Tesla Motors only $9 million in bank?

stopcrazypp · 10-31-2008, 01:37 AM

Apparently an employee of Tesla recently disclosed Tesla Motors has only $9 million in the bank. Pretty bad news. I hope they can still deliver cars, but sounds like they need a lot more just to run the company. Put in to the perspective of how a modern automaker is run (in the billions), I guess it is to be expected that Tesla would burn through a lot of money.
Deathwatch: Tesla Motors has $9 million in the bank, may not deliver cars

Of course this is in no way verified, but I fear people will jump ship with this kind of news. Obviously Tesla Motors has every intention to deliver cars since they, for the most part, are already done with the development, and if they get the loans they need, it shouldn't be a problem. But the situation is apparently a lot more urgent than I expected. They really need to get those cars delivered, fast. And Model S and other non-revenue generating projects definitely can wait if this situation is true.

Hmm, there must be some kind of non-disclosure agreement to prevent this kind to news to get out, because if it spreads, it is quite endangering to the company.

D*mn it, I can already see all the deathwatch, anti-EV, anti-Tesla, skeptics, etc. jumping in joy at this news.

WarpedOne · 10-31-2008, 02:25 AM

Quote:

jumping in joy

This is what I will never understand. What good is there in someone's failure?

What people do not realise is Elon has deep pockets. Tesla is not existentialy dependant on banks and loans. As much as I hate him (yes, hate) he has a very fundamental role in Tesla's longterm success.

Tesla could publish Delivery counter by dates:
...
24. oktober: 1
23. oktober: 3
22. oktober: 2
21. oktober: 1
20. oktober: 1

18. oktober: 2
17. oktober: 0
16. oktober: 2
...
A lot of people would say "They've only delivered N cars", but noone could say, they are not delivering.

dpeilow · 10-31-2008, 03:04 AM

Tesla sees new financing, founder offers support | Markets | Markets News | Reuters

Quote:

Tesla Motors Inc expects to close a financing round of over $20 million from existing investors as soon as next week to bolster a cash balance now at $9 million, said Elon Musk, founder and chief executive of the electric car start-up.

Bradleybang · 10-31-2008, 03:13 AM

Follow up...

Tesla sees new financing, founder offers support | Markets | Markets News | Reuters

oops dpeilow beat me to the post

DDB · 10-31-2008, 06:41 AM

Quote:

Originally Posted by WarpedOne

What people do not realise is Elon has deep pockets. Tesla is not existentialy dependant on banks and loans. As much as I hate him (yes, hate) he has a very fundamental role in Tesla's longterm success.

More than you know. At one of those Tesla owner town-hall meetings I remember reading that Elon personally guaranteed to back either Tesla or each owner a Roadster. That is a contract--a binding contract in my opinion which which he is liable for in the event of Tesla's default.

I am curious about the deposits. I'm curious if Tesla has a strict policy not to touch the cash until delivery or production or whether they have been using the cash in operations. That may be a dumb question.

graham · 10-31-2008, 07:32 AM

Quote:

I am curious about the deposits. I'm curious if Tesla has a strict policy not to touch the cash until delivery or production or whether they have been using the cash in operations. That may be a dumb question.

They do not have such a policy. In fact they more or less explicitly say when you put your deposit down that they reserve the right to spend that money on things that are not your car.

As I was speculating in an earlier thread, every car they make right now costs them money since they have mostly spent the deposit which was ostensibly to pay for making the car. They will not see income until they get through most of the 2009s, if you assume all but $9 million of the deposit money is spent.

Let's guess their price to build it is probably right around $100,000 (round number, may be wrong). So for each $1 million they have in the bank, they can build 10 cars without receiving any money in return. The money that they are get per car is $100,000 minus the deposit they have already spent. For the current cars, the sig 100s that is $0 income since those were paid for 100%, and that deposit is essentially gone. Soon they will get to folks like me where they are receiving $50,000 for each car, so "only" losing $50k per car. If they can raise enough money in the short term to blow through the 2008s and most of the 2009s they will start to take in more money than it takes to build the car and be cash flow positive. But they need enough cash to pay for building their current outstanding orders get them to that point.

It probably means also if they get enough cash in pocket soon, they could ramp up production even faster. They probably limit production somewhat today since it costs them money per delivered car.

James · 10-31-2008, 08:03 AM

They are still selling cars and collecting deposits, even in this environment. So that is another source of cashflow.

They are doing the "lock-in" dates for color and interior options for people who are in the #200 to #300 range. I believe that the final payment is due upon lock-in, so that cashflow is coming in.

They should be beyond the first 100 cars soon and building regular Roadsters.

With the new $20 million funding round, that should get them to the point where the low interest government loan is in the bank. At that point, Tesla will have enough to ride out this recession.

graham · 10-31-2008, 08:07 AM

Quote:

They are doing the "lock-in" dates for color and interior options for people who are in the #200 to #300 range. I believe that the final payment is due upon lock-in, so that cashflow is coming in.

Actually, they have done the lock-in through me at #471... perhaps all of 2008s, but have changed things so that final payment is not due until delivery (May-ish).

Quote:

With the new $20 million funding round, that should get them to the point where the low interest government loan is in the bank. At that point, Tesla will have enough to ride out this recession.

Agreed. It is going to be tight for them, but I expect them to survive through getting the DOE loans.

Cobos · 10-31-2008, 09:13 AM

Actually the Reuters article says only that Tesla has $9 mil in the bank, nothing about the value of their inventory. For all we know they might have the next 500 cars already bought in parts. So any cash coming in goes to salaries only. This means that I'm pretty sure Tesla 's economics are safe, GM's on the other hand I'm not so sure about....

Cobos

graham · 10-31-2008, 09:20 AM

Quote:

Actually the Reuters article says only that Tesla has $9 mil in the bank, nothing about the value of their inventory. For all we know they might have the next 500 cars already bought in parts.

That is an excellent point!