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I don't think they should raise anything at all.
They already did a round this year. Doing any at all in this year or next is just free lunch for the shorts.
Bad all around. They done it the first time and they've said they'll be profitable the rest of the year. Doing anything contrary to that is just gonna spook people into thinking they don't actually have financial control... They have to stand on their own now and not keep turning to this.
They already did a round this year. Doing any at all in this year or next is just free lunch for the shorts.
Bad all around. They done it the first time and they've said they'll be profitable the rest of the year. Doing anything contrary to that is just gonna spook people into thinking they don't actually have financial control... They have to stand on their own now and not keep turning to this.
Norse
Active Member
I agree. They have already done it once, when they said they really didnt need to. If they were to do it twice they would need some really good news to back it up with(like when elon bought alot aswell).
that news would be if they were to push forward the model E, then they can simply just let us preorder it.
Secondary offering shows weakness. Preordering would boost Tesla alot
Agreed. I like the idea of preordering or making another offering after additional success early in the model X production. It shows TM can do what they promised and now the next step will take more capital to complete.
As to battery issue. It is the major bottleneck but if Samsung and a Chinese company (ies) show they can ramp up needed production of a quality battery I would rather see TM buy the batteries than invest their capital in building their own factory (ies) and focus that capital on R&D of model E and subsequent production.
Without knowing exactly how the discussions go between Tesla and Panasonic/Samsung, it is a bit hard to have a strong opinion. Nevertheless, I agree with Kevin99 that they should probably raise a large chunk.
I would imagine the discussion with Panasung something like this:
Elon: Hey guys, we aim to sell 40k+ cars in 2014, 70k+ in 2015 and 120k+ in 2016. We therefore want you to add capacity of 100 million cells now, another 200 million next year and 350 million in 2015.
Panasung: OK... But we're talking very big investments here - like hundreds of millions. We would need to be pretty sure that you will be buying all those cells, because other demand is actually falling. We see you are growing, but we're inclined to be cautious until we see what your real demand looks like.
Elon: That won't do, because then our growth rate will be constrained to your conservative estimates.
Panasung: Well, then you need to put your money where your mouth is. We need you to share in the risk.
Elon: If that is what is takes...
Now, there are many ways to strike the ensuing deal. But in the end it all boils down to one thing: If Tesla doesn't grow as fast as projected, Tesla will be on the line for some of the investments of the cell manufacturers. Moving from there, the cell providers will demand some sort of collateral for that scenario, because obviously it is a scenario where Tesla is developing at a slower pace then hoped for, so they cannot know the cash will actually be there. One can hope that a deal could be struck which does not involve a lot of Tesla cash, but I am highly uncertain about that.
Besides, the golden rule is to raise money when you don't need it. With a great valuation and some scary post-QE scenarios in the financial markets, this is a great opportunity. If not $1bn then at least $500m.
I believe the shares could take a hit. However, I think that should not keep management from doing what is right. They should be maximizing the long term value of the company.
I would imagine the discussion with Panasung something like this:
Elon: Hey guys, we aim to sell 40k+ cars in 2014, 70k+ in 2015 and 120k+ in 2016. We therefore want you to add capacity of 100 million cells now, another 200 million next year and 350 million in 2015.
Panasung: OK... But we're talking very big investments here - like hundreds of millions. We would need to be pretty sure that you will be buying all those cells, because other demand is actually falling. We see you are growing, but we're inclined to be cautious until we see what your real demand looks like.
Elon: That won't do, because then our growth rate will be constrained to your conservative estimates.
Panasung: Well, then you need to put your money where your mouth is. We need you to share in the risk.
Elon: If that is what is takes...
Now, there are many ways to strike the ensuing deal. But in the end it all boils down to one thing: If Tesla doesn't grow as fast as projected, Tesla will be on the line for some of the investments of the cell manufacturers. Moving from there, the cell providers will demand some sort of collateral for that scenario, because obviously it is a scenario where Tesla is developing at a slower pace then hoped for, so they cannot know the cash will actually be there. One can hope that a deal could be struck which does not involve a lot of Tesla cash, but I am highly uncertain about that.
Besides, the golden rule is to raise money when you don't need it. With a great valuation and some scary post-QE scenarios in the financial markets, this is a great opportunity. If not $1bn then at least $500m.
I believe the shares could take a hit. However, I think that should not keep management from doing what is right. They should be maximizing the long term value of the company.
Solving the battery supply problem by bringing production in house and local is definitely the central capital intensive new project that would justify a new offering. Having the capital on hand for global rollouts of the superchargers and other infrastructure so the agenda isn't hostage to market fluctuations is also up there.
Bardlebee
Member
Can someone give a short paragraph of why another secondary would be bad? I am new to investing in general.
