Tesla Model 3 revealed
Discussion
Tuna said:
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?
Tesla has already built relationships with plenty of suppliers. They will know how good or bad they are at paying their bills - and as far as I'm aware there hasn't been a sniff of any problem there.If any OEM supplier is tooling up for production into the tune of 100's of millions (doubtful as Tesla is doing most of the high cost stuff itself), they will be doing so with plenty of guarantees.
Tesla has plenty of credibility, apart from those who seem to want it to fail for some reason.
Tuna said:
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?
OEMs make the cars, I assume you mean "as a Tier-1 supplier"...In which case:
- Tier-1s supply single product lines all the time. The bumper on a Golf won't be the bumper on a Polo most often. It's just a question of how many units that car will sell and with the pre-orders Tesla has for that one car, you would be MORE than happy to supply.
- I can't be sure, Tesla is certainly not as well established as GM obviously but despite your repeated complaints about their balance sheet and cashflow, most Tier-1 suppliers have access to accountants and advisers who actually understand these things and know that Tesla is in an astonishingly rock-solid position for a start up.
- You might be tempted to reduce the terms to something like 30 day not 90 day, but either way it's still positive net working capital for Tesla. (In the real world, payment terms is simply a way of negotiating the price. You would extend terms for a higher price, for example. It's just a question of the cost of capital - which is tiny/zero.)
- You will still want to supply them - 500k is a HUGE number for one car at the higher end of the quality range.
In any case, you continue to be completely wrong about Tesla's balance sheet and cashflow.
Money is essentially free these days.
Access to capital is quite literally one of the LEAST of their problems.
Ramping to 500k - now THAT is a problem!!
And lastly I really don't know what you mean about the "goodwill" from Musk. Sure he has backed the latest rights issue but he certainly didn't have to.
babatunde said:
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 anyone
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.
Sure, I won't waste any time asking for my refund if I test drive one and it turns out to be crap. But this is not the first EV Tesla has made and so far they have shown themselves to deliver on the majority of their promises, so I'm not too concerned.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.
Tesla seems to have been very fortunate with it's timing - or could it have been deliberate
They've brought a truly desirable, electric-only, high performance, practical, usable car to market just at the right time to take advantage of Government incentives, recent developments in battery technology and a public desire to be 'greener' but, more importantly, not so early that they only appeal to early adopter types. It seems to me the Model S and now the 3 are the right car at the right time.
I think it's BMW who have recently stated they don't plan to sell and all-electric car before 2020 and their i3 has apparently only sold 25,000 units. It's quite an achievement what Musk has done with the S and now the 3 if you look at it in context.
FurtiveFreddy said:
I think it's BMW who have recently stated they don't plan to sell and all-electric car before 2020 and their i3 has apparently only sold 25,000 units. It's quite an achievement what Musk has done with the S and now the 3 if you look at it in context.
VW announced just yesterday they will make 25% of their line up EV only by 2025.Aiming for 2-3m units.
EVs are real and they're spectacular.
FurtiveFreddy said:
They've brought a truly desirable, electric-only, high performance, practical, usable car .
I wouldn't call a car that is limited to a set network defined by the supercharger stations and that outside that network is range limited with huge refill time relative to an ICE car either practical or useable.The other OEs aren't rushing to emulate because they know the majority of the market is not ready for a pure EV. They'll continue to develop ICE, hybrid, range extender, and EV tech in parallel and as a result Tesla will continue to be niche. They simply aren't offering what the mass market wants.
Cars revolutionised mass transport because they offered the ability to go where you want when you want. Pure EVs don't offer that at the moment and are therefore a step backwards as far as most people are concerned.
Jader1973 said:
FurtiveFreddy said:
They've brought a truly desirable, electric-only, high performance, practical, usable car .
I wouldn't call a car that is limited to a set network defined by the supercharger stations and that outside that network is range limited with huge refill time relative to an ICE car either practical or useable.The other OEs aren't rushing to emulate because they know the majority of the market is not ready for a pure EV. They'll continue to develop ICE, hybrid, range extender, and EV tech in parallel and as a result Tesla will continue to be niche. They simply aren't offering what the mass market wants.
Cars revolutionised mass transport because they offered the ability to go where you want when you want. Pure EVs don't offer that at the moment and are therefore a step backwards as far as most people are concerned.
Given that the majority of users are able to charge at home, most will never actually need to use public charging stations under normal usage.
Oh and I guess you missed the announcement that VW are aiming for 25% of their range to be EV only by 2025? Looks to me that at least one other OE is trying to get into the market in a big way.
walm said:
In any case, you continue to be completely wrong about Tesla's balance sheet and cashflow.
