Tesla Model 3 - Make or Break ??

TSLA stocks are crashing.


Tesla on track for worst month EVER as Elon Musk company shares plummet 25 percent

ELON Musk’s Tesla is on track for its worst month ever as the car company’s share price is down almost 25 percent this month following a string of recent problems.

Tesla stock is down 24.86 percent in March and shares have fallen 17.21 percent in the quarter.

A negative analysis from Citigroup as well as a hedge-fund manager predicting it will be bankrupt within four months have had an impact on Tesla's share price.

The news comes after two investigators from the National Transportation Safety Board (NTSB) reportedly went to the scene of last week's fatal Tesla Model X crash which killed 38-year-old driver Wei Huang.

Mr Huang was pulled from his vehicle but died later in Stanford Hospital.

This week Tesla is down 14.51 percent, with shares on track for their worst week since February 5, 2016.

Tesla has said the firm was assisting with investigations as a spokesman defended the company’s Autopilot technology.

Moody’s Investor Service also downgraded Tesla's credit ratings on Tuesday and changed its outlook to negative from stable, citing "significant shortfall" in the Model 3 production rate and a tight financial situation.

And the agency lowered its corporate family rating on Tesla to B3 from B2 and downgraded its rating on the company's senior notes to Caa1 from B3.

Tesla has repeatedly pushed back its target of producing 5,000 Model 3 cars a week – a goal it had hope to achieve by the end of last year.

Moody's said in a release: "Tesla's ratings reflect the significant shortfall in the production rate of the company's Model 3 electric vehicle.

"Tesla's rating could be lowered further if there are shortfalls from its updated Model 3 production targets."

Financial firm Morgan Stanley echoed Moody’s concerns as it warned that Elon Musk’s car company needs to accelerate its Model 3 production rate to accelerate its Model 3 production if Tesla wanted to raise funds to an attractive price.

Morgan Stanley analyst Adam Jonas wrote in a note to clients on Wednesday: "A sharp drop in Tesla's share price in part reflects questions on Model 3 ramp … an event that directly impacts both the company's near-term cash needs and ability to potentially access the market for capital.

”A lower share price begets a lower share price… For a company widely expected to continue to fund its strategy through external capital raises, a fall in the share price can take on a self-fulfilling nature that further exacerbates the volatility of the share price.

"The precise timing of when Tesla can achieve a 2,500/week and then a 5,000/week production run-rate for its mass market sedan can make the difference between whether Tesla is potentially raising capital from a position of weakness at a price near our $175 bear case or whether it can access capital from a position of strength with a stock price near our $561 bull case.”

https://www.express.co.uk/news/world/938679/tesla-stock-plummet-elon-musk-car-company-worst-month-moodys-citigroup-morgan-Stanley

 

http://money.cnn.com/2018/03/29/technology/business/tesla-model-s-recall/index.html

123,000 Model Ss built before April 2016 recalled for steering bolt replacement. Not too big of a deal as most of these cars seem to be in coastal California and not in winter conditions with certain types of road salts. Still bad timing for the news.

Airbag recalls are a bigger deal imo like other brands have had or the Firestone tire mishap on the old Explorers that actually killed people before getting fixed. Not sure about that Model X crash recently.

 

Tesla share price falls 5% on April Fool joke

April 3, 2018

Most readers will be aware that Tesla is one of the largest technology companies in the world trying to make a big electric difference.

Tesla has produced high-end electric vehicles for many years that have impressive gadgets and insane acceleration. Those cars look impressive, expensive and drive almost silently.

The tech company is also a large player in the solar tile roof and home battery spaces.

Elon Musk, the man behind Tesla, has always wanted to produce a mass-market car. If Tesla can produce a car that nearly anyone can buy it could rapidly shift the motor market to electric vehicles.

The Tesla 3 is meant to be that mass-market car, it could have a price similar to other mass-market cars. The problem is that Tesla is having production issues. Mr Musk said that Tesla would be producing 5,000 Model 3s per week by the end of 2017.

According to the blog Jalopnik, Mr Musk sent an email to employees saying that Tesla may now exceed a production rate of 2,000 cars per week. Obviously this is less than 50% of the original production goal and it’s causing Tesla to burn through a lot of the cash reserves.

It didn’t help that on 1st April Mr Musk made an April Fool joke saying on Twitter “Despite intense efforts to raise money, including a last-ditch mass sale of Easter Eggs, we are sad to report that Tesla has gone completely and totally bankrupt. So bankrupt, you can’t believe it.”

Another tweet said that Mr Musk “was found passed out against a Tesla Model 3, surrounded by “Teslaquilla” bottles, the tracks of dried tears still visible on his cheeks.”

