Welcome to Tesla Motors Club
Discuss Tesla's Model S, Model 3, Model X, Model Y, Cybertruck, Roadster and More.
Register

Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

This site may earn commission on affiliate links.
CATL is building a new 80GWh/yr bty factory in Shanghai, rumoured to be exclusively for the Tesla Model 2. That's enough for 2M cars per year if each has a 40 KWh bty pack (which should still provide > 200 mi range in a smaller car).

It's at least a year to build out that factory, more likely to be done in 4 phases of 20GWh/500K cars/yr in sync w. Tesla's new factory buildout IMO.

Shanghail the World Manufacturing and Export Hub! (but only because Texan Teslas will mainly stay in N. America) ;)

Cheer!
Yeah, no shrimpy little furrin compacts here in Texas. American CTrucks and Semis (hopefully)! 🤠
 
On the 2021Q2 Conference Call, Elon said it takes 12-18 mths to construct a new Fab.

So that puts MiC Model 2 start-of-production at 2023Q1 (right on scheduule).

"Never bet against Elon" ;)
I can't remember, but did he say right before this that it applies to now. He could have just been explaining the time it takes and they could have been working on it sooner than anyone knows....
 
  • Like
Reactions: Artful Dodger
Warning for 2024 Tesla Convertible Bond holders

These bonds convert to Tesla shares in 2024 at a price of $309/share for the face value of the bond = $61/share post split (16.1 shares / $1000 face value).

Tesla is offering to convert these bonds to shares now, but at a large loss to bondholders. My broker's corporate actions team has said that Tesla's terms include their discretion to convert to shares or even cash at a rate of $1000 cash per $1000 bonds (ie losing 90% of the value of the market price of the bonds).

Before learning this, I naively thought Tesla would convert the bonds at the convertible note's rate of 16.1 shares per $1000. Instead, Tesla converted at a rate of ~14 shares / $1000, so I lost 15% of the shares I would have received in 2024, or from just selling the bonds.

My broker's corporate actions team told me they was working with someone else with the convertible bonds. They recently converted a small amount to see what would happen, but they were not happy with the shares received. Due to client confidentiality, I couldn't get more information but I believe they were shortchanged like I was.

Personally, this seems really shady. Converting bonds to shares saves Tesla 2% a year on interest, and they'd have to give up the shares in 2024 anyway. I don't see the justification for converting at a discount and making changes daily. Bond holders believed in Tesla in 2019, providing loans when Tesla needed it the most. Now Tesla is shortchanging them.

Does anyone else have convertible bonds or have converted them after the Tesla split? Let me know if you'd be willing to share your experience, or let me know if you'd like more details.
So let me guess this straight: Sounds like under the agreed upon covenant, holders of these bonds had to wait till 2024 to convert them to 16 shares of TSLA each.
Now Tesla is offering, and you can refuse, to convert them right now at a new rate of 14 shares.
Is this correct?
 
Last edited:

North star rose (Polar Star rose).
Looks like it sure did.

(Right at 2:00PM pacific time)

For context, I must add, he came through on his Chairs, Chairs are under appreciated messaging around this ER. The results were beyond even bull side expectations.
He unfollowed polar star rose a few minutes later and said sorry, misclick.

I'm of the opinion that this thread reads too much into Musk’s Twitter posts
 
So let me guess this straight: Sounds like under the agreed upon covenant, holders of these bonds had to wait until 2024 to convert them to 16 shares of TSLA each.
Now Tesla is offering, and you can refuse, to convert them right now at a new rate of 14 shares.
Is this right?

That is not correct, because the note provides for conversion prior to maturity. The top of the note sets the Initial Conversion Price at $309.83 (pre split) and under Maturity it states the note may be purchased earlier or converted,

With Tesla's reams of lawyers, I doubt they're doing anything illegal. I assume there's a clause or regulation somewhere that lets them do this.

However, I doubt retail investors, even sophisticated ones, would expect the conversion rate offered by Tesla to differ from the note. I haven't been able to receive copies of Tesla's offers to redeem because the brokers seem reluctant to release them. It may not make a difference though, because one of them says that Tesla updates them so frequently that the terms for one day might change to the next.

In any case, two retail bond holders have been burned so far to the tune of high 5 figures to mid 6 figures. This isn't chump change, so I wanted to let anyone else who holds / trades the 2024 convertible notes to know about this.

Top of the convertible note and link below.

The information in this pricing term sheet relates to the Convertible Notes Offering and should be read together with the preliminary prospectus supplement dated May 2, 2019 relating to the Convertible Notes Offering (together with the accompanying prospectus dated May 1, 2019, the “Preliminary Prospectus Supplement”), including the documents incorporated by reference therein, filed pursuant to Rule 424(b) under the Securities Act of 1933, as amended.
The information in this pricing term sheet supersedes and updates the information in the Preliminary Prospectus Supplement to the extent inconsistent therewith.


