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Goldman Warns Tesla Will Need To Raise At Least Another $6 Billion
Following a plant tour to TSLA, Goldman is confident that the company will meet its 2014 production objectives. However, what keeps them more guarded is the aggressive timetable of the gigafactory as well as a potential escalation of capital needs given the planned capacity ramp, model and derivative expansion, service expansion as well as other undisclosed projects. Simply put, Goldman warns, at the low end of our three disruptive scenarios for TSLA, they see the need for an additional $6bn in capital - and 18% dilution to the current market cap around $33bn. With 3Q likely to be a noisy quarter and shares seemingly baking in flawless execution at present, Goldman remains sidelined for now with a $210 target.
Via Goldman Sachs,
What's changed
We hosted a visit to TSLA’s Fremont, CA facility and met with the CFO.
Key takeaways:
(1) Production ramp post launch of new line is proceeding according to plan. Production is back to 800+ units a week (similar to before the shutdown); TSLA expects a rate of over 1,000 by year end.
(2) The body shop is the next bottleneck, with max capacity of 1,500 a week; a significantly larger body shop is planned for 1H15.
(3) Post the shutdown, wait times have extended: China at >5 months, and anecdotes of over 3 months in the US. Cancelations are not elevated relative to history, however.
(4) TSLA believes it could self-fund capex but is keeping funding options open depending on the pace of growth and new products it wants to undertake in the future.
(5) Biggest near-term cash calls are the body shop and paint shop upgrades, Model X preproduction and launch costs, to be followed by the gigafactory and Model 3.
(6) Gigafactory will ramp in phases, with localization increasing over time; Nevada site selection allows TSLA to meet its timing, not accelerate the process.
Implications
On balance, the plant tour was positive with Tesla on track to meet its 2014 production objectives. What keeps us more guarded is the aggressive timetable of the gigafactory as well as a potential escalation of capital needs given the planned capacity ramp, model and derivative expansion, service expansion as well as other undisclosed projects. So with 3Q likely to be a noisy quarter and shares seemingly baking in flawless execution at present, we remain sidelined for now.
Valuation
Our 6-month price target – derived from five probability-weighted automotive scenarios plus stationary storage optionality – remains $210.
Key risks
Cadence of North America/Europe/China demand, gigafactory timing, Model X launch, and downward revisions to estimates.
* * *
No pull back in spending expected
With numerous projects laid out (as well as those not currently communicated) ahead for TSLA, we see a possible need for additional capital.
In the near term (end of 2014 through 2015) projects include upgrading the paint and body shops for Model S and Model X, continued Model X development/launch spending, and initial gigafactory costs. Into 2016, spending for the gigafactory accelerates and Model 3 spending begins. Beyond that, there will be incremental follow through capital deployment related to the Model 3 and gigafactory. TSLA management has noted that the company could self-fund these amounts but would consider external funding depending on its growth cadence and other projects it takes on.
For example, at the low end of our three disruptive scenarios for TSLA, we see the need for an additional $6bn in capital.
* * *
We value Tesla in Exhibit 1 by modeling three “disruptive” automotive upside cases, in addition to our automotive base and downside cases, through 2025 and by incorporating the option value from stationary storage.
- Our base case forecast calls for 290k units by 2020, somewhat below Tesla’s 500k assumption, with volumes growing to 760k by 2025 and remains relatively unchanged.
- Our downside case remains unchanged at projected volumes of 260k by 2020 with Tesla ultimately reaching 500k volumes in 2025.
- For our three “disruptive” cases, we draw on the experience of past technologies like the iPhone, the Ford Model-T, and selected consumer durables like refrigerators/ laundry appliances/ dishwashers – all of which were widely adopted new technologies that radically revolutionized consumption patterns – in order to generate potential volume paths out to 2025 that show significant upside to our base and downside cases.
When probability weighted (25% disruptive scenarios, 50% base case, and 25% downside case), our automotive valuation implies a price of $190. On top of this we add our $20 grid storage option value, which is derived by evaluating potential earnings from our projected stationary storage opportunity from 2018 through 2020. The total implied value from this methodology comes to $210, implying 20% downside.
* * *
It appears shareholders are nervous...
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Hold da boat! Yesterday the financial press quoted Mr Musk as saying that they were cash rich (in general, while answering questions pertaining to the battery plant) and would not need to seek outside funds for a while.
Uh oh.....
What's goin' on?
Goldilocks and conflicting statements?
Huh ....
