Tesla Model 3 revealed
Discussion
Artey said:
Anyone know when they'll finalise the design of Model 3? I thought I heard someone mention July but am not sure.
Design should be finalised some time in July.http://www.teslarati.com/elon-musk-tells-recode-te...
98elise said:
I'm pretty sure there were actual cars at the reveal. Most manufacturers display a concept at some time, in this case they were fully working prototypes.
I don't think you understand the difference between stock price and company funds.
I do. One is how much people perceive them to be worth (which in Tesla's case is related to how much hype they generate given they've never made any money) and the other is how much money they have.I don't think you understand the difference between stock price and company funds.
I don't think you realise the deposits they took for the Model 3 are refundable, which means they can't spend any of it and it therefore generated precisely $0 company funds.
Therefore the only thing the launch did for the company was to generate hype and boost the share price.
Presumably they'll raise the cash to build the car by selling shares or attracting investment from outside by pointing to their share price and all the deposits they have (that they can't spend).
Or they'll sell a huge stake to an existing manufacturer who wants an EV brand. Although since everyone is working on their own EVs I don't know who. Maybe FCA?
Or they'll go bankrupt.
Jader1973 said:
I do. One is how much people perceive them to be worth (which in Tesla's case is related to how much hype they generate given they've never made any money) and the other is how much money they have.
I don't think you realise the deposits they took for the Model 3 are refundable, which means they can't spend any of it and it therefore generated precisely $0 company funds.
Therefore the only thing the launch did for the company was to generate hype and boost the share price.
Presumably they'll raise the cash to build the car by selling shares or attracting investment from outside by pointing to their share price and all the deposits they have (that they can't spend).
Or they'll sell a huge stake to an existing manufacturer who wants an EV brand. Although since everyone is working on their own EVs I don't know who. Maybe FCA?
Or they'll go bankrupt.
Maybe the deposits were to gauge demand and plan their future accordingly?I don't think you realise the deposits they took for the Model 3 are refundable, which means they can't spend any of it and it therefore generated precisely $0 company funds.
Therefore the only thing the launch did for the company was to generate hype and boost the share price.
Presumably they'll raise the cash to build the car by selling shares or attracting investment from outside by pointing to their share price and all the deposits they have (that they can't spend).
Or they'll sell a huge stake to an existing manufacturer who wants an EV brand. Although since everyone is working on their own EVs I don't know who. Maybe FCA?
Or they'll go bankrupt.
If 20,000 people came forward and have $1,000 deposits makes planning for the future a radically different proposition to if 300,000 people come forward.
There is a mobile phone company in China that does exactly this (but you don't need to put down a deposit) it's called Xiaomi.
Jader1973 said:
I don't think you realise the deposits they took for the Model 3 are refundable, which means they can't spend any of it and it therefore generated precisely $0 company funds.
100% wrong. They aren't holding the funds in escrow.They can do what they like with the cash.
If you ask for your money back and they refuse or don't have any to give you then you will have to sue them for it, just like every other unsecured lender.
You are sort of right on the other stuff.
They have already done a $2bn secondary offering to raise more funds to meet their accelerated production schedule.
You don't really "point at the share price", that's just one thing investors will take into account when considering whether to participate in the secondary.
I haven't checked the latest 10-Q or done a pro-forma for that latest secondary but IIRC they have enough cash now to meet their production plans and to get to breakeven.
walm said:
100% wrong. They aren't holding the funds in escrow.
They can do what they like with the cash.
If you ask for your money back and they refuse or don't have any to give you then you will have to sue them for it, just like every other unsecured lender.
I stand corrected. However their own agreement says they are fully refundable: Google "Are Tesla Model 3 deposits refundable" and the first result is a Tesla website that says the are fully refundable if you cancel your reservation.They can do what they like with the cash.
If you ask for your money back and they refuse or don't have any to give you then you will have to sue them for it, just like every other unsecured lender.
You're right they aren't in Escrow so yes they can spend them - reports I read said they couldn't.
Will be interesting if they refuse to refund someone and they end up in court, although I doubt that would happen.
As Walm says, they have just got $2Bn more funding so why would they argue about refunds for a few reservations? They have already cancelled and refunded the reservations of quite a few speculators who reserved more than 2 Model 3s.
Musk never needed the Model 3 reservation money to build it. If he did, he would have had to follow the crowd funding business model and asked for a lot more than 1k.
Musk never needed the Model 3 reservation money to build it. If he did, he would have had to follow the crowd funding business model and asked for a lot more than 1k.
FurtiveFreddy said:
As Walm says, they have just got $2Bn more funding so why would they argue about refunds for a few reservations? They have already cancelled and refunded the reservations of quite a few speculators who reserved more than 2 Model 3s.
Musk never needed the Model 3 reservation money to build it. If he did, he would have had to follow the crowd funding business model and asked for a lot more than 1k.
There's a huge cash flow problem there.. there's a lot of parts and materials cost involved in producing that many cars. Call it $20,000 for each of the 500,000 cars for easy maths and you end up with $10Bn needed to fulfil those orders. Obviously it's cash flow rather than outright funds, but it's quite a challenge all the same.Musk never needed the Model 3 reservation money to build it. If he did, he would have had to follow the crowd funding business model and asked for a lot more than 1k.
I think they set the reservation 1k just about right. If they had asked for just a written intent, they would have had no idea how many would convert and if they had asked for significantly more money up front, the seriously interested would probably have held back until they knew a lot more about the product or had seen/driven a production model.