Issuer: Tesla, Inc., a Delaware corporation (the “Issuer”)
Ticker / Exchange for Common Stock: TSLA / The Nasdaq Global Select Market (“Nasdaq”)
Pricing Date: May 2, 2019
Settlement Date: May 7, 2019 (T+2)
Nasdaq Last Reported Sale Price on
May 2, 2019:
$244.10 per share of common stock of the Issuer, par value $0.001 per share (the “Common Stock”)
Total Transaction Size: Approximately $2.3 billion in net proceeds from the Common Stock Offering (defined below) and Convertible Notes Offering (or up to approximately $2.7 billion if the underwriters’ options to purchase additional shares of Common Stock and additional Notes (defined below) are both exercised in full).
Convertible Notes Offering
Securities Offered: 2.00% Convertible Senior Notes due 2024 (the “Notes”)
Aggregate Principal Amount Offered: $1,600,000,000 aggregate principal amount of Notes (or $1,840,000,000 aggregate principal amount of Notes if the underwriters exercise in full their option to purchase additional Notes)
Maturity: May 15, 2024, unless earlier purchased or converted
Interest Rate: 2.00% per annum, accruing from May 7, 2019
Interest Payment Dates: May 15 and November 15 of each year, beginning on November 15, 2019




Price to Public: 100% of the principal amount of the Notes plus accrued interest, if any, from May 7, 2019
Conversion Premium: Approximately 27.5% above the Price to Public in the Common Stock Offering
Initial Conversion Price: Approximately $309.83 per share of Common Stock
Initial Conversion Rate: 3.2276 shares of Common Stock per $1,000 principal amount of Notes
Underwriting Discount: $11.00 per $1,000 principal amount of Notes
$17.6 million in aggregate (or $20.2 million in aggregate if the underwriters exercise in full their option to purchase additional Notes)
 
I'm confused. Are you saying Tesla is not following the terms that were agreed upon when the instruments were purchased? If so, wouldn't you simply sue them to force them to keep their word?

What gives here? I suspect you bought an instrument you were totally unfamiliar with.

I am saying two retail investors received less shares than expected when converting post split. Other members on this forum that converted prior to the split appear to have received all the shares due to them. I reference the split only to give an idea of the timing, not that it has anything to do with this.

More on this in the post above.
 
it has been a longtime since clicking on the 5 day graph of TSLA made me feel good.
Go ahead, go make yourself feel good.

Huh? To my way of seeing things, the share price is in the exact same channel it's been in since early March. That's 5 solid months in a fairly narrow channel, which is OK by me but I tend to think more in 2X, 4X, 8X, 16X, etc. in terms of share price. It's just noise. But I was greatly heartened by Q2 results FAR better than I expected. It looks like Tesla is mastering not only manufacturing but corporate discipline as well.

It's almost like they have a mission or something. 🤪
 
I am saying two retail investors received less shares than expected when converting post split. Other members on this forum that converted prior to the split appear to have received all the shares due to them.

It sounds like you are saying some investors didn't receive all the shares due to them?

I would expect Tesla would follow the terms of the note.
 
  • Like
Reactions: RobsJester
I can't remember, but did he say right before this that it applies to now. He could have just been explaining the time it takes and they could have been working on it sooner than anyone knows....

He said that to explain why it made 0 sense for Tesla to "just build a fab" as many had suggested to him as a "solution" to the current, temporary, chip shortage.

He was communicating exactly why they're NOT building one.

That's apart from the cost.


Building an entry-level factory that produces 50,000 wafers per month costs about $15 billion

And honestly that 12-18 months is INSANELY optimistic (he even mentions that'd basically be building at light speed)... Even for companies for whom this is their primary business, they've got experts specifically in this field, and have roughly comparable market caps to Tesla (TSMC for example) 2-3 years to build a fab and then you START production is typical.

TSMC is spending 28 billion just this year on new factories/equipment, nearly 2x Teslas current cash on hand-- and they don't expect to be producing product at the new fabs until like 2024.
 
Last edited:
It sounds like you are saying some investors didn't receive all the shares due to them?

I would expect Tesla would follow the terms of the note.

Some investors (me being one) received less shares than stated on the note. My guess is that Tesla must offer the conversion rate at some point, but can make other offers with arbitrary terms. The retail investor is at risk because:

1. We don't get copies of the conversion offers from Tesla. I've requested copies from two brokers, but they aren't willing to give them out.

2. The broker at etrade was not able to specify the conversion rate, and not comfortable stating which note would be applied. He said he's getting updates from Tesla on this note daily. One note stated 14 shares / $1000 instead of the original 16 shares / $1000.

