Musk's asset accrual and paying for Mars

[ChrisWilson68]

Not happening, since Musk has said that he's the last capital out of Tesla.  Nowadays, we have borrowing on your equity, which preserves this investment, is tax efficient, and cheap.

Borrowing on equity in a publicly-traded stock is very risky.  You can end up losing everything.

And the "nowadays" qualifier is completely wrong.  Borrowing on equity is nothing new, it's been common for a century.

As an example to illustrate both points, consider William Durant.  He was the founder of General Motors.  He became very wealthy.  But he borrowed on his stock in GM and when the market went down in a 1920 recesssion he lost control of the company.  He later went bankrupt.

[ChrisWilson68]

This all assumes that a traditional car company that produces in two weeks what it takes Tesla all year to make doesn't eat Tesla's lunch with a cheaper model that can be driven home off the lot on the same day.

No other company produces in two weeks what it takes Tesla all year to make.  The traditional car companies produce gas-driven vehicles.  Those are not the same as electric cars.

Those traditional car companies have been trying and failing for years to compete effectively with Tesla.  So far, they've all failed miserably.

Or that the SEC doesn't get tired of Musk's antics and give him an extended time out this time.

The SEC doesn't have arbitrary power.  They can't just decide to punish someone.  They can only have any power at all if they can make a case that a crime has been committed.  And even then their power is limited by the scope of the alleged crime and the likelihood they can convince a court to convict someone.

The SEC was able to force Musk into a settlement because he made an unwise tweet that could be taken as illegal.  I think it's clear that Musk learned his lesson from that and isn't likely repeat the mistake.  Unless Musk does something else like that that can be taken as a serious violation of securities law, there's nothing at all that the SEC can do to punish him.

[ChrisWilson68]

This all assumes that a traditional car company that produces in two weeks what it takes Tesla all year to make doesn't eat Tesla's lunch with a cheaper model that can be driven home off the lot on the same day. Or that the SEC doesn't get tired of Musk's antics and give him an extended time out this time.

If the SEC forces him out that is the perfect excuse to sell his shares and focus all his efforts (and capital) on SpaceX.

Having an "excuse" doesn't make things any better for Musk.  Having him forced out of Tesla would cause a huge hit to the share price.

[ncb1397]

The SEC was able to force Musk into a settlement because he made an unwise tweet that could be taken as illegal.  I think it's clear that Musk learned his lesson from that and isn't likely repeat the mistake.  Unless Musk does something else like that that can be taken as a serious violation of securities law, there's nothing at all that the SEC can do to punish him.

Umm, maybe not the best time to make that argument. There is some indication that the recent tweets about Tesla stock being too high were not vetted as stipulated under his SEC settlement.

Musk has had problems with the SEC for tweeting about the company’s stock in the past. Musk has since agreed to submit his public statements about Tesla’s finances and other topics to vetting by its legal counsel. The agreement came after Musk’s famous tweet in August 2018 saying he wanted to take Tesla private at $420 per share and that he had secured the funding to do so. It’s unclear if Musk had that approval for his tweets Friday. When asked by the Wall Street Journal if the tweet was a joke or vetted, Musk replied: “No.” The SEC declined to comment.

https://www.cnbc.com/2020/05/01/tesla-ceo-elon-musk-says-stock-price-is-too-high-shares-fall.html

That was in addition to previous tweets which the SEC claimed violated the SEC settlement. And given that he has called the $20 million slap on the wrist "worth it", it isn't exactly evident that he has learned a lesson. Let alone being absolutely " clear that Musk learned his lesson".

[laszlo]

No other company produces in two weeks what it takes Tesla all year to make.  The traditional car companies produce gas-driven vehicles.  Those are not the same as electric cars.

Those traditional car companies have been trying and failing for years to compete effectively with Tesla.  So far, they've all failed miserably.

