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Tesla Faces Accelerating Rate of Model 3 Refunds (recode.net)
According to new U.S. data from analytics company Second Measure, Tesla is facing an accelerated rate of Model 3 refunds. As of the end of April, some 23 percent of all Model 3 deposits in the U.S. had been refunded. "Model 3 deposits are fully refundable up until the customer configures a car by selecting features and paying an additional fee of $2,500," notes Second Measure. "After configuration, vehicles are typically delivered in just a few weeks." Recode reports: These cancellations aren't necessarily bad for Tesla, since its production rate is nowhere near as high as it needs to be to fulfill the more than 450,000 reservations it still has. Last quarter, it delivered just 8,180 Model 3s. Presumably, potential Tesla customers could make a deposit again when production is more regular. The potential longer-term harm would be in alienating them so that they choose a different brand of car altogether. About 60 percent of Model 3 reservations so far in the U.S. were made back in April 2016, when Tesla first began taking deposits. About 18 percent of the total refunds on the Model 3 happened this past April, the largest share out of any month, according to Second Measure. That's when Musk explained that Model 3s would be delayed six to nine months. A Tesla spokesperson said that Second Measure's data does not align with its internal data, but would not be more specific as to how far off it is. But the analytics company's numbers did match up to Tesla's numbers last August, "when CEO Elon Musk disclosed that there were 455,000 net reservations out of 518,000 gross reservations, suggesting 63,000 cancelations and a 12 percent cancellation rate," reports TechCrunch.
Tesla is $10 BILLION in debt. Teslas credit rating is a B3 which is SIX levels below investment grade. That means it is paying huge amount of interest. It has a very good chance of going bankrupt.
Tesla has around $10 billion in debt, and if the stock price drops down to around $200-230, another $900 million or so in debt comes due. At the moment they probably have less than $1 billion in cash reserves with roughly 50% being in the form of refundable cash deposits for the Model 3. These refunds have just evaporated around 10% of that reserve.
There's a reason Tesla is the most shorted stock on Wall St, and it's not because the shorts are haters. It's because by market capitalization, Tesla is larger than GM, despite making 1/35th of the cars that GM does, and only ever producing a running a single profitable quarter in its life (after liquidating ZEV credits). Tesla right now is buoyed by irrationality and hype.
I'm on record as being anti-Tesla corp, there really isn't precedent for pre-ordering mass market cars (just rare ones e.g. BMW M2 or early Ferraris) and at the end of the day Tesla got to earn interest / avoid borrowing 400-million dollars for a couple years.
Honestly it should be higher, I imagine most of the people pre-ordering were given the false impression they'd have their cars or an order date last years. You can't plan your life around promises from a car manufacturer, I suspect there will be a lot of people cancelling when they get the opportunity to order as they'll be locked into leases or finance deals.
What does that have to do with Tesla? GM and Ford are in a different league in terms of revenues. I wouldn't invest in GM or Ford either.
"Everyone loves to compare Tesla to GM or Ford as if they are good companies. Don't forget GM actually *did* go bankrupt in 2009 (and Ford nearly did). As for debt, check out GM's and Ford's balance sheets. GM is carrying $99B of debt, and Ford is carrying $158B (per Yahoo Finance)."
Ford and GM have billions in the bank. Their revenues are many times more than Tesla's. They pay a dividend. You can't compare outstanding debt between Tesla and them. The only reason Tesla is compared to Ford or GM at all is because of its ludicrous market cap.
People put down a deposit in case they wanted one knowing it would be a long wait. They are simply in the mood for a new car now. The novelty just isn't there.
That aside I think the production issues are mainly with producing batteries.