Is Tesla On The Verge of Bankruptcy?
The Market Ticker - Commentary on The Capital Markets
2017-11-19 13:56 by Karl Denninger
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Is Tesla On The Verge of Bankruptcy?
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If you want one of their alleged "Super-Roadsters" you need to ante up $5,000 now plus $245,000 more within 10 days by wire transfer.

Note that the car will not be "ready" and "deliverable" for three years according to Master Touter Musk.

What happens if "three years" turns into "never"?

You flushed $250,000 down the toilet.

May I remind you that Tesla is a money-losing enterprise and has been since it was founded.  It has never made a profit, it has zero in retained earnings and you will be an unsecured, back-of-the-line creditor with your "reservation" -- which they will spend the minute it comes in the door.

If the "Reservation" was a modest amount of money this might be defensible.  $5,000 as a punt on a "supercar"?  Sure, why not.

When it's a quarter of a million bucks it not only is indefensible in my opinion the solicitation of same borders on criminal fraud since the company has absolutely no reasonable reason to believe it will be able to ever deliver said car.

Let me remind you that their "example" shown was damn fast and impressive.

It also almost-assuredly had nearly zero range, was "damn fast" because it intentionally had nearly no battery in it and thus might have had a range of a few miles in its "present" configuration which was simply "stick big electric amp-sucker on each wheel and it breaks the 3-second barrier, damn actual ability to use said vehicle for more than a stunt showing to Hell."

You cannot get around physics folks.  Tesla is betting you will fork up a quarter million dollars for something they cannot deliver now, might never be able to deliver as I suspect the technology necessary in the battery department to do it within the weight and power budget does not currently exist in a form that can be manufactured and further, the company may not exist in three years as it only does so today due to being able to continually go back to the well of Wall Street and either issue more stock or debt to fund the charismatic preaching of Elon Musk which thus far has translated into losing money on each vehicle made.

One "market disruption" that occurs at the wrong time and Tesla is literally out of money and out of business.

If that happens, which I believe is quite likely, your $250 large is going to go "poof" like a fart in a church.

Oh, may I remind you that EV subsidies, which have enabled Tesla to run a "tax farm", are going away -- and may well precipitate that "market disruption"?

Musk ought to be in prison for running this crap.

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Rollformer
Posts: 90
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As Jim Chanos says, "Put it this way. If you wouldnt be short a multi-billion-dollar loss-making enterprise in a cyclical business, with a leveraged balance sheet, questionable accounting, every executive leaving, run by a CEO with a questionable relationship with the truth, what would you be short? It sort of ticks all the boxes.

I would probably hedge my deposit with put options on the equity.
Tickerguy
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Three-year out PUTs are going to be pretty ****ing expensive.

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Whitehat
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an interesting window seems to be closing on the whole debate over battery cars. there is a general belief that they are a fait de compli for the near future. europe is committing itself to them and there are governmental initiatives in some states and cities to support and favor them. there is no debate regarding whether this is truly efficient; it is not. they will pollute more if you consider how the electricity is generated. they will strain the grid. the battery production and recycling is very energy and resource intensive.

short run passenger vehicles are one thing as there might be a need and practicality using more conventional batteries, however the management at UPS seems to have lost its mind as they are going to convert their NYC fleet to battery electric only. heavy load vehicles are not practical which is why Tesla's truck idea is pure bull****.

how far can they push this BS. europe will be in a position to have to reevaluate the decision to require them just like when they made the mistake of favoring diesels without serious pollution controls.

anyone have an idea as to how this will play out? the regular guy could take a real economic screwing if they are mandated or the market shifted towards them.

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Tickerguy
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The common European is gonna get ****ed.

That much I'm sure of.

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Bjonsson
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To me, the epitome of the "electric car" cult is when I was one on the streets that was recently just driven off the lot.

No license plate yet, in its place, a paper card that said "Zero Emissions".

Zero emissions my ass. When you plug your car in, what's on the other side of the ****ing cord?

These envirotards are such idiots.

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Tdurden
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Preston Tucker was hounded into the poor house for a lot less than that.