You're correct, the traditional car companies do not produce the same product as Tesla. The traditional car company makes:
1. gasoline-powered cars
2. by the millions per year
3. that can be viewed and test-driven throughout the nation at local dealerships
4. that can be taken home the same day that they are test driven
5. that cost  as little as $3000 per seat (without heavy tax subsidies)
6. that have extensive repair networks locally available
7. that have extensive refueling networks across the continent giving the cars essentially unlimited range (fuel depots, they're not just for outer space)
8. that can be fully refueled in under 5 minutes

Tesla makes:
1. electric-powered cars

I'm not saying that Tesla won't eventually put together the rest of its vehicular ecosystem to where they can match what traditional companies are providing now, nor am I saying that they can't eventually scale up their manufacturing to the point where price and availability won't match gas-powered cars. For that matter, traditional car companies moving to electric will have to address items 5, 7 and 8, which can only help Tesla as long as common standards are followed. My point was that while Tesla is slowly climbing the learning curve, addressing the chicken and egg problems and setting up that entire ecosystem from scratch, a savvy traditional company could quietly watch, learn, re-tool existing factories and suddenly burst onto the scene with a much more generally competitive product with a complete ecosystem. Tesla, after all, has to develop everything from scratch, the existing car companies only need to develop a successful electric drive train.

It's not a guaranteed slam-dunk for Tesla and their future is nowhere near as assured as many people think it is, so neither is Musk's Mars piggy bank.

[geza]

Musk could not get $25 billion by selling all his shares of Tesla now, because as soon as he started selling the stock price of Tesla would tank, for two reasons:

  1. A flood of new supply of shares on the market always causes prices to go down.

  2. A lot of people would lose confidence in the future of Tesla if they thought that either Musk might not believe the future of Tesla was bright or he was stepping away from involvement in the company, because a lot of confidence in Tesla comes from confidence in Musk as an exceptional leader.

To get value out of Tesla, Musk has to sell shares slowly, over a long period of time.

Reason 2 above applies even if Musk doesn't sell Tesla shares at all but just cuts back on his involvement in the company to focus more on SpaceX.

Musk has been splitting his time between SpaceX and Tesla for many years now and it has worked out well for both companies.  If he cares most about colonizing Mars, his best course is to continue doing that.

Much of the market capitanization of Tesla is based on the beleif that Tesla is the future. Of course, it is a possibility the Tesla will lose this status, and remain one of the many automakers, not among the largests. If this is the future, Musk should sell his shares before their price drops - and this act will make that drop inmmediadte.

The better possibility is if prestige of the Musk/Tesla/SpaceX endeavour remains high. Tesla may become an energy company, additional to having a car factory and car renting business, etc. Meanwhile Spacelink could acquire a significant share of telecommunication market, etc. Then, shareholders of Tesla will understand that they will loose the larger part of their investment without further investing into the image of Company of the Future. Then, the best strategy for Musk will be to steer Tesla towards investing into Mars directly. Develope Martian versions of the Cybertruck, develop the energy sector of the Martian colony, and contribute them, as investment. Build Megafactory on Mars, etc.

Of course, investing into Mars will not pay off directly in Earthly money, so it is dangerous financially. Maybe, it will pay of through prestige and through the excitement, motivation, experience of the company engineers, etc. 

What do you think? Is this possible? I am not sure.

The usual hope is that if SpaceX solves the transportation problem to Mars, then many people, not only Elon, will invest into the Martian colony. I am not so sure about this. However, if this is the hope, then Tesla should be the very first company who take the risk.

[Billium]

It is my belief that a significant portion of Tesla’s current valuation (and future increases in valuation) is tied to them getting full self driving to work with current hardware. I hope it works, but I don’t think it’s guaranteed to work. If it works, then the stock value will soar, if it can’t work the stock will crash.

Musk is facing 2 law suits right now by shareholders, the first is over lack of disclosure on the solar city merger, the second is about the “funding secured” tweet. He could loose billions of dollars from these.

He will likely face a third law suit from his recent “Tesla stock is too high” tweet. I thought he had learned his lessons, but evidently he hasn’t. Who knows how much of his net worth he will loose to stupid tweets between now and when he wants to cash in Tesla.

I think he should get his money out of Tesla and into Spacex while he can. Also, Starlink is a political threat to many authoritarian regimes, and sanctions against Tesla is the way those regimes can exert pressure against him.