Some people may have found the joke funny, but Tesla shareholders won’t be smiling as the Tesla share price dropped by over 5% in response.

Foolish takeaway

Tesla has wonderful long-term goals and if it succeeds it could completely change the motor world. But, Tesla isn’t immune to cash burn, share price plunges and conventional valuation methods. Today’s share price fall could be an opportunity, but it could pay to wait as there could be more falls in store until Tesla ramps up production to the full 5,000 cars per week.



https://www.fool.com.au/2018/04/03/tesla-share-price-falls-5-on-april-fool-joke/

 

Tesla says no need to raise more capital as Model 3 output rises

April 4, 2018

Tesla Inc. sought to squash any speculation it might need to raise more capital this year as it announced it built 2,020 of its cheaper Model 3 sedans in the last seven days, Reuters reports.

The company’s shares jumped as much as 6.9 percent in morning trade, recouping a third of its losses from a week dominated by bad news about its credit rating and a crash involving a car using its semi-autonomous driving technology.

But with Tesla again missing its own 2,500 target for weekly production at the end of the first quarter, doubts remained among analysts and fund managers about its ability to keep production growing to a promised 5,000 Model 3s per week in three months’ time.

Elon Musk’s US$50-billion company, involved in a raft of projects ranging from trucks to a Roadster sports car and a factory in China, said it would also churn out 2,000 of the Model 3 cars next week and promised output would climb rapidly through the second quarter.

The Model 3 is the most affordable of Tesla’s cars to date and is the only one capable of transforming the niche automaker into a mass producer amid a sea of rivals entering the nascent electric vehicle market.

“[Tesla is] laying the groundwork for Q3 to have the long-sought ideal combination of high volume, good gross margin and strong positive operating cash flow,” the company said.

“As a result, Tesla does not require an equity or debt raise this year, apart from standard credit lines.”

Jefferies analysts had estimated that Tesla needed US$2.5 billion to US$3 billion of fresh equity to fund the Model 3 ramp-up and several other Wall Street brokerages have predicted the company would need more funds this year to fund its wide range of technology initiatives.

‘Unlikely to be sustainable’

Some analysts said there were signs that the company might have prioritized the cheaper car, seen as crucial to its profitability, over its Model X SUV and more-established and expensive Model S sedan.

Last week, Barclays analyst Brian Johnson warned investors to be wary of a brief “burst rate” of Model 3 production that was not sustainable.

“Tesla may have stockpiled batteries amid Fremont downtime, allowing production to be higher in the final week of 1Q,” Johnson wrote. “Any such ‘beat’ is unlikely to be sustainable, and questions remain on Tesla’s ability to sustainably reach 2,500/week, let alone 5k/week.”

First-quarter deliveries totaled 29,980 vehicles, out of which 11,730 were Model S and 10,070 were Model X. Both were lower from the previous quarter and the first quarter a year ago.

“Maybe Elon Musk switched staff from Model S and X to Model 3 to get better production numbers for Model 3,” said analyst Frank Schwope from NORD/LB.

While Tesla had promised to reach 2,500 cars per week in the first quarter which ended March 31, the Model 3 weekly numbers it gave were for the seven days to April 2. Tesla declined to give production figures for the week to March 31.

Tesla shares peaked at US$389 last September and have been declining steadily since, but analysts continue to give the company the benefit of the doubt as a big bet on the future of high-tech electric and self-driving vehicles.

Meanwhile, investors raised their bets against Tesla shares by 10 percent since mid-March, according to data provided by S3 Partners LLC on Tuesday, betting the market has misjudged the electric car maker’s prospects.

Musk himself has taken direct control of Model 3 production and the company says it already has about 500,000 advance reservations from customers for the car.

The production numbers, while short of Tesla’s own target, are far above the 793 Model 3s built in the final week of last year.

“Progress is the first word that comes to mind after reading the Q1 delivery report,” Nomura analyst Romit Shah said.

“We believe that the backlog for Models S and X remains solid but that this is an area to monitor given the sequential declines.”


http://www.ejinsight.com/20180404-tesla-says-no-need-to-raise-more-capital-as-model-3-output-rises/

 

There's no need to raise capital because I'll bet they have already done a prepack Chapter 11 deal. Can you say adios, boys?

 

Having the line and being able to draw on it can be two very different things.

 

Care to attach a timeline to that prediction?

 

From what I'm hearing, they have another two to three months before they go negative on cash flow, assuming they don't spend the deposit money on operations. But, I don't follow the company that much. No dog in this hunt. But, any company that not making a profit from operations is an accident waiting to happen.

 

Robotic manufacturing processes or not, I believe QC will be horrendous on these early Model 3s.

