
Tesla is raising up to $1.5B through convertible note and share sale - ilarum
https://techcrunch.com/2019/05/02/tesla-1-5-billion/
======
heartofgold
A lot of people want to trash Musk and Tesla, but I look at it this way:

\- Sure the CEO might be too active on twitter and at times say or do things
typically considered inappropriate CEO behavior.

\- Musk often makes bold claims and sometimes misses his projected dates.

However:

\- Musk also is often right.

\- He delivered amazing things with the model s. The Audi e-tron looks quite
nice and I think competition is nice, but it still doesn't match the 2012
model s specs.

\- He wanted the model 3 entry price to be $35k. Lots of peopple doubted he
could do it, and many projected it wouldn't be available until 2020 or later.
It looks like the base model 3 I can order is about $39k and with tax credit
brings you downt to $35k and change.

\- He promised autonomous driving 2 years from 2016, and honestly many people
thought he was nuts. And his prediction was overly optimistic here, but there
have been a steady stream of amazing incremental improvements to auto-pilot.
On freeways, the tesla can now determine when to change lanes and does it. It
can follow navigation within freeways, and it can warn you if a stoplight or
stopsign is approaching. They demoed true autonomy, and I believe it's
actually getting quite close. Given 1 or 2 more years of incremental
improvements, your tesla would be capable of driving you most places I would
think. He didn't make his 2 year prediction, but his team at tesla is still
doing amazing innovation in this space.

\- Part of what makes a great innovator is being able to fail sometimes. Musk
will continue to make bold claims, sometimes he will fail to fulfill it, but
many times he will deliver.

What he's doing is nothing short of amazing. He's doing things people keep
saying can't be done. Re-usable rockets that land? Electric cars? Cars that
drive themselves? I'm willing to tolerate a little shenanigans in exchange for
this kind of innovation.

~~~
LiquidSky
>Sure the CEO might be too active on twitter and at times say or do things
typically considered inappropriate CEO behavior.

The problem is he's saying or doing things that are typically considered
crimes, like securities fraud.

>Musk often makes bold claims and sometimes misses his projected dates.

Or, to use normal language, he's a serial liar.

>Part of what makes a great innovator is being able to fail sometimes. Musk
will continue to make bold claims, sometimes he will fail to fulfill it, but
many times he will deliver.

Being willing to fail and being dishonest aren't the same thing. It's bizarre
how the Musk Cult contorts itself to avoid any possibility of criticizing the
Great Leader.

~~~
codeulike
Mostly, it just that like any CEO, he will always paint the situation in the
best light possible. "Semi is coming next year", "Model X deliveries will
start in 2015" etc.

The going-private-at-420 thing was reckless, and he's paid the price for that.

But I don't think its accurate to brand him a serial liar. He's just doing
what a CEO does.

~~~
golfer
"He's just doing what a CEO does."

I disagree. At a certain point, Musk turned the corner and became delusional.
It's beyond simple boasting now.

------
yingw787
I was on Jeju Island in South Korea and apparently it's where the South Korean
government tests renewable technologies like electric vehicles. Our tour guide
had this electric Hyundai that was indistinguishable from the gas-powered
version. It was quiet, and that's about it.

I remember thinking that this is the future of electric vehicles. Boring.
Reliable. No drama or shenanigans about CEOs doing weed or pissing off
regulators or stiffing suppliers or "production hells" or falcon wing doors
and touchscreen dashboards or getting rich people to adopt it first and making
everybody else wonder if the price will ever come down. Everything just works.

China's already there with electric buses and electric scooters. I think they
own those markets now (well-deserved based on their execution BTW).

If you haven't been paying attention to renewable tech in East Asia, you
should definitely explore more; I think it would be valuable experience for
the rest of the world's big-volume automakers. At least I learned a lot.

~~~
swamp40
The imitators always catch up to the innovators. Eventually. And everyone
downplays the innovation, as if it were just part of some natural evolution of
things.

But some people know the truth: That it could have easily been another 50 or
100 or 200 years before some OTHER innovator came along to lead the pack
along.