[Brovane]

This all assumes that a traditional car company that produces in two weeks what it takes Tesla all year to make doesn't eat Tesla's lunch with a cheaper model that can be driven home off the lot on the same day. Or that the SEC doesn't get tired of Musk's antics and give him an extended time out this time.

If it was only that easy.

Last year the Model 3 in the US outsold all other manufacturer's EV's sales combined. 
Other car manufacturers are really struggling to produce a EV that can even match what Tesla can build.  Let alone actually mass produce that same EV at the rate that Tesla does. 

[Zed_Noir]

Question for the folks. If the starlink Constellation works more or less as intended. How hard would it be to piggy-back a Paypal like banking service onto it?

Interesting factoid, Musk have procession of his old x dot com URL again. All the web site is doing is displaying a lower case x character so far.

[garcianc]

Since Elon is making full use of his constitutional right to rant publicly, I will do the same.

As a long term investor in Tesla, since the IPO days, I believe it is time for Elon to step down as CEO - he can stick around as Chief Architect or something like that. There have been times in the past few years where I have come to question Elon's mental state, or at least his maturity. Despite his well-publicized beef with short-sellers and market-naysayers, there are many Tesla stockholders who are small investors who have put their faith in Tesla. Alienating those people who have kept Tesla from going bankrupt through some pretty tough times is, at the very least, insulting.

Elon has said that the main goal for Starlink is to not go bankrupt. Well, he needs to learn how to act better when representing those who fund his ventures.

This views are mine and do not necessarily represent this forum. My apologies in advance to those who do not agree, but they come from many years of Elon trying my patience.

I want SpaceX and Starlink to succeed. At this point, I can care less about Tesla, they have accomplished the only thing I cared about when I invested, which was to make electric vehicles mainstream. However, if Elon is going to run Starlink and other off-shoots the same way, he is going to need to grow up.

/rant

[ncb1397]

This all assumes that a traditional car company that produces in two weeks what it takes Tesla all year to make doesn't eat Tesla's lunch with a cheaper model that can be driven home off the lot on the same day. Or that the SEC doesn't get tired of Musk's antics and give him an extended time out this time.

If it was only that easy.

Last year the Model 3 in the US outsold all other manufacturer's EV's sales combined. 
Other car manufacturers are really struggling to produce a EV that can even match what Tesla can build.  Let alone actually mass produce that same EV at the rate that Tesla does.

This video suggests a slightly different story.



The Volt/Leaf/Fusion Energi/Prius Prime all had comparable sales to various Tesla Models as of middle of last year. Where Tesla comes out ahead isn't necessarily with a model doing better then their competitors, but Tesla just tends to have more models in this segment than their competitors and they have yet to produce a model that doesn't sell reasonably well (although the X having comparable sales to the Fusion Energi that nobody has heard isn't a good look).

Other car manufacturers are really struggling to produce a EV that can even match what Tesla can build.

Sales for various models from other manufacturers that roughly match Tesla sales suggest otherwise?  In fact, the Model 3 and Nissan Leaf are pretty much tied...

Nissan LEAF recently reached a cumulative sales milestone of 450,000 (since December 2010). We learned about the new milestone from one of the latest press releases. The precise date of achieving 450,000 is not known (it could be December 2019).

The number of 450,000 at this point is in line with our estimations (450,000-460,000) from the beginning of January.

Nissan called the LEAF "the world's most popular EV with 450,000", but we are just weeks from the switch for the first position, as the Tesla Model 3 is outselling the LEAF significantly (about 448,634 Model 3 were sold by the end of 2019).

https://insideevs.com/news/393890/nissan-leaf-sales-450000/

Anyways, various models show that electric car models from traditional car makers can go head to head with Tesla and come out competitive from a sales perspective. Maybe that equation has changed recently, but it is hard to tell if that is transient due to pent up demand, Elon Musk's hardcore following that is fervent but limited in size or where the traditional car manufacturers are in their product plans in what to them is a small market.