Now where are all the Tesla-tards here????
Like Fonzapuke
6 Billion.......with a B?
That's why its called a "Gigafactory" - it will cost several Gigadollars to build!
Is TESLA an auto company or an Utility?
A Marketing Company
I guess Goldmans are buying then
I guess Goldmans are buying then
The Squid wants blood in the water. It's what it feeds on.
If there are intelligent historians in the future they will look back at Tesla and exclaim; "What were they thinking". Have we not learned by now that government funded industries always fail. Apparently not.
I guess I must be totally clueless. What is with this obsession with Tesla? (The car company, not the man.)
<Is this just a case of a little too much fiat catnip on Wall Street?>
Same personality defect that has "people" on the iPhone line today
Come on, Cog..... Out here in the Great People's Republic of Free Shit, everybody is aware of Saint Musk and His non-polluting Save the Planet über-Cool cars.
Come pray with us at the altar of Progressive Group-Think, properly adorned in Birkenstocks and Learn from Him that the Miracles of Zero Point Energy are Here.
Tesla alone is responsible for falling oil prices.... The demand for energy has collapsed.
After all, ya' just plug the thing is and it works.
Kinda like Central American labor.
And Jerry Brown's gonna print some more water for us and import for us an infinite supply of cheap labor, too.
Everybody is Happy.
oh man, my cynicism overflows... best off to a morning meeting
Clearly I am not properly Californicating.
IMO the obsession with Tesla is about it being one of the prominent icons for the unicorn shitting Skittles la-la-land crowd who must believe in miracles solving all the world's problems.
These are the same fucktards who also believe all the fantasy land bullshit spewed by the likes of CNBS and the Feral Reserve.
And so it's very gratifying to those living in reality to see these retard's dreams getting crushed like grapes by a freight train.
While it is nice to see that that there is something in the old New United Motors factory, I would not give that SOB of a CEO a single penny. He seems to be one arrogant ass. But he has nothing to worry about. In Goldman-speak, raising money means "creating it out of thin air then spreading it to a few hedge funds to then buy stock". What a crooked racket.
Tesla is either going to continue straight up - if it can come up with battery technology and performance that no one else has and at an affordable price - or it will crash to zero if it cannot. If it achieves the former, raising $6 billion will be easy.
Tesla will only go straight up if they can solve the following problems:
1) Getting around the various lawsuits targeted at them from angry auto dealership tycoons who don't want Tesla to be able to sell their own product. I mean, c'mon, you can't cut the middleman teat suckers out and not expect some consequences!
2) Producing a battery that does not implode upon impact with a pebble in the road
3) Convincing people to spend ridiculous sums of fiat for an EV that is only marginally better than any other EV, which isn't saying much.
I'm afraid that this company is Solyndra on wheels.
How much of their revenue comes from selling carbon-credits these days?
http://www.marketplace.org/topics/sustainability/teslas-secret-success-s...
Without Gov. Moonbeam shaking down the automotive industry, Tesla would be SOL.
Nothing quite like politicizing science for cash flow.
Yes; it's called "taxfarming".
Better hope those hippies don't find out about this. Whats great is they can change the fluid at a filling station.
http://themindunleashed.org/2014/09/move-tesla-new-car-powered-salt-wate...
Oh wait, the US gov would never allow a car in the US that gets more than 25 MPG.
Nevermind...
Salt water eh? What type of salt? What are the reactants? What are the products? Where does the energy come from? Have they overcome the corrosion problem inherent with salt?
So much hype, so little information.
Not that I am qualified to call BS. For all I know, this could be the miracle car we are all looking for. Or it could be yet another offer of false hope fed with lots of hype and no replicable information. Sorry to be so negative but please wake me up only when you have the latter to share.
Flow cell batteries are the tech in question. Not the car. Supposedly this company made an advancement. But don't let that stop you from calling BS without knowing about it.
http://lmgtfy.com/?q=flow+cell+tech
Anyways, I am not the one making the claim. The company is...
http://www.nanoflowcell.com/en/nanoflowcell#nanoflowcell-prinzip
"The electrolytic energy storage medium does not degrade and suffers no wear and tear."
Thanks for that. I like this page:
http://www.nanoflowcell.com/en/nanoflowcell#nanoflowcell-prinzip
... to help put it in perspective but this page is not too helpful on it's own. Anyone else interesed start with sleigher's links (let me google that for you ... ) Saying a car runs on salt water instantly puts an image in the minds of people that they can just pull over at the beach, scoop up a bucket of sea water, dump it in the car and drive off. Despite schools offering to teach people basic chemistry, a lot of people still don't even realize that there is more than one type of salt.