The story is timeless.

~~~
onion2k
_That it could have easily been another 50 or 100 or 200 years before some
OTHER innovator came along to lead the pack along_

Give the fact that Musk didn't start Tesla I don't really understand this
comment. Musk has done a great deal to further electric vehicle adoption, but
it's not like it's he's the only person in the industry. It _obviously_
wouldn't have taken another 50 years.

~~~
ajross
I read the "innovator" in that post as "Tesla" and not "Musk", FWIW. You don't
need to buy in to the ridiculous cult of personality to agree that Tesla cars
have absolutely pushed the market in new directions.

------
ckastner
Quoting Musk on Twitter[1], about a year ago:

 _The Economist used to be boring, but smart with a wicked dry wit. Now it’s
just boring (sigh). Tesla will be profitable & cash flow+ in Q3 & Q4, so obv
no need to raise money._

[1]
[https://twitter.com/elonmusk/status/984705630106673152](https://twitter.com/elonmusk/status/984705630106673152)

~~~
tinco
So the bank predicted 2-3 billion in 2018, and instead it's 1.5B in 2019. The
CEO of a company is optimistic about his company, and the bank is pessimistic
about the company. Truth ended up somewhere in the middle, I don't see
anything noteworthy about this.

~~~
falsedan
You don't see anything noteworthy about a $1,500,000,000 gap in funding?

~~~
tinco
Tesla had a revenue of $20,000,000,000 in 2018. Yes those are big numbers.
They had some problems, fell short by 5-10% (or 25% if the trend continues
:P), yes that's a big deal short term, and yes if this were some big stable
corporation people would get fired. But Tesla is not a big stable company, no
matter how many people buy the stock on their Robinhood accounts. And no one
said the gap wasn't noteworthy, what I'm saying is Musk's response to that
article has very little relevance to this situation, at least from my
perspective.

------
ilarum
This comment seems prescient.
[https://news.ycombinator.com/item?id=19723650](https://news.ycombinator.com/item?id=19723650)

"Take a moment and think about why are they doing this event now. Elon is
setting a stage for a capital raise, he's pitching the autonomy narrative
after the Model 3 cash cow narrative failed. They're trying to convince
investors (and customers) to give them money because money-printing autonomous
taxi service is coming next year."

~~~
thiago_fm
If they could do it for next year, why don't they just do it and profit alone,
not selling the autonomous cars to anyone -- and make trillions? :-)

It is probably because they can't

~~~
moduspol
Because they also need money now, so they started leasing Model 3 and telling
lessees that Tesla will be keeping the car after the lease expires.

They get money now and keep the car for use as a robo-taxi.

~~~
specialp
What an outrageous hedge story that I am shocked anyone believes. Tesla needed
to lease model 3s because

\- They were horribly late in delivering the car (and now claim they are going
to have fully autonomous taxis by next year when they couldn't even deliver on
a basic car on time)

\- They can't make the $35k car they promised without losing money

\- They have exhausted the market of people that will pay 50k for an electric
car knowing the fuel savings will never make up for the premium so they have
excess inventory

\- They now are low on cash, high on inventory so they make up this moonshot
story to get people to invest in them again. Simply saying they are doing
standard leases would be too honest.

The day is going to come soon where the amount of people that believe the hype
will dwindle and the debt will pile up even more where there is a liquidity
crisis. It is essentially a legal pyramid scheme. I have to hand it to them
though being able to convince a good amount of people that their leasing is
actually ensuring a future supply of robo taxis is impressive. One day people
will laugh at the outrageousness of that.

~~~
griffordson
Every day I see young people dreaming about owning a Tesla someday instead of
the ICE dream cars of the past (Ferrari, Porsche, Lamborghini, etc.) I don't
know what the value of that is, but it ain't nothing.

~~~
BoorishBears
No, it’s nothing.

If Tesla was aiming to be the size of Porsche (not VAG) or Lamborghini it’d be
something.

But the same “conversion” rates from young person wanting a dream car to old
person affording dream car apply regardless of if it’s an EV or a ICE, because
the limiting factor is money.

So “stealing” the kind of volume that Porsche and Lamborghini get from...
daydreaming young people, isn’t worth anything in the long run if you’re
talking about keeping up Tesla’s 40B dollar market cap

------
dragontamer
With 2.2 Billion in remaining cash and $700 million loss in Q1, it was clear
that Tesla needed to raise more money to survive. Tesla can't take 3 more
quarters of that kind of cash burn.