[Brovane]

The Volt/Leaf/Fusion Energi/Prius Prime all had comparable sales to various Tesla Models as of middle of last year. Where Tesla comes out ahead isn't necessarily with a model doing better then their competitors, but Tesla just tends to have more models in this segment than their competitors and they have yet to produce a model that doesn't sell reasonably well (although the X having comparable sales to the Fusion Energi that nobody has heard isn't a good look).

Sales for various models from other manufacturers that roughly match Tesla sales suggest otherwise?  In fact, the Model 3 and Nissan Leaf are pretty much tied...

Nissan LEAF recently reached a cumulative sales milestone of 450,000 (since December 2010). We learned about the new milestone from one of the latest press releases. The precise date of achieving 450,000 is not known (it could be December 2019).

The number of 450,000 at this point is in line with our estimations (450,000-460,000) from the beginning of January.

Nissan called the LEAF "the world's most popular EV with 450,000", but we are just weeks from the switch for the first position, as the Tesla Model 3 is outselling the LEAF significantly (about 448,634 Model 3 were sold by the end of 2019).

https://insideevs.com/news/393890/nissan-leaf-sales-450000/

Anyways, various models show that electric car models from traditional car makers can go head to head with Tesla and come out competitive from a sales perspective. Maybe that equation has changed recently, but it is hard to tell if that is transient due to pent up demand, Elon Musk's hardcore following that is fervent but limited in size or where the traditional car manufacturers are in their product plans in what to them is a small market.

Reference graph below for US 2019 EV sales.  Notice how the Model 3 outsells all other manufacturers EV's combined. 

2018 US sales for the Model 3, doesn't look any better for Tesla's competitors. 

[Robotbeat]

No other company produces in two weeks what it takes Tesla all year to make.  The traditional car companies produce gas-driven vehicles.  Those are not the same as electric cars.

Those traditional car companies have been trying and failing for years to compete effectively with Tesla.  So far, they've all failed miserably.

You're correct, the traditional car companies do not produce the same product as Tesla. The traditional car company makes:
1. gasoline-powered cars
2. by the millions per year
3. that can be viewed and test-driven throughout the nation at local dealerships
4. that can be taken home the same day that they are test driven
5. that cost  as little as $3000 per seat (without heavy tax subsidies)
6. that have extensive repair networks locally available
7. that have extensive refueling networks across the continent giving the cars essentially unlimited range (fuel depots, they're not just for outer space)
8. that can be fully refueled in under 5 minutes

Tesla makes:
1. electric-powered cars

I'm not saying that Tesla won't eventually put together the rest of its vehicular ecosystem to where they can match what traditional companies are providing now, nor am I saying that they can't eventually scale up their manufacturing to the point where price and availability won't match gas-powered cars. For that matter, traditional car companies moving to electric will have to address items 5, 7 and 8, which can only help Tesla as long as common standards are followed. My point was that while Tesla is slowly climbing the learning curve, addressing the chicken and egg problems and setting up that entire ecosystem from scratch, a savvy traditional company could quietly watch, learn, re-tool existing factories and suddenly burst onto the scene with a much more generally competitive product with a complete ecosystem. Tesla, after all, has to develop everything from scratch, the existing car companies only need to develop a successful electric drive train.

It's not a guaranteed slam-dunk for Tesla and their future is nowhere near as assured as many people think it is, so neither is Musk's Mars piggy bank.

Then short Tesla, because the market believes Tesla is worth a lot already.

[su27k]

The SEC was able to force Musk into a settlement because he made an unwise tweet that could be taken as illegal.  I think it's clear that Musk learned his lesson from that and isn't likely repeat the mistake.  Unless Musk does something else like that that can be taken as a serious violation of securities law, there's nothing at all that the SEC can do to punish him.

Umm, maybe not the best time to make that argument. There is some indication that the recent tweets about Tesla stock being too high were not vetted as stipulated under his SEC settlement.

