense for real shareholders.

Borrowing small amount of money doesn't make a difference. Borrowing a lot of money will increase risk. We don't want to go through that again.

Now that Model 3 ramp has been achieved, G1+G2+G3+Fremont factory will generate enough free cash flow to fund any future expansion.

Focusing on cheap models is not a great way to do business. This is obvious just look at what Apple has been doing in the past 10 years.

 

[Cloxxki]

Diluting 10% would free up $5-6B.
How much of a global market share might that have ~10 years down the road when legacy car makers and suppliers are closing old factories left and right because they could not convert to BEV tech, or find enough work to do?
There will be big brands not making it through the transition, BEV "startups" such as Tesla and many Chinese ones we don't even know about will take their place.
The way I see it, this is still the start of a 20 year race to a whole new car market. Full ICE substitution. Tesla and the Chinese have a 2-3 year head start now. What are they going to do with it? Seems like Tesla will only add serious assembly capacity at least 2 years from now, in China. I can hope that the Tilburg expansion makes it more of a Fremont facility that could be fed parts directly from suppliers and GF3, but that really is only hope by lack of even a rumor. Just, Elon saying China will make "some parts" first before assembly comes online.
This means, 2 years from now, Tesla will have lost significant BEV market share. BEV market will eventually substitute the pre-BEV industry completely.
VW see the problems and risks with battery supply and build an extra factory to be less dependent on LG.

Tesla has the Machine That Makes The Machine, sort of, but only have published plans for ONE to be completed in the next 3 years, and nothing published to come beyond that. Europe GF is a wish, but although it should be peanuts compared to doing China on their own terms, nothing firm as yet. Not even a country or a plot of land.

For NOW, Tesla makes the most compelling premium BEV's in series and mass production. Their price point is steep, and can be adjusted over the next years to ensure demand keeps up with production gains. But their are approaching a ceiling. Sure, we speculate GF1 will make Model Y and possibly 3 "soon". But the snitches at the 45,000 head company are not saying anything to that extent yet.

I fear Tesla is no longer a startup anymore. It wants to self-fund, and after all the criticism incurred and survived, why adopt that strategy NOW, just when things are really starting to go their way? It was a blessing that the rest of the market didn't catch up when Tesla were ruining close to a year's worth of planned sales by not ramping Fremont fast enough AND allowing GF1 to start lagging. I suspect in part due to lack of cash from late Model 3 ramp and the "no new capital" policy already having been adopted. Too early for comfort.

[Slight tangent]
There is some business to be made if they can get some good focus on Model S and X refresh, both the cars in itself, production speed+cost and consumer price. More like Model 3, but even more compelling in terms of quality and specs. Fend off the premium brand competition before it establishes itself as a viable option. I believe they'll do something about S+X, when and if GF1 indeed catches up to demand. There's serious money to be made merely swapping to self made cells there. The new Model 3 motors are bound to be better/cheaper/more reliable with room to be slightly scaled up. In fact, the Semi might turn out to need a slightly beefier motor if it's only going to have 4 of them. Even if they are P level ones.
[/tangent]

The GF3 project seems too modest for now. Initial car capacity 250K across 3 and Y. That's less than Fremont does NOW in 3's alone. Suddenly better expectation management? Or just under-preparing for demand? Or too little Li-ion and other RM's secured?

Especially if indeed they're working on a smaller simpler ~$25K car, there will need to be some serious expansion. Service Centers but also another GF for it. Say it would be 40kWh and just 500,000 units (not a lot for such a car), that's 20 GWh right there, equal today's GF1 capacity. Also for number of motors.
If the tariff war (S/X sales losses in China) justifies expediting GF3 construction, why not expand MORE while they are in a position to collect capital cheaply? Wouldn't shareholders see the benefit of having slighly less in a vastly larger company?
The Model 3/Y building machine can't be a product to repeat too often. The cars that come out are just a narrow if large market segment. Can the same machine also push out S, X, pickup and smaller vehicle at the same or higher pace?
A machine that makes smaller cars seems more important to the BEV future Tesla wants to make happen. Teslas are still the quirky electric Lexus' (Lexi?). Not enough diversity and volume. The smaller car would be a real challenge to integrate into the service organization, but if it's truly simpler with less tech to break on it might actually help to justify a denser service presence globally.

The future is NOW, Tesla! Your delays did not affect to competition, it only made them stronger than they'd otherwise have been at this date, having lost 100's of thousands of fewer sales to you.

 

[electracity]

Really, for a car company (albeit not exclusively), TSLA doesn't have that much debt on the books relative to achieve sales, even when accepting 18Q3 as a long term ceiling of sorts.
There's now sufficient profit to build GF3 in China and do so quickly, apparently. No need for more debt or an equity issuance.