Assuming Tesla improves their cash flow, this new +$1.5 Billion raise will
provide Tesla with another 1 to 2 years to turn the company around... for a
total of 3ish years worth of cash reserves.

Remember the key profitability calculation from years past: 5000 Model 3 Cars
/ week is the break-even point. (Its a very blurry estimate, Tesla managed to
be profitable with ~4500 M3 cars in Q3 2018... margins and other services may
change that). With cheaper cars and fewer cash credits, maybe the new
profitability point will be ~6000 cars/week instead. But that's Tesla's
overriding goal.

Tesla is currently selling 2500 Model 3 Cars / week based on latest estimates.
A drop from Q3 2018. USA is at the end of a car cycle, so the USA is dropping
sales in general (this is why Ford and GM shut down so many of their
factories, in preparation for this cyclical downturn). Tesla is feeling the
effects of this as their sales drop. They HAVE to get Chinese and European
sales numbers up now, to make up for the loss of American sales.

~~~
bsaul
With the current chinese policy against anything non-chinese, as well as the
tariff wars i don't think china is going to represent any kind of market for
tesla (especially since electric vehicle are seing as a strategic industry for
the chineese regime).

Europe is completely stuck in economical weak growth, and has an extremely
high population density and good public transport system that makes it clearly
try to steer away from personal vehicle. Not to mention the fact that german
cars are starting to embrace electric engines, and have an insanely better
reputation regarding manufacturing quality than tesla.

There again, i don't see how a 40k vehicle is going to sell well enough to
compensate from the american market decline.

------
privateSFacct
Don't underestimate how badly demand is dropping / going to drop.

You basically cannot get timely repairs on a tesla. This is getting mainstream
coverage.

Your car could be out of service for 5 months. That's simply a no-go for a lot
of more mainstream buyers myself included.

My own prediction, some skinny / dark days ahead until they work out some of
the kinks. Execute on getting parts inventory up / available. Model Y
execution. And price - a huge segment at 32K or so especially in Model Y
segment - my worry is that with federal rebates going away the price issue
becomes much worse.

~~~
natch
>You basically cannot get timely repairs on a tesla. This is getting
mainstream coverage.

You get a loaner Tesla during repairs so it's not that bad.

I was at work and discovered a flat tire at lunchtime. By 2pm there was a
truck there with a loaner wheel, identical to my wheel. Not a lame low-speed
wheel. The tire was also identical... same brand, same model. They took my
wheel away and when it got to the service center, they called me and said that
the tire would need to be replaced, as the flat was not fixable.

After a week they called me and said they couldn't find my wheel. It was lost
somewhere. They said they would keep looking. Sounds like a nightmare, right?
Well I had the perfectly good loaner wheel, so I was fine. It's a company
going through some growth spurts, so there are bumps in the road sometimes.

Then a week later I came too close to a curb and put curb rash on their new
loaner wheel. I had signed a document saying I would be responsible for
damage. I called them (no hold time btw) and said hey, you lost my wheel, and
you're taking a while to get it back to me, are you going to hold me to this
thing about no damage on the loaner wheel? And they said, no, some wear and
tear is fine. I mentioned the curb rash and they said don't worry about it,
it's fine.

A week later they called and said they had found the wheel, replaced the tire,
and the new tire replacement would be free, comped by Tesla because of the
extra delay. That day they brought my wheel with the new tire on it to my
workplace and mounted it onto the car in the parking lot, which took all of 10
minutes out of my work day. No charge for the tire, no charge for the time, no
charge for the curb rash damage to their loaner wheel, no charge for anything
whatsoever.

During this entire time notice I did not lose use of my car at all. Nor did I
have to go to any service center.

People who do lose use of their cars get loaners... different from their own
cars, but a bit too first world of a problem for me to complain about.

~~~
nicpottier
Just out of curiosity, a flat tire is a warranty item? Was it something wrong
with the wheel or the tire? Never realized you could claim a flat tire as a
warranty item, I would have just gone to a tire shop.

~~~
natch
No, flats are not covered under my warranty as far as I know. Did I seem to
say that?

I didn't mind not going to a tire shop... tire shops are not my idea of fun.

~~~
nicpottier
Oh ok, my bad then. Just would have never thought to call Tesla for something
like that but glad it turned out ok in the end.