3. The contact for Tesla legal is through a web form. They haven't responded.

I asked one forum member who said they successfully converted prior to the split. I assume they received the expected shares, but it's also possible they didn't count or found a discrepancy later.
 
He said that to explain why it made 0 sense for Tesla to "just build a fab" as many had suggested to him as a "solution" to the current, temporary, chip shortage.

He was communicating exactly why they're NOT building one.

That's apart from the cost.




And honestly that 12-18 months is INSANELY optimistic (he even mentions that'd basically be building at light speed)... Even for companies for whom this is their primary business and have roughly comparable market caps to Tesla (TSMC for example) 2-3 years to build a fab and then you START production is typical.

TSMC is spending 28 billion just this year on new factories/equipment, nearly 2x Teslas current cash on hand-- and they don't expect to be producing product at the new fabs until like 2024.
This fab thing needs to die. What Tesla is doing already with their firmware coding is more than enough to get through this temporary shortage. But to build their own fab to solve a temporary chip shortage is like using a sledgehammer to kill a fly.

Fabs are the single biggest money pit in any business. Fabs are such a money pits that AMD's own fab, Global Foundries almost took AMD down to bankruptcy when their node was not competitive. They had to sell it to the Saudis as a lifeline to stay afloat. This was on the backs of selling hundreds of millions of chips per year while not being profitable which is orders of magnitudes larger than Tesla's current number produced cars. I rather Tesla buy cum rocket coins than put it in a fab..it's that bad of a business idea.
 
Some investors (me being one) received less shares than stated on the note. My guess is that Tesla must offer the conversion rate at some point, but can make other offers with arbitrary terms. The retail investor is at risk because:

1. We don't get copies of the conversion offers from Tesla. I've requested copies from two brokers, but they aren't willing to give them out.


Forgive my ignorance as I've not been through this process... but what happens if you just tell them you refuse any offer you can't get the term of in writing to review first?

(then again I also find the idea early conversion terms that couldn't be unilaterally changed later weren't in the original agreement to be odd too)
 
...Fidelity has not approved his account for Level 2 Options (to sell cash secured Puts).

Selling covered puts/calls is Options Level 0 at Schwab. I'm pretty happy with them after I transferred from Vanguard a month ago. I got a $1500 bonus for transferring, which I didn't expect or ask for.

I did ask for a 1.6% margin interest rate, because someone here said they got that on request. I got it after a little "let me talk to my manager" haggling and I threatened to go to Interactive Brokers instead. IB has a lower interest rate for high balances, but their margin equity requirement for TSLA is 70%, and they reportedly start selling your stock instantly if your equity dips below that. Schwab's margin equity requirement for TSLA is 40%, and they reportedly give you some time to decide how to resolve a margin call. Schwab's 40% equity requirement is higher than they require for most marginable stocks (30%), but they told me they haven't changed the TSLA requirement in a long time (unlike some brokerages that raised it when TSLA took big dips).

I also like their attached checking account, which lets me transfer funds instantly between checking and brokerage, instead of waiting days for an ACH transfer to an outside bank. Wish I switched from Vanguard long ago.
 
Last edited:
\
Yachts and Gulfstream jets.

Perhaps you are not familiar with the meaning of the word "and"?

Also, yachts, even sailing yachts, have huge carbon footprints over their useful lives, even compared to a gas or diesel car. I'm not going to say what's right for others but I know I couldn't enjoy a large yacht myself even though I love being on the water.
There is value in helping push the energy transition out onto the water. Yachts aren’t a bad place to start—in the same way that the first Roadster and the Model S helped pave the way for subsequent vehicles.

Large electric cars and solar-electric yachts also help raise awareness in circles that may benefit from it. People in those circles have the means to act on that awareness. The economics of amusement and vanity are, perhaps, easier than the hard accounting of practical applications.

Let‘s face it, the ‘eat your granola’ approach to EV’s didn’t work. Similarly, the idea that any significant number of people can go back to some pastoral past is fantasy and would be ecologically disastrous.

"Just say ‘No’ to yachts!" is in the same league of nonstarters. We can’t go backwards, we must power our way forward.

Fortunately, electric can be way more fun. Yes, some in those circles will take pleasure in watching today's vocal puritans gag on the bile of their resentment (indulging one’s outrage for that frisson of moral superiority is as much a sin in my book). "Fine" I say, "at least go electric, please." Boats, planes, and trains must be transitioned.
 

Attachments

  • 7DA6D520-A1B9-4CE9-82FE-2E8A8F48C6ED.png
    7DA6D520-A1B9-4CE9-82FE-2E8A8F48C6ED.png
    465.7 KB · Views: 81
  • Funny
Reactions: OrthoSurg