$TSLAQ Asks People To Donate $2,500
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2019-03-15 13:46 by Karl Denninger
in Company Specific , 302 references Ignore this thread
$TSLAQ Asks People To Donate $2,500
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I've seen lots of scams in my years.

Last night's was the most-brazen I've seen yet among those are, at least formally, likely legal.

Musk "revealed" the "Model Y" which appears to be little more than a Model 3 with a mild lift kit and a bit of body styling.  Branded as a "new compact SUV" it's one of the biggest yawners I've seen in a long time.

The shocker wasn't the car -- it was the business model reveal.

In short, unless I grossly misunderstood the "reveal", TeSCAMla is now asking for $2,500 to get a place in line to buy a vehicle that won't be produced for nearly 18 months to start, and unlike the Models S and 3 it's not a deposit; that is, it does not go toward the price of the car.

This is much like Apple charging you $500 to stand in line to buy a new iPhone when it's released, but the $500 doesn't go toward the phone.  It just buys you a place in the line; when you get into the store the entire $500 goes "poof" like a fart in a church and you still must fork up the full price.

Now envision the line is there for 18 months, and Apple has a cash-flow issue.

There is never a guarantee that an announced but not-yet-built product will actually materialize and be deliverable.  In the case of a deposit, at least you're getting credit toward the eventual purchase, if it happens at all and if the product is canceled you have a damn good case to demand a refund.

In both cases you run the risk of the firm failing or filing bankruptcy -- if that happens your funds are gone, as you're an unsecured creditor and when a firm goes under or files Chapter 11 it does so because it has negative net value and unsecured creditors usually get little or nothing.

But in this case even if Tesla survives you get nothing whether the car is ever produced and delivered or not; your $2,500, in short, is a pure gift to the company at the moment you fork it over.

Exactly how stupid does Musk think people are?

We have the answer to that question already, don't we......

Update: Now, on their web site, it does say "fully refundable." Except it's not, but it is:

Pre-Order Process; Cancellation; Changes. After you submit your completed pre-order and the options you selected become available in production, which we expect to begin in the fourth quarter of 2020, we will begin the process of matching your pre-order to a vehicle and coordinating your Vehicle delivery. Your Pre-Order Payment covers the cost of these activities and other processing costs and is not a deposit for the Vehicle. Until your Vehicle is delivered to you, you may cancel your pre-order at any time, in which case you will receive a full refund of your Pre-Order Payment. Until your pre-order is matched to a vehicle, you may make changes to your Vehicle Configuration. If you make changes to your Vehicle Configuration, you may be subject to potential price increases for any pricing adjustments made since your original Pre-Order Date. Any changes made by you to your Vehicle Configuration, including changes to the delivery location or estimated delivery date, will be reflected in a subsequent Vehicle Configuration that will form part of this Agreement. When you take delivery of the Vehicle, we will provide a credit to the final pre-order price of your Vehicle equivalent to the amount of the Pre-Order Payment you paid. This Pre-Order Payment and this Agreement are not made or entered into in anticipation of or pending any conditional sale contract.

What?

It's a payment against the price (which is a deposit) but it's explicitly not a deposit?  Let me guess -- this is a way to bank the cash but not record the liability on the balance sheet against it as a current liability, thereby cooking the books?

Here's the deal: If you take a deposit then on the cash statement you're $2,500 to the good but on the balance sheet there is no change.  You have a $2,500 credit to the cash account and an exactly-equal $2,500 debit to liabilities since the obligation is crystallized and known.

If you, on the other hand, explicitly do NOT call it a deposit then you're $2,500 to the good on the cash statement (the same) and $2,500 to the cash side of the balance sheet.  However, there is no countervailing crystallized liability because while the customer might ask for it back or might take delivery of a car neither has happened yet and nobody can forecast whether or when either of those two things will happen.  There is a footnote arguably required because there's a potential ("contingent") liability but again it's not a crystallized liability in that it has no date associated with it.

This is the only logical reason for the last sentence in their "agreement": It is a pure attempt to keep the liability from being crystallized and thus reflected in the balance sheet until physical delivery of a vehicle takes place or the customer demands their money back.  It also is likely to severely prejudice your odds of any recovery should Tesla go bankrupt or file for reorganization before the vehicle is delivered especially in light of the entirety of the rest of the paragraph above which identifies explicit previously-occurring expenses you're allegedly paying for.

IMHO were I an auditor and saw this I'd throw up all over it, never mind the SEC who should throw up all over this too and force it into the current liability column, never mind bringing a criminal securities fraud charge as there is no business reason -- other than intentionally misrepresenting by obfuscation liabilities on the balance sheet -- that I can come up with to do this but you can bet neither will.

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User Info $TSLAQ Asks People To Donate $2,500 in forum [Market-Ticker]
Flaps10
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Tesla people must have no gag reflex
Nadavegan
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If true, this is amazing. Say 100,000 want to get in line. Pretty quick way to raise $250 million. Feels like a last-ditch attempt to come up with some operating capital.
Spanktron9
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KD-

There is some debate on $TSLAQ about the status of the $2500. The language is vague and strange (par for TSLA). Latest appears to show that the money IS refundable up until configuration and manufacturing of the model. But I wouldn't bet on it.

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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
"Its like Calvinball."-MarvinMartian
Tickerguy
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A deposit is stated as a deposit.

So..... is it or isn't it?