 

If they had switches they'd be sticky?

 

Where did I predict anything about profitability? Or make any predictions at all?

A prediction is useless without a timeline.

 

Why Tesla Is Dumb to Think It Can Avoid a Capital Raise This Year

April 8, 2018

Margins are under pressure and a debt crunch looms. Tesla saying it won't need an equity or debt raise this year is just another goal that won't be met.

Another day, another Tesla Inc. (TSLA) promise that probably won't be kept.

The electric carmaker announced this week that it is "laying the groundwork for Q3 to have the long-sought ideal combination of high volume, good gross margin and strong positive operating cash flow. As a result, Tesla does not require an equity or debt raise this year, apart from standard credit lines."

But given Tesla's track record, this is likely another empty promise. Tesla has fallen short time and again, habitually missing production and launch goals since its inception in 2003. And aside from Tesla's history of shortcomings, the financial picture is bleak. Margins are under pressure and cash continues to fly out the back door.

"It's ludicrous," Tesla expert Anton Wahlman said of the notion that the company won't have to raise debt or equity this year.

Margins will likely be tightened further as Tesla has slashed deliveries of its more expensive Model S and Model X vehicles by 22.2% sequentially to reportedly free up capacity for Model 3 production. The average selling price for the Model X is more than 140% that of the Model 3, and there isn't much yet indicating profit margins on the Model 3 will be as high as the S or X.

Meanwhile, debt coming due in the next 18 months totals about $1.8 billion. Seeing as Tesla is a long way away from being cash flow positive, it will need to satisfy this debt somehow.

"Most people who are long the stock don't even try to defend that the company is entering into a debt crunch," said Wahlman. "You have to look at how on God's green earth they're going to finance these things and with what."

Other Tesla watchers agree.

Jefferies analyst Philippe Houchois tells TheStreet's Chris Nolter that to fund production increases, Tesla is likely going to need to raise $2.5 billion to $3 billion in equity, diluting shareholders by 6% to 7%.

Efraim Levy of CFRA Research suggests Tesla could have to raise $2 billion to $3 billion to combat what is expected to be as much as $3.35 billion in cash burn this year. Levy forecasts that if Tesla does nothing to address the cash crunch, it could be short $1 billion next year.

Yet those who worship at what Wahlman calls the "Church of Tesla" continue to do so blindly, hoping that the great one known as Elon Musk knows what he is doing. Wahlman says that it's not impossible for Musk to send feelers out to his wealthy friends who might have a couple billion dollars lying around for Tesla to finance its debt.

As far as the average shareholders, though, Musk has pulled the wool over their eyes again. There's no evidence Tesla doesn't need new debt or equity this year -- only evidence that it probably does. The notion that it can go without is PR hype.

"They simply have to live another day," Wahlman said. "They're masters at postponing anything that can shake investor confidence."


https://www.thestreet.com/investing/tesla-is-dumb-to-think-it-can-avoid-a-capital-raise-this-year-14547750

 

QA will forever be all over the place as long as Musk treats his employees like chattel. Massive issues like this are the result of poor morale: https://teslamotorsclub.com/tmc/threads/help-a-pillar-defect-found.88657/

Did they ever sort out issues with the X? I've seen assembly issues that would have embarrassed a K-Car.

 

Painted over a rip on the A pillar and it made it as far as final delivery ? How many others will have similar ? Not a chance it is an isolated issue if it is structural and if this made it to final delivery, I’d be concerned they would increase the flap length to cover tears in other vehicles. It should be shredded, that car is test mule quality. Shares or in the driveway, the word here is SELL.

 

That was a Model S, a year ago, and they gave him an entirely new car.

My late 2015 S has been absolutely perfect... so good that I've only bothered to take it in to service once in 34,000 miles. Who knows how that happened, but it has no relevance to the Model 3. Read any Mercedes or BMW forum and you can see crazy one-off stories as well.

 

I’m pleased to hear your experience has been excellent. The Model X has had ongoing issues since introduction with CR advising subpar reliability. Reliability on later model Model S cars improved over earlier versions with CR now advising the current cars are above average. Demand for the Model 3 is heavy, inevitably cars will need to be assembled quickly, ultimately leading to problems with QC. As you mention, every manufacturer has produced a lemon at one point, however there are degrees of lemon. A structural defect that was obviously painted over and left unconcealed should be of heightened concern. Is Tesla’s workforce stressed to the point of allowing anything through the gate (prior to the ferocious push for Model 3s).
Apparently they are.

 

isnt it funny that the folks who are the most critical of the car, dont own one, and never have....
isnt it funny that the folks who post a negative tesla article at least once per day, have been short the stock for the last 200 points in their faces....