~~~
natch
They have free road service for the first year (“free” means the coming and
doing minor fixes part, I guess you still pay for non-warranty repairs) so
calling them was an easy option. After the first year the cost is comparable
to something like AAA except the mobile service person who comes out is
trained on Teslas.

------
_Microft
All-out war between fanbois and the hate crew in 3...2...1?

I wish there were a forum were decent discussion about Tesla would still be
possible but wherever (HN, Reddit, Ars Technica, ...) you look, it always ends
the same way.

Any recommendations, maybe?

~~~
goshx
It’s better to not read them. I usually try to debate and clarify to people
who clearly don’t know what they are talking about how the actual cars work
and etc., but the amount of bull crap that haters post in articles like this
is so ridiculous that it isn’t even worth reading the comments.

They are still stuck hating the CEO, regardless of the company’s achievements,
so it is useless to try to debate.

~~~
_Microft
The problem is that you do not know on first sight if they are just misguided
or actually malicious.

I remember a few names of the worst offenders that I just ignore now but it
sucks anyways.

 _Edit:_ Using Stylus, the following solution is possible to highlight the
names of selected people (the list needs to be updated when you want to add
someone):

    
    
      a[href$="username1"],
      a[href$="username2"], 
      ... 
      {  
        color: darkred !important;
      }
    

Hiding the sub-thread in a similarly easy way is not possible though, due to
the nature of the tree.

------
jaimex2
They are raising capital to tool up for the Model Y, Semi and Pickup assembly
lines as planned.

Q2 is going to be a positive quarter as the only reason Q1 fell short was
missed deliveries from cars in transit to Europe and China.

~~~
dragontamer
> Q2 is going to be a positive quarter

Tesla sold 10,000ish Model 3 cars in April. That's 2500 Model 3 cars/week.
Remember, 5000ish cars/week is the breakeven point, when Tesla is profitable.

[https://insideevs.com/news/347137/tesla-model-3-s-x-sales-
ap...](https://insideevs.com/news/347137/tesla-model-3-s-x-sales-april/amp/)

Inside EV is pumping the story. But anyone paying attention recognizes that Q3
2018 and Q4 2018 were the quarters to look at. Q3 2018 sold 4653 Model 3 cars
/ week (and also sold way more Model S / Model X cars).

Tesla is severely behind on Q2 numbers, there's almost no way they're going to
hit their guidance. 100%, Q2 will be a miss as well, I guarantee it. The
numbers are already quite bad for Q2. Either that, or "Inside EVs" is wrong
(quite possible... but buy the rumor, sell the news, amirite?)

Q3 is where you can hope for Tesla to become profitable. They gotta expand
into Europe and China and make up for all the lost sales. Americans are at the
end of an automotive cycle, Americans are not going to be buying cars for a
long time (in general).

~~~
glenneroo
Just curious why you are in every Tesla thread providing critique? I
understand the general skepticism/pessimism/negativity which goes along with
HN comments but it seems as if you go out of your way to always be in Tesla-
related threads arguing why they will fail or why their latest decision is
pointless. The last month of your comment history proves my point.

~~~
dragontamer
1\. I find stock analysis to be fun. There's a huge variety of information
available because of the required 10k forms, quarterly filings, and so forth.
I've been doing this since the start, you can ask the Tesla Bull "Toomuchtodo"
about it, he and I often butt heads on this subject (but we both enjoy the
discussion).

2\. Tesla is such a divisive topic right now, that you can gather a lot of
opinions and viewpoints on this stock. Other stocks, like Costco or Target,
are less exciting. There's so little discussion that almost no one would want
to talk to me about those stocks.

3\. I can state strong opinions as a test to myself. They're documented, and
sometimes I'm wrong. But making predictions and improving my own predictive
skills in the market is absolutely essential if I want to make money in the
long term. So I'll get my "paper practice" with Tesla, with regards to
investing strategy.

4\. The topics I __DO __care about deeply, don 't get upvoted and don't get
discussed.
[https://news.ycombinator.com/item?id=19702487](https://news.ycombinator.com/item?id=19702487)
.

It takes two to tango. I post interesting subjects when I can, but everyone
around here is talking about Tesla. I'd rather talk about GPUs and CPUs, but
there really isn't as much discussion around that subject these days.
(Unless... Tesla makes an ASIC chip. Then I get to talk about GPUs, CPUs, AND
Tesla at the same time!)

If you're insinuating that maybe I have a greater reason... I own ZERO Tesla
stock. The shares I do own are Costco, Lattice Semiconductor, Ford, SPY ETF,
Pebblebrook, and a few others. Tesla is purely a theoretical exercise for me,
since there's a lot of discussion online and analysis available. Other stocks
don't even have a fraction of the analysis or discussion Tesla has, so its
great "practice" as far as I'm concerned.

I don't short shares either. So no shorts, nor do I have any put options right
now. (My last put options / bear bets were on Kellogg and on Bank of America,
if you want to know my stock-trading history). I don't make many bear bets or
play it short very often... its very difficult to predict short squeezes and
other issues like that, so I recommend people to stay away from shorting.

------
amrrs
Am I the only one who thinks Tesla is destined to be acquired by a proper
Manufacturing company?

Can Tesla by itself exist after 5 years ?

