What happens to my deposit and down payment if Tesla runs out of cash?

[brooklynrab]

@brooklynrab

I think you need to get your deposit back now while you still can.

GTFO and buy a Bolt. Hopefully GM doesn’t go bankrupt a SECOND time this century.

If you can’t afford your $1000 initial deposit you can’t afford the insurance on the Model 3 anyway.

Hey, @MXWing, I owned a P85 Classic (know what that even is?) before you probably knew Tesla made cars, and have had plenty of fun dealing with this company’s ups and downs over the years. You might be very amused by your own snarkyness and insults, but the concerns around this company are not hypothetical and these are all fair questions. From your tone, I would make an educated guess that I could probably buy and sell you ten or twenty times over, but I got this way by not flushing money down the toilet.

 

[MXWing]

Hey, @MXWing, I owned a P85 Classic (know what that even is?) before you probably knew Tesla made cars, and have had plenty of fun dealing with this company’s ups and downs over the years. You might be very amused by your own snarkyness and insults, but the concerns around this company are not hypothetical and these are all fair questions. From your tone, I would make an educated guess that I could probably buy and sell you ten or twenty times over, but I got this way by not flushing money down the toilet.

Yes I’ve sat in a Roadster when Tesla was HQ in Redwood City in 2003.

One can ask all sorts of questions that result in the same conclusion. If you can’t withstand the potential heat you get out of the kitchen.

Will Tesla be bankrupt? Will the government break up Amazon?

You divest the stock and don’t buy the car in Tesla’s case and you divest the stock on Amazon’s case but that’s not exciting as the next topic.

If you can buy me over 20 times, I’ll buy you a Model 3.

If you can’t, you can buy me a Model 3?

Seems like a free Model 3 for you.. what say you..? I’m gonna wager the person that can buy me out at a 20x multiple would ask smarter questions or have someone else ask it for them..

 

[cmyke]

I am an all-in Tesla guy, but also a finance guy. This company needs capital, will go into default on its bonds in Jan if it doesn’t raise money and possibly chapter 11, the board seems passive, and Elon somewhat more erratic than usual andseems to need to face the reality that he must be willing to either be diluted or bring in a strategic Jv partner and their cash. The potential solutions are there, but this can easily go off the rails. If that happens, does anyone know what happens to our deposits and down payments? Are they simply unsecured debt, at the bottom of the stack? If we have cars already, can our warranties by voided in bankruptcy? Presumably someone comes along to buy this as a going concern and has an interest in not killing all the customer goodwill.

January, dude. Think about that. Over quarter away. Lots can happen.

Whenever Elon talks about Tesla and bankwupt, he always points to the 2008 period. Because -that- was when they were close. They aren’t now.

Put it this way: name a time in history when an industry-defining product with massive demand just *poof* went out of business and disappeared.

 

[GlennAlanBerry]

Hey, @MXWing, I owned a P85 Classic (know what that even is?) before you probably knew Tesla made cars, and have had plenty of fun dealing with this company’s ups and downs over the years. You might be very amused by your own snarkyness and insults, but the concerns around this company are not hypothetical and these are all fair questions. From your tone, I would make an educated guess that I could probably buy and sell you ten or twenty times over, but I got this way by not flushing money down the toilet.

I too have a "classic" P85, that is even older than yours. I don't feel any need to compare the size of our bank accounts or investment portfolios (which is irrelevant for this discussion). As a long time Tesla owner/observer/"finance guy", you should know better than to actually think that Tesla is in any danger of actually going out of business/being liquidated, even if you believe all of the trolls and $TSLA stock -shorters.

Model 3 production and deliveries are really picking up, and it looks like Tesla is going to have a great Q3 and Q4. This should alleviate their cash flow problems and quiet down at least some of their critics. Even if that weren't the case, Tesla can easily raise more money if they actually needed to (I don't think they will).

You shouldn't be too surprised to get push-back on a Tesla enthusiast forum with what seems like a click-bait title, ready made for some clown on Seeking Alpha to quote in an article.

 

[Electroman]

I wouldn't want to find out, so I pulled my reservations. At this point with all the quality concerns

The constant FUD that is orchestrated by trolls and MSM is taking its toll.

When you keep hearing naive admonishments and advise that Elon should simply ignore the shorts and focus on delivering, they conveniently forget that the blatant lies and exaggerations spouted in the regular and social media severely impacts demand.

mos6507 is a good example of that.

 

[GlennAlanBerry]

The constant FUD that is orchestrated by trolls and MSM is taking its toll.