My other interest is "Where does the energy come from?" It comes from the salt water. Where does the salt water come from? Do we scoop it out of the ocean or do we have to manufacture it? If we have to manufacture it then we have to put energy in. Where does that energy come from and what is the energy return on the energy invested? Just keep looking, I guess.
Vanadium Pentoxide invented in Australia by a woman researcher. it works; but mysteriously, the MSM hasn't heard about it. Mitsubishi built a back-up/ load sharing battery for a big power plant, I dunno, 500, 000 kilowatt/hrs. or something; it works fine. nobody ever mentions it.
Jezus Christ, that's terribly naive (although you're in good company, how the fuck does a reputable sports car manufacturer put their name on a fucking sports car with solar panels?). That guido is about as obvious a scam artist as there is, he makes Rossi seem like an amateur.
He made his fortune screwing some widow out of her inheritance.
Solar? What are you talking about?
This is the second time he tried this scam, first time he fooled koenigsegg into putting their name on it ... that car used this same flow shit, but together with solar cells.
My investment strategy is to do the exact opposite of whatever Goldman Squid recommends. It's worked well.
p/e = n/a = lmfao
Oh sure....use your voodoo math on us.
Elon don't need no steenkin' GAAP.
The squid wants your share huh? Sooo... BTFD then?
What was GS short position before realeasing this infomration?
GS just wants to raise the money. And get paid on puts and buy at lower price. It must be great being on the inside.
"On balance, the plant tour was positive with Tesla on track to meet its 2014 production objectives."
Exactly what do banksters from the Vampire Squid know re. manufacturing operations? Since when do moneychangers know anything about producing tangible products? Tesla engineers shouldn't be lectured to by paper pushers.
VampireSquidFUBAR.
+1 And notice the squid mentioned nothing about Tesla meeting its sales objectives.
...and cue the call from Tesla to GS for some bit of business to shut up the equity analyst.
Before the Shorts convice a few Analysts to get off the Hype-fueled Daisy-Chain and Hugfest to gather their senses and Downgrade.
They've yet to meet their 40K Cars/Year Pace. A few more Winter Stalling Stories in the NE should slow down Winter Sales...
Now, i8 is out - too bad. With Chevy Volt / Nissan Leaf et.al on the Cheap Side, Hype won't last much longer.
the white elephant continues walking
going to enjoy this shit show failing - electric cars are expensive as hell to run and maintain and any so called benefit to the environment is lost producing and transmitting electricity
stupidity reigns on!!!!!! fuck ya!!!!!!!!!!
Tesla buyers just need a bigger subsidy.
For example: buy one, get one free.
Elon Musk is such a great capitalist!
"Free" electricity would help, too.
Goldman is king of the Use other peoples money to do what you want....its easier to steal it then....and Tesla will have all the Greenies falling all over them to give them what ever they want...Nevada just gave them 3 billion in tax breaks...they can do no wrong in many peoples mind..its the right thing to do....even though over time this car will be a failure...a collectors item...or number three in your garage...
i think battery cars are the future. but at what stock price today?? tsla has mkt cap in excess of mazda. discounting cash flows 15+ yrs in the future today while burning cash....'self fund capex'!! that is the funniest today so far, even more that BABA not trading.
roll out a 20k electric car for the masses (a la model t)...and it will change the world. until then 70k luxury cars for people with hours to refuel, doesnt do anything. tsla is worth today given risk of running out of money, maybe $50.
I keep seeing articles about ultracapacitors that can charge in minutes and are the size of a suitcase. That might blow this more-than-a-century old invention called a battery right out of the water.
I guess Goldman Sachs missed that little tidbit about Telsa opensourcing their patients knowing full well they could never reach market saturation of electric cars in general overtaking gas cars because of just this reason, the high cost of entry and development time and costs for entry level companies.
http://www.forbes.com/sites/knowledgewharton/2014/07/01/06252014/
http://www.teslamotors.com/blog/all-our-patent-are-belong-you
...
Tesla Motors was created to accelerate the advent of sustainable transport. If we clear a path to the creation of compelling electric vehicles, but then lay intellectual property landmines behind us to inhibit others, we are acting in a manner contrary to that goal. Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.