Hold on, I'm not criticsing them, just saying it's a big challenge. Until the Model 3 is released and selling consistently with no major recalls, advancing a credit line is a risk for a supplier. Whatever you say, the risk here is different from extending a similar line of credit to one of the major manufacturers for an established model. Even for an established supplier to Tesla, the amount of credit being advanced is an order of magnitude larger than it was for the Model S.walm said:
And lastly I really don't know what you mean about the "goodwill" from Musk. Sure he has backed the latest rights issue but he certainly didn't have to.
No, I meant that Tesla is a company that is built around the personality of it's founder. Musk and Tesla can't be separated - it's his charisma that is getting people to put down deposits for the Model 3 a year or more in advance rather than going out and buying the Chevy Volt right now. If Musk goes under a bus tomorrow, Tesla is going to be in deep trouble. So when I say goodwill to Musk, I'm not talking in the financial sense, but in the sense that the success of the company depends heavily on a single person. I don't have to point out to you that when you're evaluating risk for credit or investment you have to take that into account.Tuna said:
walm said:
In any case, you continue to be completely wrong about Tesla's balance sheet and cashflow.
Hold on, I'm not criticsing them, just saying it's a big challenge. Until the Model 3 is released and selling consistently with no major recalls, advancing a credit line is a risk for a supplier. Whatever you say, the risk here is different from extending a similar line of credit to one of the major manufacturers for an established model. Even for an established supplier to Tesla, the amount of credit being advanced is an order of magnitude larger than it was for the Model S.Suppliers are falling over themselves to supply to Tesla.
Yes, it is more risky than supplying GM.
Yes, it is higher volume than the S.
Neither of those two are enough to make it a challenge.
Musk is literally NEVER going to have to stand up and say, "we can't find someone to supply our light fittings because all the suppliers consider us a credit risk".
He can pick-and-choose anyone he wants.
(One thing I should further mention, often the supplier might insist on credit insurance such that even if the company they supply goes belly up they get paid. I doubt Tesla even needs that.)
Tuna said:
walm said:
And lastly I really don't know what you mean about the "goodwill" from Musk. Sure he has backed the latest rights issue but he certainly didn't have to.
No, I meant that Tesla is a company that is built around the personality of it's founder. Musk and Tesla can't be separated - it's his charisma that is getting people to put down deposits for the Model 3 a year or more in advance rather than going out and buying the Chevy Volt right now.Would anyone who has ordered on here like to admit it was because they have a man-crush on Musk?
You are literally making stuff up!
Edited by walm on Friday 17th June 12:02
Tuna said:
walm said:
In any case, you continue to be completely wrong about Tesla's balance sheet and cashflow.
Hold on, I'm not criticsing them, just saying it's a big challenge. Until the Model 3 is released and selling consistently with no major recalls, advancing a credit line is a risk for a supplier. Whatever you say, the risk here is different from extending a similar line of credit to one of the major manufacturers for an established model. Even for an established supplier to Tesla, the amount of credit being advanced is an order of magnitude larger than it was for the Model S.walm said:
And lastly I really don't know what you mean about the "goodwill" from Musk. Sure he has backed the latest rights issue but he certainly didn't have to.
No, I meant that Tesla is a company that is built around the personality of it's founder. Musk and Tesla can't be separated - it's his charisma that is getting people to put down deposits for the Model 3 a year or more in advance rather than going out and buying the Chevy Volt right now. If Musk goes under a bus tomorrow, Tesla is going to be in deep trouble. So when I say goodwill to Musk, I'm not talking in the financial sense, but in the sense that the success of the company depends heavily on a single person. I don't have to point out to you that when you're evaluating risk for credit or investment you have to take that into account.They are selling 50k cars a year while building the capacity for 10 times that. A 10 year old could grasp the economics of that.
You also go on about cash flows as if its a corner shop going to the local wholesaler any buying stock for a year.
I'm going to go out on a limb here and guess that you have no experience at all of business finances. Am I right?
walm said:
FurtiveFreddy said:
I think it's BMW who have recently stated they don't plan to sell and all-electric car before 2020 and their i3 has apparently only sold 25,000 units. It's quite an achievement what Musk has done with the S and now the 3 if you look at it in context.
VW announced just yesterday they will make 25% of their line up EV only by 2025.Aiming for 2-3m units.
EVs are real and they're spectacular.
98elise said:
Tuna said:
walm said:
In any case, you continue to be completely wrong about Tesla's balance sheet and cashflow.
Hold on, I'm not criticsing them, just saying it's a big challenge. Until the Model 3 is released and selling consistently with no major recalls, advancing a credit line is a risk for a supplier. Whatever you say, the risk here is different from extending a similar line of credit to one of the major manufacturers for an established model. Even for an established supplier to Tesla, the amount of credit being advanced is an order of magnitude larger than it was for the Model S.walm said:
And lastly I really don't know what you mean about the "goodwill" from Musk. Sure he has backed the latest rights issue but he certainly didn't have to.