When you keep hearing naive admonishments and advise that Elon should simply ignore the shorts and focus on delivering, they are conveniently forget that the blatant lies and exaggerations spouted in the regular and social media severely impacts demand.

mos6507 is a good example of that.

I don't think we've seen any evidence that reservation cancellations are running higher than new orders/configurations coming in. Despite all of the trolling on forums and in the corporate media, Tesla is still an aspirational brand. I think the Q3 numbers will be extremely good, and will hopefully shut-down the shorts in a big way.

Looking at the various delivery threads, the initial quality issues seem to be improving pretty rapidly. I just took delivery of a Model 3 Performance plus on September 6, and it did not have any issues. Things are rapidly getting better, not worse.

 

[seattlite2004]

Hey, @MXWing, I owned a P85 Classic (know what that even is?) before you probably knew Tesla made cars, and have had plenty of fun dealing with this company’s ups and downs over the years. You might be very amused by your own snarkyness and insults, but the concerns around this company are not hypothetical and these are all fair questions. From your tone, I would make an educated guess that I could probably buy and sell you ten or twenty times over, but I got this way by not flushing money down the toilet.

Yes I’ve sat in a Roadster when Tesla was HQ in Redwood City in 2003.

One can ask all sorts of questions that result in the same conclusion. If you can’t withstand the potential heat you get out of the kitchen.

Will Tesla be bankrupt? Will the government break up Amazon?

You divest the stock and don’t buy the car in Tesla’s case and you divest the stock on Amazon’s case but that’s not exciting as the next topic.

If you can buy me over 20 times, I’ll buy you a Model 3.

If you can’t, you can buy me a Model 3?

Seems like a free Model 3 for you.. what say you..? I’m gonna wager the person that can buy me out at a 20x multiple would ask smarter questions or have someone else ask it for them..

I love the drama on this site....the Bolt and the Porsche forums are sooooooo boring.

 

[MXWing]

I love the drama on this site....the Bolt and the Porsche forums are sooooooo boring.

Oh absolutely. Those are boring and uninspired forums. Goes with the car and their owners.

I’m excited to find out if someone is bothered by about a 1,000 deposit if they have 20X my net worth. That’s amazing hubris.

 

[Uncle Paul]

The chances of loosing your deposit is 1,000 times less than loosing your deposit with an independant dealer.

 

[Seattle]

Oh absolutely. Those are boring and uninspired forums. Goes with the car and their owners.

I’m excited to find out if someone is bothered by about a 1,000 deposit if they have 20X my net worth. That’s amazing hubris.

It's just embarrassing for someone to make a comment like that. First of, it's a terrible way to approach the world, someone disagrees with your ideas and all you can say is I have more money than you do - as if that settles anything. Anyone making that kind of argument has some issues. If you have a tesla and you ever scratch it seriously, it will cost a lot more than 1k.

But the funniest thing is if was pretending to be some cliched shorter of tesla stock who working at a hedge fund, that's exactly what you'd expect me to say! "I have more money than you do, waaanh!".

 

[ohmman]

mod warning: Take it down a notch with the personal nonsense. It looks bad for all involved. And as noted above, wallet (!) measuring contests are embarrassing and those invoking them ought to realize that. Discuss the topic, not the poster, or just enjoy another of our wonderful threads here at TMC.

 

[notAnExpert]

I love the drama on this site....the Bolt and the Porsche forums are sooooooo boring.

If this drama amuses you, checkout forums.tesla.com. That one is a full fledged Jerry Springer show.

 

[MXWing]

It's just embarrassing for someone to make a comment like that. First of, it's a terrible way to approach the world, someone disagrees with your ideas and all you can say is I have more money than you do - as if that settles anything. Anyone making that kind of argument has some issues. If you have a tesla and you ever scratch it seriously, it will cost a lot more than 1k.

But the funniest thing is if was pretending to be some cliched shorter of tesla stock who working at a hedge fund, that's exactly what you'd expect me to say! "I have more money than you do, waaanh!".

I would never presume to measure wallets, as it’s not the measure of a person. Though I have no choice but to bite at a 20x multiple!
Excited to call my CPA first thing tomorrow to get my free Model 3!

Tesla going bankrupt and eating everyone’s deposits is just a super bizzare argument.

Tesla could just sell to Volkswagen at 420 dollars per share and that will be that.

I admit my reply was snarky even if truthful. Just tired of all the FUD planting.