Those of us who have put down the 1k have an emotional attachment to the project and we're more likely to want it to succeed. We're now going to be easier to convert to a sale. We'll now need good reasons NOT to buy rather than good reasons TO buy.
There are bound to be more refunds when the time comes to commit to buy. How many remains to be seen, but by then there will be plenty of demand from new buyers who haven't reserved.
Regardless of what's likely to happen to current reservation numbers, there's going to be no shortage of funding or commitment going forward.
Those of us who have put down the 1k have an emotional attachment to the project and we're more likely to want it to succeed. We're now going to be easier to convert to a sale. We'll now need good reasons NOT to buy rather than good reasons TO buy.
There are bound to be more refunds when the time comes to commit to buy. How many remains to be seen, but by then there will be plenty of demand from new buyers who haven't reserved.
Regardless of what's likely to happen to current reservation numbers, there's going to be no shortage of funding or commitment going forward.
FurtiveFreddy said:
I think they set the reservation 1k just about right. If they had asked for just a written intent, they would have had no idea how many would convert and if they had asked for significantly more money up front, the seriously interested would probably have held back until they knew a lot more about the product or had seen/driven a production model.
Those of us who have put down the 1k have an emotional attachment to the project and we're more likely to want it to succeed. We're now going to be easier to convert to a sale. We'll now need good reasons NOT to buy rather than good reasons TO buy.
There are bound to be more refunds when the time comes to commit to buy. How many remains to be seen, but by then there will be plenty of demand from new buyers who haven't reserved.
Regardless of what's likely to happen to current reservation numbers, there's going to be no shortage of funding or commitment going forward.
Unless of course they cant meet production dates or bring a crap product to market in which case people will ask for their £1k back. in the mean time he has raised funds and the profile of Tesla, free marketing anyoneThose of us who have put down the 1k have an emotional attachment to the project and we're more likely to want it to succeed. We're now going to be easier to convert to a sale. We'll now need good reasons NOT to buy rather than good reasons TO buy.
There are bound to be more refunds when the time comes to commit to buy. How many remains to be seen, but by then there will be plenty of demand from new buyers who haven't reserved.
Regardless of what's likely to happen to current reservation numbers, there's going to be no shortage of funding or commitment going forward.
But more importantly they've shown that there is a demand for electric cars, Musk's stated aim with Tesla is to accelerate the progress of electric cars to the mainstream, seeing that the likes of Mercedes and VW among others are committing Billions to doing exactly that, seems he is even more of a genius that we give him credit for.
At this rate I may have to sign up for a trip to Mars.
Tuna said:
There's a huge cash flow problem there.. there's a lot of parts and materials cost involved in producing that many cars. Call it $20,000 for each of the 500,000 cars for easy maths and you end up with $10Bn needed to fulfil those orders. Obviously it's cash flow rather than outright funds, but it's quite a challenge all the same.
Customer 1 will have paid $20,000 in full before they build a car for the 500,000th customer, Tesla requiring $10Bn upfront is balls.
Tuna said:
There's a huge cash flow problem there.. there's a lot of parts and materials cost involved in producing that many cars. Call it $20,000 for each of the 500,000 cars for easy maths and you end up with $10Bn needed to fulfil those orders. Obviously it's cash flow rather than outright funds, but it's quite a challenge all the same.
I don't know if it will be the same for Tesla but for all the other mainstream OEMs they certainly don't pay up front for parts!!!!Winning a part in a car is a HUGE deal for any supplier. To be even considered you have to be in the rare bunch called Tier-1 suppliers.
You essentially offer the part at cost which the OEM will insist drops over time and you MAY make some money IF the car sells well and you manage to do better on your OWN costs.
In other words, it is FIERCELY competitive to supply OEM car makers.
Part of the deal is that they pay you LATE, very very late.
(For the geeks, one I just checked has 60-90 day DSOs)
So Telsa, if it can get terms like other OEMs, won't have any working capital problem.
walm said:
I don't know if it will be the same for Tesla but for all the other mainstream OEMs they certainly don't pay up front for parts!!!!
Winning a part in a car is a HUGE deal for any supplier. To be even considered you have to be in the rare bunch called Tier-1 suppliers.
You essentially offer the part at cost which the OEM will insist drops over time and you MAY make some money IF the car sells well and you manage to do better on your OWN costs.
In other words, it is FIERCELY competitive to supply OEM car makers.
Part of the deal is that they pay you LATE, very very late.
(For the geeks, one I just checked has 60-90 day DSOs)
So Telsa, if it can get terms like other OEMs, won't have any working capital problem.
As an OEM, if you're approached by a company that hasn't yet made a profit, that depends hugely on goodwill to a single founding executive, that has had to redesign parts in production vehicles, that essentially has only one product line and that is effectively asking you to extend them a line of credit running into the hundreds of millions, how will you feel?Winning a part in a car is a HUGE deal for any supplier. To be even considered you have to be in the rare bunch called Tier-1 suppliers.
You essentially offer the part at cost which the OEM will insist drops over time and you MAY make some money IF the car sells well and you manage to do better on your OWN costs.
In other words, it is FIERCELY competitive to supply OEM car makers.
Part of the deal is that they pay you LATE, very very late.
(For the geeks, one I just checked has 60-90 day DSOs)
So Telsa, if it can get terms like other OEMs, won't have any working capital problem.
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