No, I meant that Tesla is a company that is built around the personality of it's founder. Musk and Tesla can't be separated - it's his charisma that is getting people to put down deposits for the Model 3 a year or more in advance rather than going out and buying the Chevy Volt right now. If Musk goes under a bus tomorrow, Tesla is going to be in deep trouble. So when I say goodwill to Musk, I'm not talking in the financial sense, but in the sense that the success of the company depends heavily on a single person. I don't have to point out to you that when you're evaluating risk for credit or investment you have to take that into account.They are selling 50k cars a year while building the capacity for 10 times that. A 10 year old could grasp the economics of that.
You also go on about cash flows as if its a corner shop going to the local wholesaler any buying stock for a year.
I'm going to go out on a limb here and guess that you have no experience at all of business finances. Am I right?
Artey said:
walm said:
Artey said:
Cashflow isn't important you say...
No.He didn't say that.
He said the cashflows for a publicly-listed multi-billion dollar business are different to those of a corner shop.
ked.
Well, except for one where you can tap the public markets for billions, or tap into your enormous revolver, or ask your multi-billionaire founder for a loan, or issue a convert etc...
Most of these aren't available at the till in Booker.
Artey said:
98elise said:
Tuna said:
walm said:
In any case, you continue to be completely wrong about Tesla's balance sheet and cashflow.
Hold on, I'm not criticsing them, just saying it's a big challenge. Until the Model 3 is released and selling consistently with no major recalls, advancing a credit line is a risk for a supplier. Whatever you say, the risk here is different from extending a similar line of credit to one of the major manufacturers for an established model. Even for an established supplier to Tesla, the amount of credit being advanced is an order of magnitude larger than it was for the Model S.walm said:
And lastly I really don't know what you mean about the "goodwill" from Musk. Sure he has backed the latest rights issue but he certainly didn't have to.
No, I meant that Tesla is a company that is built around the personality of it's founder. Musk and Tesla can't be separated - it's his charisma that is getting people to put down deposits for the Model 3 a year or more in advance rather than going out and buying the Chevy Volt right now. If Musk goes under a bus tomorrow, Tesla is going to be in deep trouble. So when I say goodwill to Musk, I'm not talking in the financial sense, but in the sense that the success of the company depends heavily on a single person. I don't have to point out to you that when you're evaluating risk for credit or investment you have to take that into account.They are selling 50k cars a year while building the capacity for 10 times that. A 10 year old could grasp the economics of that.
You also go on about cash flows as if its a corner shop going to the local wholesaler any buying stock for a year.
I'm going to go out on a limb here and guess that you have no experience at all of business finances. Am I right?
Artey said:
No they are the same, if you run out of cash you're fked.
It depends, when you have lots of forward orders you can borrow against them. Tesla isn't building for stock and then hoping to sell the Model 3. It's already sold more than enough to justify investment. Even if a substantial proportion of the deposits turn bad the numbers are so huge it's a solid business.ked.I've done a complete U-turn in my view on Tesla. When it was making roadster I thought they had built more cars than the market wanted, now it's the other way around.
Simon
FurtiveFreddy said:
Musk hasn't had to go on Dragon's Den to get where he is now, in case some of you aren't aware.
Well that's not entirely true and I'm surprised (or perhaps not) that Tesla fanbois don't know the actual st that went down before Tesla S launch. And that's why Musk was so happy to start collecting deposits for Model 3 before they've even finalised the design.simonrockman said:
Artey said:
No they are the same, if you run out of cash you're fked.
It depends, when you have lots of forward orders you can borrow against them. Tesla isn't building for stock and then hoping to sell the Model 3. It's already sold more than enough to justify investment. Even if a substantial proportion of the deposits turn bad the numbers are so huge it's a solid business.ked.I've done a complete U-turn in my view on Tesla. When it was making roadster I thought they had built more cars than the market wanted, now it's the other way around.
Simon
Artey said:
Well that's not entirely true and I'm surprised (or perhaps not) that Tesla fanbois don't know the actual st that went down before Tesla S launch. And that's why Musk was so happy to start collecting deposits for Model 3 before they've even finalised the design.
Do tell.t that went down before Tesla S launch. And that's why Musk was so happy to start collecting deposits for Model 3 before they've even finalised the design.To be honest I know almost nothing about them pre-S!
(Although, once again, it is fairly standard to take deposits for pre-orders. Just look at the new Honda NSX.)
walm said:
Artey said:
Cashflow isn't important you say...
No.He didn't say that.
He said the cashflows for a publicly-listed multi-billion dollar business are different to those of a corner shop.
Corner shops generally have to pay for goods up front at the wholesaler
Even your local garage will get parts on account, and will have sold them to you before they have to pay for them.
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