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Spanktron9
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Carl I'm curious about your quote that there's not enough battery range or any battery range on the new supercar. I haven't done a great deal of digging on it but at least the statements from the press conference were saying it was a 600 kilowatt battery with a 500 mile range. If the link you provided has that detail I will look it up I'm driving at the moment so

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"Winter is coming." -Motto of House Stark
"Don't coast through life. Grab it by the hair and **** it half to death." - Jotapay
"Strong people are harder to kill than weak people, and more useful in general" - Mark Rippetoe
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Tickerguy
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Yeah, sure. Where'd they put the 600kw battery?

More the point, why do they need 3 years to deliver the car if they have a 600kw battery?

You DO realize, I presume, that the PRESENT model "S" has an 80ish kw battery, right? (Tesla now claims they have a 100kwh unit available for both the "S" and "X" but they've been known to be "generous" with their capacity claims in the past.)

This thing is claimed to have something like SIX TIMES that size battery.

By the way that would mean the pack in that car is also SIX TIMES THE MASS OF SAID EXISTING BATTERY too, which you then have to ACCELERATE.

SUUUUUREEEEEE they had SIX TIMES the Model S's mass in the car and accelerated at that rate.....

(Boy are YOU a sucker!)

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Krzelune
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I missed the part about 600KW battery. That is hilarious.

http://en.winston-battery.com/index.php/....
Tickerguy
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smiley

Now to be fair the 600kw battery might have been in the Semitruck. Even so, I want to see the battery they claim to have that will deliver the range in that roadster -- 620 miles -- they claim to be able to deliver.

Let's say for argument it's a 200kw pack. That's double the size and mass of the existing "large option" in the Model S -- and that range assumes you don't actually hammer the throttle. Just a few of those hammer-jobs and the range won't be anywhere near 600 miles -- it'll be more like 100.

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Asimov
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It's a 200kw battery in the roadster.

When their other cars have a 100kw with 300 mile range, 200kw being a 600 mile range makes sense. (Whether they can or not is another thing, and I'm not saying they can, just saying their numbers do make sense.)


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Asimov
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Err... last post - I thought that had the battery size in the image, but didn't.

Here's the article I stole it from: https://jalopnik.com/heres-what-a-batter....

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Tickerguy
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The "demo car" almost-certainly did NOT have a 200kw battery in it.

Remember that the rate of acceleration for a given amount of power expended is directly proportional to mass. Never mind the SIZE of said battery.

It's REAL EASY to have one of those "demos" do the smoking burnout crazy **** -- just take a lot of weight out of it by putting a tiny battery in the thing for the demo!

Double the mass of the battery and suddenly it gets a HELL of a lot harder to hit those acceleration numbers. You also have to figure out where you're going to put that HUGE battery pack and deal with the impact all that mass has on the vehicle's handling......

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Flyanddive
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The Roadster has a supposed 200kw battery, but there is no way the test car they used had anywhere near that. They also claim that the car has 10000Nm of Torque, which at 5000 rpm is 7021 horsepower. That claim is dubious at best, but around the track, the more than 5000lbs this thing weights, and the amount of heat generation, this car will quickly become dangerous to drive, or slow to SUV type speeds like the Model S does. So you probably get one or two, ~2 second accelerations, then software limiting kicks in, and there goes your $250,000 in performance, as a base 911 smokes you at the track.

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Asimov
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Smaller battery (at least fewer cells) has to discharge faster to deliver the energy than a larger battery with more cells would. So smaller batteries have problems making a car accelerate that fast as well.

*Shrug* It doesn't really matter to me anyway, I won't believe it till I see OWNERS of new cars showing it off.

I didn't believe the existing tesla numbers till I saw people who owned it doing it. Kinda hard not to believe them now though. :)

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Festina lente.
Bagbalm
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There are some very radical new claims for battery technology. If they are true it will still be disruptive because the 'wrong' people will own the tech and they aren't going to license it for cheap.
Still gotta get the juice to charge it - somewhere.

https://electrek.co/2017/11/14/fisker-so....
Tickerguy
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Quote:
I didn't believe the existing tesla numbers till I saw people who owned it doing it. Kinda hard not to believe them now though. :)

Those existing owners can smoke you in a 1/4 mile, sure.

Now get on a real course where you have to use that power for more than 10 seconds with a big wait between uses and see what happens.

Hint: As Fly noted, if you try to do that the base 911 eats you for breakfast.

