Much more capital investment will be needed in Fremont and Reno to actually make Model ☰ happen by the end of 2017, but an extra $100 million would help...
It would make for a nice bit of collateral, should Tesla Motors decide to take out another Advanced Technology Vehicles Manufacturing (ATVM) loan from the Department of Energy. I believe the fund still has over $15,000,000,000 in it. Just sitting there. Waiting for someone to take advantage of the offer...
If Model 3 rollout goes really well, raising money won't be a problem. Besides reservation income, they could sell more stock at potentially a much higher price than it is now.
Whoever he is Red Sage has so much vaulable knowledge in so many fields, Tesla would do well to hire him as an advisor. A sage indeed (wise man, not the weed).
more importantly-100k reserves = 875m profits from those orders. Now that's some money for superchargers and more factory robots and workers.
Pretty sure the reservation money would simply go into a liability account. The interest would be Teslas, but no bank would accept it as collateral ... it's a refundable deposit after all. Banks want to be first in line ... not last.
Tesla won't be needing that money in my opinion. The Model S and Model X sales will be more than enough to finance Model 3. Autopilot has really made the sales take off. Tesla is now a software company that produces it's own hardware. And we know software companies roll in money.
If this was about raising money, the deposit would be higher. $100 million in the world of plants, manufacturing and vehicle certification is NOT a lot of money. This is about building a "soft" book of orders. As a fully refundable deposit, it is another brilliant marketing move by Tesla.
Tstolz: +1! Great point.
Ankit Mishra & PeterPlt: +1! Well said.
They are already selling batteries to power homes and some utilities(as in Hawaii)which not many consider in revenue flow. I believe Gigafactory 2 is in the works. Also a deal with Chinese for selling in China and in the EU may be another caveat. This is a most exciting time.
This is a nicely done article on the Model 3 in Bloomberg.
If indeed reservations are enormous,
1: they can stop taking orders
2: raise the deposit above $1000
3: prepay for the car, as was the Roadster
4: work harder
5: bankrupt due to unmanageable setup expense
6: replace Elon as CEO
Tesla is trying to be different and gouging people over deposit amounts, simply because they can, is not in Tesla's DNA. The deposit for the Model ≡ is essentially half the amount for the MS, which is appropriate because the Model ≡ is half the cost of a MS.
It certainly would garner some fantastic press to announce that production of the Model ≡ is sold out for the next 2 years.
@moorelin: the reservation money is refundable. It will be placed in an escrow account. Tesla will have to raise more than $100 million.
@Ankit: What are you smoking over there? The gross profit from the sale of 75,000 cars this year will be less than $1.5 billion. Not enough to fund the capital needs for growing battery and auto production capacity in addition to growing the worldwide networks of Superchargers and Service centers and hiring the additional staff needed.
They will absolutely have to raise more capital in the next 12 months IMO.
@Ross: the logic that produced the wildly disparate list of 6 outcomes isn't clear to me. Perhaps you have put too much stock in the unquantified word "enormous" that has led you to jump to unsupported conclusions. Or there may be other explanations...
@georgehawley.fl.us I am not sure about that. A lot of what is needed has already been invested with the production line improvements for the X. Panasonic is taking a good percentage of the cost of the first year battery production line. I think that the S & X sales could very well cover most if not all of the costs of getting the 3 into production.
On the other hand none of us know anything really.
Yes! I can finally post again!
100,000 reservations as an example as some here are espousing is a mind boggling confront for Tesla to handle.
The setup costs will be bigger than they have ever experienced, than probably any company in the world has ever experienced. To get it up in 2 or 3 years soon? To 500,000 per year. In which case 100,000 reservations would only be described as healthy ONCE they have the capability.
This is not an iPhone.
Hope it is not a Model X, which only dribbles out of a factory which used to produce 500,000 cars annually for NUMMI.
I have just finished Ashlee Vance's book.
I have my shares for the long haul but doubts for the short haul.
I hope the team can do it.
Have you ever seen 100,000 or 500,000 cars together?. Its a lot of metal, and plastic and computers.
And have you ever seen a spaceship coming off the line every 55 seconds?
With possibly 8000 batteries per car average x 500,000 Models 3, plus Models S and X 100,000 plus Powerwall equal to all of that , then double it as they supply the rest of the 'world', I think is 38 billion 400 million batteries a year.
Each battery is 65 mm long, so that is over a billion meters, or a million kilometers of batteries coming off the production lines. 1 1/2 round trips to the moon I think if the cells are connected end to end.
I think they might need you and me to come out of retirement to sort this.
If you delivered 500,000 Models 3 all at once in single file (on Summon and Autopilot), one car length apart, the line would be 2750 miles long, the same distance LA to NY.
500,000 cars a year won't happen until 2021 or 2022 with a 50% year over year growth rate which is a very high growth rate to sustain over such a long time.
In order to build 100,000 M≡s a year, they will have to double the current production capacity of the Fremont works. Assuming a 55 kWh battery pack ( who knows what it really will be?) will require about 3,000 GF-produced cells per car. 100,000 cars a year=about 5.5 Gwh worth of batteries, well within the projected capacity of the GF.
To build 200,000 a year will require another doubling of production line capacity and over 10 Gwh of batteries.
To build 400,000 a year, another doubling to 8 times as many robots as they now have in Fremont. 20Gwh of batteries by which time it is well into the 2020s and Tesla or successor will be another automotive behemoth, building another Gf and Elon will be getting ready to go to Mars.
Big numbers all but thinkable if it takes another 7 years or so to get to that long line of cars.
I hope we both live long enough to see it. Really.
We should get carbon fibre coffins made the shape of a Tesla for those of us who die from waiting.
Now there is a business opp for say, Ankit. Would keep him busy. ROFL.
My ashes are already dedicated to the parking lot mix for the GF overflow lot.
Not sure what to do about the metal in my knee and hip. Might get recycled into Tesla parts. Got some stainless steel and some titanium.
All of us older forumers hope to see as much of the reovlution as possible. For me, a kind of victory of spirit over the material, of vision (or one man?) over the impossible. The poet Wordsworth said something about it being glorious to be alive at the time of the (French) revolution. He later changed his opinion, but then Model 3 wasn't in the offing.
corrections: revoultion ;of one man