I listened to the "reveal" and it certainly wasn't made in a clear fashion that it was a deposit. If it is, you don't dance around that.

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Winding it down.

Deep6
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Just think if the medical industry were to implement this concept......they haven't yet, have they??? :)
Spanktron9
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Reality.
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If you go to $TSLAQ @pluginfud has the breakdown. He's a HUGE bear and trolls Elon mercilessly. That being said, he's seeing differing interpretations of the fine print. I'm confident in your discernment.

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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
"Its like Calvinball."-MarvinMartian
Asimov
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It's for the children!

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It's justifiably immoral to deal morally with an immoral entity.

Festina lente.
Tickerguy
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@Spankton -- Having now found the T&Cs in detail (which weren't there last night when I first saw the reveal) it's an accounting scam.

If you book a deposit then there is both a credit and debit on the balance sheet that are exactly equal. You take in $2,500 (credit) but you have a $2,500 exactly-equal debit as a liability to the company against the future production. The net impact on the cash statement is +$2,500 but the net impact on the balance sheet is zero.

If it's not a deposit then there is no current liability. There is generated a contingent liability that will have to be disclosed in the footnotes but until and unless you demand the payment back or the car is produced and delivered there is no current liability against the $2,500.

In short it's an accounting scam. Arguably legal but intentionally misleading.

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Winding it down.
Spanktron9
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KD-

I'm shocked. Shocked I say! Are you insinuating Elon would do something less than ethical? Don't you know he is the only one who can save the WORLD!!!

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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
"Its like Calvinball."-MarvinMartian
Jal
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Where did they learn to do that?
My banker?
Are my bank deposits my cash or my investments with poor collateral?
Tickerguy
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@Jal -- Yep, this is exactly like a bank claiming your deposits are "contingent" liabilities and not real liabilities, since there's no way for the bank to know if or when you will take your money out.

If you tried that as a banker you'd go to prison immediately. Well, at least you used to go to prison immediately. These days I suspect you'd get a pat on the head and a bailout from Congress.

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Winding it down.
Tsherry
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I'm pretty sure I'm going to be happier putting $2500 into my 1966 Mustang, thanks.

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Omne mendacium est.
Mangymutt
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Exactly how stupid does Musk think people are?



Hahahaha hahahaha.

VERY!!! Because some really are.

For answering correctly.

Do I win an all pre-paid trip to watch the first one roll off the assembly line?
Tickerguy
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@Mangymutt -- Naw, you get to watch the first battery fire.

I suggest doing so from a reasonable distance OUTSIDE the vehicle smiley

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Winding it down.
Punch_rockgroin
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Amazing what kind of ideas are generated in choom gang focus groups.

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Put the boots to him. Medium style.
Jdaun
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Sort of related ... anyone see the "3rd row seats" in the Model Y?
What a joke, they look even smaller than the jump seats available in the trunk of the Model S.
You'd be lucky to fit a pair of rat terriers back there.

Link to the only seat photo I could find: https://d2t6ms4cjod3h9.cloudfront.net/wp....
1crzydmnd
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Live look at the Scamla fanboys..


inline

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BFYTW
Quik49
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So I went on their site and went through the order process....just for fun...I was thinking "WTF"...where is the SUV...is this the Ford Taurus website? Nice ground clearance ....I thought this was going to be more of an SUV style...did I miss a memo...

Jump seats..don't worry...Seven Seat Interior Available in 2021

Don't what the cool one...no worry...Standard range production is expected to begin early 2021.

Then there is this beauty...
Full Self-Driving Capability

Then there is this beauty...

Summon: your parked car will come find you anywhere in a parking lot. Really.
Recognize and respond to traffic lights and stop signs.
Automatic driving on city streets.

Due today to complete your order: $2,500.
Your design can be modified after ordering. If you haven't test driven the car, you can return it for a full refund within 7 days or 1,000 miles, whichever comes first.

What a crock of ****....

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Long Vaseline....

Gonewest
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@Mangymutt

Travel a couple of hours north and you'll see just how many stupid people there are. Teslas are everywhere in the Seattle area. Bunch of dumb-ass, virtual signaling idiots.
Mangymutt
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Quote:
you get to watch the first battery fire.


Who doesn't love the smell of Teslas burning in the morning?

Quick49

Quote:
your parked car will come find you anywhere in a parking lot.


But will it find me as flames erupt from the battery? That would actually be worth paying to see.
Mangymutt
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Gonewest - Thanks for the invite, but Portland has more than enuff dumb-asses. Plus if I went up there I would probably ask for a plastic straw and get the Old "Sea Turtle killer" look from the waitress.

A couple years ago I was in Olympia and stopped by a Safeway and got a shopping cart full of stuff. The cashier asked "Do you want a bag" Well of course I want a bag, how else am I supposed to carry it from point A to point B? Oh those are 25 cents apiece. WTF!!!

Regardless of the stupid laws the bags should be provided as a point of customer service.

Anyway I looked at my receipt and there was an additions "Littering" fee on top of it. Now I am not the type of person who likes litter, but they charged me for something I hadn't done YET!!

I was by the state capital at the time, so I figured....This seems like a good place to take advantage of that fee.

So you can keep your dumb-asses up there and we will keep our dumb-asses down here. Or we could start a Go-Fund-Me account and have them sent to Florida :P
Tickerguy
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Go **** yourself 😁

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Winding it down.
Mangymutt
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LOL
Tickerguy
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smiley

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Winding it down.
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