BTW graphene batteries have been "just around the corner" for quite some time now. Show me a small one that works -- for example, a cellphone-battery-replacement that I can buy somewhere. It would roughly double the battery life of said phone and charge in seconds.

No such battery exists; the laboratory experiments look interesting but they did several years ago too, and yet..... where are the batteries?

It's a wee bit more difficult to make them, you see, than people anticipated.....
smiley

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Whitehat
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the more one listened to the pro battery electric people over the years it became obvious that it has become a religion, rather a cult. whenever someone points out a shortcoming or cost of operation over time, you know, that science and logic stuff; you always hear that, "when battery technology improves," or some derivation of this phrase. it found its way into media and politics too regarding these vehicles.

This is the key. We have a large group and entire millennial generation that seems to think that this will happen. The seeds were planted with their ****ing macbooks and later iphones when everyone of them was told that multi day battery life under constant usage was just round the corner through some amazing apple magic at Steve Jobs magic wand. it is either by accident or design that the same marketing message was picked up by the battery car crowd. it sounds futuristic. we do see items improve over time, however much technology becomes incremental and the efficiency gains graph flattens. even apple admitted that there were hard limits and were said to be exploring a reaction type power source to generate electrical power in their laptops, a fuel cell.

the lack of scientific literacy along with the inability to think critically will always lead to technology worship. Star Trek was a fantasy world; there are hard laws of physics that must be addressed. It has been said that religious beliefs ordered many societies, perhaps even the beginnings of the American experiment. However, the founders created a separation so that individual inspiration did not become mandatory. Yet, now we see that a new religion was created based on the high priests of technology and the politicians and business leaders follow its cannons. So now these politicos will place charging stations all over our cities, give all sorts of benefits and major corporations such as United Parcel Service will convert fleets and bear the costs to stay in the good graces.

Many of our social debates such as global warming and this one have become secular religions.

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There are two ways to be rich: One is by acquiring much, and the other is by desiring little.
Nadavegan
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I read an article a couple weeks ago about how Musk had taken up residence at one of the production facilities because they are having troubling scaling. Of course the article lauded him as an amazing leader, but.....that cannot be good news, right? If I go to my son's school and sit at his elbow during Algebra class, it doesn't mean I am a good parent, it means that something has gone very wrong.

I work for a company that supplies Tesla and others. I am pretty much just trying to get mine right up until the charade ends. Keeping one eye on the exit door.
Flaps10
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I'm guessing that prototype used capacitors. They were likely charging it up between rides.

[Cough] Like at the carnival
Whitehat
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@Flaps10

the use of capacitors makes a lot of sense. a brief, high energy release since no sustained capacity of any magnitude is needed for the demonstration.

sadly, the technology of electric drive and management of propulsion does make a lot of sense in terms of efficiency. however, he made a deal with the devil by making his arguments anti-combustion. dump the batteries and have generation motors using some liquid fuel, gasoline or diesel, maybe natural gas, and these would be incredibly efficient and fun vehicles. if i felt like burning up money, i would buy one used and figure out some way to install an engine solely for the purpose of generating the electrical power and keep the rest of the car stock. there might have to be some mild capacitance for regenerative braking and load buffering, but it would really make Musk look like **** as i get amazing mileage in one of his cars using gasoline.

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There are two ways to be rich: One is by acquiring much, and the other is by desiring little.
Rollformer
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Come to think of it, I think during the Tesla Q2 conference call, Musk said they would be tapping the equity market for funding. They wound up issuing junk debt. These deposits definitely serve as a $250 million "not-a-bond" issue.

I had been thinking about modeling out Tesla just to see how long they had. I saw all the tranches of debt, and I figured I didn't need to model out what I already knew. If I want to be a shareholder, I'll buy the bonds, thank you very much Elon.
Aztrader
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And of course the new Tax bill keeps the EV deductions. Funny that they are killing the medical expense deduction, but keeping this rich man's deduction.
Fedwatcher
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The bottom line is that China will ship very attractive electric cars to compete with Tesla and other makers.

For many who want an electric car, Nissan's Leaf already meets their needs. BMW also has an attractive entry in the space that meets the needs of buyers who need "bragging" rights.

GM and Ford will end-up in joint ventures with China as Tesla runs out of buyers.

The future of the Electric Car is in China.

The end of Tesla is only a question of 'When'. A bad investment and a risky trade.





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