When I started out with my first company, Zip2, I thought patents were a good thing and worked hard to obtain them. And maybe they were good long ago, but too often these days they serve merely to stifle progress, entrench the positions of giant corporations and enrich those in the legal profession, rather than the actual inventors. After Zip2, when I realized that receiving a patent really just meant that you bought a lottery ticket to a lawsuit, I avoided them whenever possible.
At Tesla, however, we felt compelled to create patents out of concern that the big car companies would copy our technology and then use their massive manufacturing, sales and marketing power to overwhelm Tesla. We couldn’t have been more wrong. The unfortunate reality is the opposite: electric car programs (or programs for any vehicle that doesn’t burn hydrocarbons) at the major manufacturers are small to non-existent, constituting an average of far less than 1% of their total vehicle sales.
At best, the large automakers are producing electric cars with limited range in limited volume. Some produce no zero emission cars at all.
Given that annual new vehicle production is approaching 100 million per year and the global fleet is approximately 2 billion cars, it is impossible for Tesla to build electric cars fast enough to address the carbon crisis. By the same token, it means the market is enormous. Our true competition is not the small trickle of non-Tesla electric cars being produced, but rather the enormous flood of gasoline cars pouring out of the world’s factories every day.
We believe that Tesla, other companies making electric cars, and the world would all benefit from a common, rapidly-evolving technology platform.
Technology leadership is not defined by patents, which history has repeatedly shown to be small protection indeed against a determined competitor, but rather by the ability of a company to attract and motivate the world’s most talented engineers. We believe that applying the open source philosophy to our patents will strengthen rather than diminish Tesla’s position in this regard.
...
Whether you like electric cars or not the man gets it and sees it as far as the way things need to operate going foward.
If Goldman is involved FAIL is the furure.
Here's an aticle that puts Tesla in perspective.
"Tesla Derangement Syndrome"
http://www.forbes.com/sites/markpmills/2014/09/18/tesla-derangement-synd...
Elon needs to go back on his meds. He might need them on Mars.
Doesn't anybody else see "Delusions Of Grandeur" personified here?
He was interviewed on Japanese State TV one evening regarding TSLA and SpaceX.
When questioned about the Key to his success, he told the 50-something Interviewer and Co-Host of the Newscast that:
"You can't teach Old Dogs New Tricks"
He proceeded to state the need to give younger people more repsonsibilities and promotions. It may have worked for a few Silicon Valley Software Startups as they get Flipped for Profit; but I don't think it'll work for - everywhere else.
Remember when taking Goldman advice. When Goldman loses, the taxpayers bail Goldman out. When you lose they drop you from the S&P.
Goldman = FAIL
Easy, just have a secondary offering. Lots of cash out there to buy worthless companies. The Fed has printed over 4 trillion, that cash has to to somewhere
All the numbers indicate a factory on track with its business plan with all the borrowed money. But at the end of the tunnel, what has to keep the factory open and running is sales (unless I'm being naive). This must continue year on year at a profit. Let's take a deep breath and look at what regular car sales are doing right now: Living on transfusions of loans to people that can barely afford a regular car at prices much lower. So, are the elite planning on buying one a month until they have all the colors and models? And after they fill their garages, who will be the customers in a 30 hour a week job economy?
So, Goldman’s new price target for TESLA is just slightly more than double what it was at the beginning of this year, which was only 150% off the present price.
http://www.streetinsider.com/Analyst+Comments/Goldman+Sachs+Comments+on+Tesla+Motors+(TSLA)+Q4/9195548.html
One can only wonder where Goldman’s Tesla target it will be in another nine months, and whether it will be off their current target by more or less than the size of their last error.
Why does anyone assign any value on what these people say?
I still wonder why the Volkswagon TDI gets nearly 60 mpg in Europe...and the one they import over here gets 20 mpg less.
hmmmmmmmm.
VW XL1 is the smart way to go. Side by side Im taking the diesel. Hands down far more value in the diesel. Its proven technology and does not need any skittles to make a sale. Add F/T fuel to the mix and you have the good future of transportation for the next fifty years at least. 3 gallons of diesel will stomp all electric cars period end of story. Its math and its not up for debate.
+!
A plug in hybrid turbo diesel is the way to go and I have been saying that for years. The Germans will figure it out not some ***king selfy iPad Facebook posting Silicon Valley douchebag,
The math works very well on this car. At higher speeds this little beast might be even more impressive. Far beyond any E carmakers dreams. At 140/160 mph with the right gearing? If I told ya you would think me insane.