Causalien
Prime 8 ball Oracle
The share price isn't really helping TSLA's cause right now besides retention of key employees through stock compensation. Us share holder can get rich however we want, but unless TSLA do a share offering, the company itself is not getting any money. So TSLA as a company are still stuck at the cash level when Elon made the promise of perfect execution of Model S and X until 2017. The stock price however, is telling everyone that we want Gen 3 next year and 300 000 cars per year. Do you make an offering and expand? Or do you do nothing and wait for the stock to drop? We should do nothing and let the stock drop because Gen 3 needs R&D time, not money. Throwing more engineers at the problem probably won't help right now. Unless they have enough money to hire a new team to do Gen 3 designs and manufacturing build up. But with that, you are not leveraging the experienced engineers that was at the forefront of model S and X. The one deciding factor that'll push me to go ahead with an offering at 100% confidence. Is extreme demands from Chinese market. Which no one knows anything about besides Elon. This is a good time for some of our Chinese members to bribe the TSLA store staff and get a reservation number. Decisions, decisions. So much weight on Elon's shoulder from us greedy shareholders.
I am doubtful of a secondary. It's not needed. Right now, everything is just a matter of time. Time for infrastructure, expansion, and manufacturing.
I have a feeling Benzinga is getting it crossed with the Solarcity Secondary. Elon's name is on it and he's buying in more shares of SCTY. I think that everybody is on the Nokia train today and to put things into perspective TSLA tracked the market in terms of trend today.
I have a feeling Benzinga is getting it crossed with the Solarcity Secondary. Elon's name is on it and he's buying in more shares of SCTY. I think that everybody is on the Nokia train today and to put things into perspective TSLA tracked the market in terms of trend today.
Also, any amount of extra money cannot create an elon musk clone.. (Okay maybe about $1,000,000,000,000,000,000,000,000,000 thrown at cloning technology research)
He is ONE MAN, with ONE BRAIN, running TWO COMPANIES, of which tesla is actively selling and developing TWO CURRENT MODELS, and is bound by 24 HOURS in each day, 7 DAYS in a week.
How much money do you think will allow him to successfully fast forward himself to Gen 3? No amount of money can do that. Not without a second elon. Plus you can't fast forward lowering battery costs...
He is ONE MAN, with ONE BRAIN, running TWO COMPANIES, of which tesla is actively selling and developing TWO CURRENT MODELS, and is bound by 24 HOURS in each day, 7 DAYS in a week.
How much money do you think will allow him to successfully fast forward himself to Gen 3? No amount of money can do that. Not without a second elon. Plus you can't fast forward lowering battery costs...
Citizen-T
Active Member
No amount of money will bring Gen3 (E) sooner. They are waiting on battery prices to come down so the car can be sold cheaply enough.
I would be 100% behind a second offering. Elon would most likely use it to accelerate product development and introduction, infrastructure build-out for superchargers or production facility growth.
Still no go on the Tesla logo and trademarks - a factory now would be illegal. Again, time is necessary for the legal and other processes that need to occur to clear the way for Tesla to operate openly in China.
Citizen-T
Active Member
Actually, having read about the possible deal with BYD, the state darling EV company as a new battery supplier, the China factory would make sense too. Any such deal (building a factory, BYD as a supplier) would have to be with the blessing of the Chinese state. It is a communist country after all. Believe me, the trademark issue would be gone in 5 seconds. I would even go as far as thinking the whole dispute may be the Chinese government's way on putting preassure on Tesla to work with BYD...
This is in line with my thinking also. The trademark problem would go away with the deal to buy batteries and put up a factory in China. If the Government wants it this way then if TM wants to sell in the world's largest market, it will happen.
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Would like to hear Dave T, Sleepy, Curt and Julian's take on this and what it means for 'short term' stock price. I define short term as daily/weekly price movement and long term as quarterly/yearly changes...... Monthly?? someplace in between. Do I have the definitions right?
FredTMC
Model S VIN #4925
OT
I've though a lot about Gen 3 "accelerated" production... For example, maybe within 2.5 years instead of 3 years. While, I don't think this acceleration is likely, I want to mention a thought about the battery cost component of Gen 3. If production target was accelerated by six months, the battery pack cost wouldn't drop much, however, keep in mind that the first Gen 3 cars off the line will be "signature and Loaded performance" versions. I'm guessing a loaded Gen 3 car is $70k+ (similar to BMW M3). I think TM can probably make decent margin (>10%) in the first 6mo of production. Also, i think buyer demand would be so high that TM wouldn't need to start producing base model Gen 3 until at least 9-12mo after initial Gen 3 launch. In summary, that $35k base model Gen 3 car may arrive very late after Gen 3 starts deliveries. This fits well with Elon's stated goal of accelerating mass production EVs.
Comments encouraged.
TM is *most likely* taking the lion share of the 18650 market as the form factor is not used in the current production laptops, cell phones or general devices these days (AAA-size is much more common as the closest size). TM is effectively going to drive the price down themselves and could stand to reap those benefits for several years as no other car company has 18650 in its sights.
Will Tesla Alone Double Global Demand For Its Battery Cells?
Will Tesla Alone Double Global Demand For Its Battery Cells?
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