With the head start that Tesla somehow still holds in BEV's, competitors slowly getting underway securing battery capacity seemingly the main bottleneck for legacy BEV implementation more so than demand even at needlessly elevated price points... Why not double down? GF4 should be in Europe, and can it wait, really? I can see Europe getting mostly assembly with China doing drive trains, wheels, tyres, brakes, steering wheels, screens, circuitry, wiring harnesses, etc.
But, USA seems to simply need accelerated production. And not just on the expensive coast. Which is far from Europe anyway. GF1 might be a decent alternative as a do-all manufacturing city. But it needs labor, quality labor. And with housing prices going through the roof, decent cost workers will be in short supply.
GF1 needs to be expanded regardless of another factory in North America to be built or not. Why not invest in housing?
Is Li-ion supply secured, properly, for potential accelerated groth? And if so, should it not all be used?

With a $50-60B market cap, isn't funding a whole new GF on top of existing plans, or an expedited one, quite cheap to do? Barely any dilution for a very significant capacity increase.
GF's are quickly becoming a copy/paste solution. The China one NEEDS to be an easy build now. Production easy to ramp, as it's been done already, by themselves.
Seems to me the cheaper model needs to come sooner rather than later. That's where the real business is, and that's what VW and the Asians are really gunning for. And while Model 3 production is well too slow, a proper effort for a simpler car still should be doable. Especially when hiring external production geniuses or teaming up with the likes of Toyota. again.

Just growing as fast as profits come, to me seems needlessly slow. Did Tesla somehow succumb to the corporate ways of just being short-term profit focused? How fast they manage to grow from here will define the role of the company in a market that is gradually transitioning to BEV's. Today it's just a drop in the bucket. It will not for long. There IS a headstart. Why give that up?

Musk has been very successful at achieving the "what". He has been ridiculously optimistic, perhaps naive, and possibly dishonest with the "how" and "when".

Self funding is a "how" and "when".

As far as the market, there may not be enough buyers today to go fast. Tesla sits in a sweet spot today with it's cars and production. They may calculate that spending too much too soon puts what they have achieved at risk.

Tesla is looking at timing strategy in the same way all car companies are making EV plans.

 

[Cloxxki]

Musk has been very successful at achieving the "what". He has been ridiculously optimistic, perhaps naive, and possibly dishonest with the "how" and "when".

Self funding is a "how" and "when".

As far as the market, there may not be enough buyers today to go fast. Tesla sits in a sweet spot today with it's cars and production. They may calculate that spending too much too soon puts what they have achieved at risk.

Tesla is looking at timing strategy in the same way all car companies are making EV plans.

As debt-adverse as I am, if the road ahead is so profitable, I don't see a risk in adding to it. And equity issue if successful is basically free money to play with. To which extent an extra GF would add running costs driving down near term profitability, I cannot assess,would be interesting if capital spending specialists could weigh in.

You're right that the how and when are not Tesla's strong points. Profitability may disappoint when hitting production ceilings, which may still end up lower and more costly than currently envisioned. This would delay production expansion abroad (again, GF1 seems well behind to me) and give up more and more market share.
More car models is what a big brand needs. Not remain too much a one-trick pony. Y and pickup will come, sure. And despite Musk for a while considering Model 3 the long-term entry model, he's come back on that and acknowledges that a lower price point also needs to/ could be served. I feel the time line on that deserved to be advanced to the maximum. And if other brands can make sedans and wagons on the same line, Tesla will have to get into that action soon enough to ensure maximum sales. For instance, Tesla is now starting to run out of US customers for Long Range models. Had Model 3 also come as a wagon, would that still be the case? Some owners would be simply happier with their car, others that would have never consider the 3 for having too little cargo capacity would have jumped in. Some of those for fully loaded configurations. It's been done and will need to be done by Tesla as well if they want to make sure and truly optimize profits to self-fund growth or keep maximum access to cheap capital.
That's a bit of another tangent, but Tesla does still leave good opportunities on the table that are bound to strengthen the company, and to me that's worrisome. The vision is good but too little business sense seems to be mixed into decision making and time lines.

 

[TheTalkingMule]

No need to jump right now. A major corner has been turned, but now everyone's jumping in the pool and Tesla will need to compete with that. Early GF China build out is already funded from what I hear, so they should sit tight and execute while the rest of the world catches up to phase 1.

Show 4Q and 1Q numbers in line with guidance then you can hit the gas again(so to speak),

 

[Rarity]

Honestly, after Q3, I don't think capital is a constraint. Growing revenue at 80%+ for more than a few years at this scale will break the CEO and many of the team. Let's rather grow at 50% a year.

 

[Cloxxki]

No need to jump right now. A major corner has been turned, but now everyone's jumping in the pool and Tesla will need to compete with that. Early GF China build out is already funded from what I hear, so they should sit tight and execute while the rest of the world catches up to phase 1.

Show 4Q and 1Q numbers in line with guidance then you can hit the gas again(so to speak),

I will say that the very start of a GF like project is not as expensive. Some land to pay cash, but construction you pay in increments I imagine. The machines are mostly figured out, but Grohman and suppliers need to know what they need to build.