I am sure you could figure out a way to take a potential loss as bad debt that can’t be collected on to relieve capital gains taxes. Though a finance guy at 20X my net worth would have that dialed in. And CPA to the rescue!

If it becomes worthless, the IRC allows you to deduct this deposit as a non-business bad debt in the year it becomes totally worthless. It is considered a short-term capital loss for tax purposes.

See? It ain't so bad after all. Uncle Sam is standing by to ameliorate your loss of funds.

Only up to 37% of $1000 though as that is the OPs tax bracket?

Since he can buy me 20 times over, I’m going to be sitting in the 12% bracket.

 

[MXWing]

Look at it this way: Tesla was paying all the capital costs and nearly all the operational expenses / fixed costs of production for the Model 3 program in the second quarter, *and not delivering very many cars*. For the third quarter, they have lower capital costs (since they mostly don't have to redo the stuff they already built), lower fixed costs of production (since they've fixed problems), and are delivering and booking the revenue from twice as many cars.

If a "finance guy" can actually do *basic business analysis*, he should be able to tell that Tesla's only financial problem, for their entire lifetime, has been that they haven't been making enough cars to cover their fixed costs. They are now or at least will be in the fourth quarter, so they'll have strong positive operating cash flow; enough to pay off the March bonds, by nearly all well-founded estimates. (The faster they pump out cars, the more cash, until the next really expensive production line construction.)

I am astounded at the inability of "finance guys" to distinguish between fixed and variable costs, which I really would have thought was basic to finance. But apparently it's not part of the curriculum in finance any more. How odd.

Anyway, Tesla has positive book value, so if there was a cash crunch, which there won't be, they'd be able to get a loan, which they won't need.

Ehh I’m an Econ guy - we are finance people with better math tools to measure changes over time.

A terrible bearish argument is that Tesla loses money on every car. They DO lose money on every car but not on a per car basis.

That’s how we get funny thesis like the more Tesla’s that are built the faster the company goes into bankruptcy.

The first Model 3 cost 20 billion. The 500,000 unit - not as much.

While you touched on more cars produced equals cash flow greater than production cost, you haven’t mentioned that AVC goes down over time making MR gain against MC.

 

[brianman]

I owned a P85 Classic (know what that even is?) before you probably knew Tesla made cars ….

Current and original owner of P85 Signature here. Irrelevant to the discussion, and childish. Focus on content and merits, not puffery.

 

[Adam3]

How this thread makes me feel

 

[neroden]

One of the immediate signs of someone who hasn't done their financial research is referring to a "January" debt maturity for Tesla; there isn't one.

(There's a term loan for one of the solar lease SPVs which has to be refinanced in December 2018, but that's non-recourse with solid collateral; it'll get refinanced.)

The poorly informed original poster probably got some garbled, inaccurate information about the *March* debt maturity.

 

[voip-ninja]

One of the immediate signs of someone who hasn't done their financial research is referring to a "January" debt maturity for Tesla; there isn't one.

(There's a term loan for one of the solar lease SPVs which has to be refinanced in December 2018, but that's non-recourse with solid collateral; it'll get refinanced.)

The poorly informed original poster probably got some garbled, inaccurate information about the *March* debt maturity.

He probably reads a lot of "articles" about Tesla on Seeking Alpha or Business Insider. The financial arguments in most of those pieces are pretty disconnected from reality when they try to make their case that Tesla is about to run out of $$.

 

[mos6507]

"Tesla going bankrupt and eating everyone’s deposits is just a super bizzare argument."

The fact that there's even a serious debate as to whether Tesla will go bankrupt in the near future is enough to spook people into pulling their reservations. You can mock and deride them for doing so all you like, but it's simple human nature not to want to make a long-term purchase of a car that is highly dependent on support and service if you think it won't be around much longer.

 

[MXWing]

"Tesla going bankrupt and eating everyone’s deposits is just a super bizzare argument."

The fact that there's even a serious debate as to whether Tesla will go bankrupt in the near future is enough to spook people into pulling their reservations. You can mock and deride them for doing so all you like, but it's simple human nature not to want to make a long-term purchase of a car that is highly dependent on support and service if you think it won't be around much longer.

It’s not a debate. While I could go on for 10 pages why it’s not a debate - all you need to know is Tesla rejected a Volkswagen buyout at 420 per share.

Only reason Tesla ever goes “bankrupt” is through self fulfilling FUD spread by you and the OP.

Tesla is gonna die so I won’t buy their cars. No one buys Tesla cars so they die.

Thankfully some of us can see past the noise and look at the product on its own merits.