~~~
reitzensteinm
Tesla has in excess of $11bn in debt; even if you could get the equity for
nothing, an acquisition would still be extremely expensive - more than 25% of
Ford's market cap.

I can't see a middle of the road outcome for Tesla; it'll either be wildly
successful, or Musk will destroy it in the attempt.

~~~
Roritharr
Still easily doable by Apple, if they only wanted to.

~~~
morkfromork
Larry Ellison invested in TSLA. I would not want to see Oracle buy them.

~~~
erichurkman
Model 3 suddenly cost $1,000 per wheel and come with a mandatory $40k/year
support package, but don't worry, your rep got you a sweet 7.5% discount on
future services — and he's never heard of a director approving such an
incredible discount.

~~~
qaq
Hmm maybe TSLA should leverage Oracle for corp. fleet sales :)

------
studentrob
Is this all going towards autonomy?

[https://youtu.be/Ucp0TTmvqOE?t=13330](https://youtu.be/Ucp0TTmvqOE?t=13330)

~~~
gvb
It's going towards not dying. The autonomy pitch (IMHO) was showmanship to
distract investors from focusing on the real problem: not dying due to running
out of funds.

 _If you can just avoid dying, you get rich. That sounds like a joke, but it
's actually a pretty good description of what happens in a typical startup._

Ref: [http://www.paulgraham.com/die.html](http://www.paulgraham.com/die.html)

------
golfer
FYI. Tesla Net income in millions.

Q1 2019: -702

2018: -976

2017: -1,961

2016: -675

2015: -889

2014: -294

2013: -74

2012: -396

2011: -254

2010: -154

2009: -56

2008: -82

2007: -78

~~~
speeq
Do you have numbers for revenue growth?

~~~
seem_2211
It doesn't matter though. Just as people are rightfully skeptical of Uber's
selling a dollar for 80 cents, it looks like Tesla are doing the same thing.

------
alex_young
I think it's odd that Musk says he's buying 10M of shares to boost confidence,
but he is already very highly leveraged with loans against his current shares.

If you use a loan against your shares to buy more shares and that causes your
share value to increase, that's a very interesting chain of events.

~~~
fooker
Ah, the self sufficient pyramid scheme!

------
cubaia
He used Tesla to save SolarCity, he can still continue using SpaceX to save
Tesla.

~~~
gcb0
that's not how it works. thankfully.

~~~
Robotbeat
In 3 years, it's not terribly unlikely that SpaceX will be worth more than
Tesla is now (with most of the value from deploying Starlink). And Elon is
significantly more vested in SpaceX than Tesla. If Tesla has continued to face
challenges, it's not beyond the realm of possibility that Starlink is spun-off
as a highly profitable company (allowing Musk to maintain a majority interest
in SpaceX proper) and Musk uses the capital from that to stabilize Tesla.

Of course, in 3 years, Tesla's situation could easily be vastly different in
both directions. And Musk would probably prefer to fund Mars ambitions than
necessarily Tesla.

------
tardo99
Where is Elon Musk getting the $10M of cash to buy into this offering? Isn't
his wealth tied up in his companies?

