complete guide to how Elon Musk has raised, and then spent,
billions of dollars.
company that Elon Musk built to usher in the electric-car
future might not have enough cash to make it through the
anxieties that lurk beneath the tremendous ambition of Tesla
Inc. moved into the forefront in recent weeks. The company
far short of its own production
targets for the mass-market Model 3 sedan, another person died
in a crash involving its
assisted-driving feature and Musk entered into a
public dispute with federal safety
regulators. Tesla’s once high-flying stock, buffeted by a
downgrade from credit analysts, has dropped 24 percent from
its peak in September.
a good reason to worry: No one has raised or spent money the
way Elon Musk has. Nor has any other chief executive officer
of a public company made a bankruptcy
joke on Twitter at a time when so
much seemed to be unraveling.
is going through money so fast that, without additional
financing, there is now a genuine risk that the 15-year-old
company could run out of cash in 2018. The company burns
through more than $6,500 every minute, according to data
compiled by Bloomberg. Free cash flow—the amount of
cash a company generates after accounting for capital
expenditures—has been negative for five consecutive
quarters. That will be a key figure to watch when Tesla
reports earnings May 2.
years to come, we will all look back and wonder how so many people were
taken in by this shyster, who makes Enron look honest.
lot of Musk’s money has been extracted from suckers, who think he is God’s
gift, as Bloomberg report:
of Tesla’s greatest strengths is its ability to monetize the patience
and goodwill of its customers and loyal fans. The company is sitting on
a staggering $854 million in customer deposits as of the end of 2017.
Tesla sells its products direct to consumers, without relying on a
dealer network, customer deposits are cash payments that essentially
serve as interest-free loans—and these loans can stretch on for years.
If Tesla were to go bankrupt, those deposit holders would likely be
is holding customer deposits for two vehicles that aren’t even in
production yet: an electric Tesla Semi ($20,000 deposit) and a
next-generation Roadster (either $50,000 down or the $250,000 retail
price paid up front to reserve a limited edition). Even customers
interested in installing an array of solar roof panels or the company’s
Powerwall home battery must hand over $1,000 to place an order.
doesn’t break out deposit numbers by car, but the vast majority comes
from $1,000 reservations for the Model 3. When Musk first introduced the
lower-priced sedan in March 2016, fans stood in long lines at Tesla
stores. Two years later, the slower-than-expected
pace of production means that most of the more
than 400,000 reservation holders are still waiting. And new people
appear to be joining the queue: As of April, the company reported “net
Model 3 reservations remained stable.”
an additional source of free money from loyal believers: An unknown
number of customers have paid up for vehicle features—$3,000 for “Full
Self Driving” capability, for example—that Tesla thus far hasn’t figured
out or released to anyone.
consumer psychology that sees hundreds of thousands of people
essentially extending an interest-free loan to a public company is
unusual, to say the least. Consider the devotion of Bruce Sidlinger, a
60-year-old aerospace engineer who lives in Flagstaff, Arizona:
morning after the Roadster was announced, I put a deposit down.
Putting down $50,000 for a Roadster that won’t be out for a few years
is kind of like buying a bond that returns zero. Elon Musk is one of
our planet’s great hopes. I would offer a kidney to him if he needed
in mind that Sidlinger already owns both a Model S and a Model X. He
drove across the country to Florida earlier this year in a car made by
one Musk company so he could watch a rocket made by another Musk company
take flight for the first time.
think the phrase “more money than sense” rather sums it up