Musk has had problems with the SEC for tweeting about the company’s stock in the past. Musk has since agreed to submit his public statements about Tesla’s finances and other topics to vetting by its legal counsel. The agreement came after Musk’s famous tweet in August 2018 saying he wanted to take Tesla private at $420 per share and that he had secured the funding to do so. It’s unclear if Musk had that approval for his tweets Friday. When asked by the Wall Street Journal if the tweet was a joke or vetted, Musk replied: “No.” The SEC declined to comment.

https://www.cnbc.com/2020/05/01/tesla-ceo-elon-musk-says-stock-price-is-too-high-shares-fall.html

That was in addition to previous tweets which the SEC claimed violated the SEC settlement. And given that he has called the $20 million slap on the wrist "worth it", it isn't exactly evident that he has learned a lesson. Let alone being absolutely " clear that Musk learned his lesson".

Musk has said Tesla stock price is too high many times before, this is a non-issue: https://qz.com/1031702/all-the-times-elon-musk-has-trash-talked-teslas-tsla-stock-price-as-overvalued/

October 2013: “The stock price that we have is more than we have any right to deserve.”

October 2014: “I’m not going to sit here and say we deserve every penny.

September 2014: “I think our stock price is kind of high right now, to be totally honest.”

May 18, 2017: “I do believe this market cap is higher than we have any right to deserve.”

[randomly]

Anyways, various models show that electric car models from traditional car makers can go head to head with Tesla and come out competitive from a sales perspective. Maybe that equation has changed recently, but it is hard to tell if that is transient due to pent up demand, Elon Musk's hardcore following that is fervent but limited in size or where the traditional car manufacturers are in their product plans in what to them is a small market.

This is silly. There are more pre-orders for the model 3 in China alone than Nissan has sold Leafs in the last DECADE. There has not yet been a competitive vehicle introduction from any Car company yet to compete in this market segment. I'm sure eventually there will be, but how long will that take? Clearly the EV market will continue to rapidly increase in size and currently Tesla is positioned to gobble up most of the market and continue their rapid expansion.

[ncb1397]

Anyways, various models show that electric car models from traditional car makers can go head to head with Tesla and come out competitive from a sales perspective. Maybe that equation has changed recently, but it is hard to tell if that is transient due to pent up demand, Elon Musk's hardcore following that is fervent but limited in size or where the traditional car manufacturers are in their product plans in what to them is a small market.

This is silly. There are more pre-orders for the model 3 in China alone than Nissan has sold Leafs in the last DECADE. There has not yet been a competitive vehicle introduction from any Car company yet to compete in this market segment. I'm sure eventually there will be, but how long will that take? Clearly the EV market will continue to rapidly increase in size and currently Tesla is positioned to gobble up most of the market and continue their rapid expansion.

You are comparing future sales to past sales. In an expanding market, that isn't necessarily apples to apples.  Anyways, there were 2.2 million plug in cars sold in 2019. 367,500 were Tesla. Their market share in the plug in space is ~17%.

[Coastal Ron]

You are comparing future sales to past sales. In an expanding market, that isn't necessarily apples to apples.  Anyways, there were 2.2 million plug in cars sold in 2019. 367,500 were Tesla. Their market share in the plug in space is ~17%.

Elon Musk's wealth regarding Tesla is not tied to units sold, but what the stock market perceives the value of Tesla to be, not just today but in the future too.

[laszlo]

...It's not a guaranteed slam-dunk for Tesla and their future is nowhere near as assured as many people think it is, so neither is Musk's Mars piggy bank.

Then short Tesla, because the market believes Tesla is worth a lot already.

I've got no interest in shorting Tesla. I'm not convinced they will fail (nor do I want them to). I'm just also not convinced they will succeed. My point, in view of this thread, was simply that reliance upon Tesla's stock value value to finance a Mars program comes with risks that other posters were not considering, including a breakout competitor, and that a breakout competitor is a valid possibility. Acknowledging that Tesla is still in a vulnerable stage doesn't mean that I'm rooting for the competition, just that I realize that they're there and have to be considered. The arguments based on Tesla's cachet, existing sales numbers and stock value do not rule out the possibility of further market disruption. In fact, they sound a lot like what people were saying about Old Space a short while ago. There's also no law that says that disruption has to come from a small upstart company. Established companies have used their assets and expertise to take over from and stomp smaller innovators.

[laszlo]

Musk has said Tesla stock price is too high many times before, this is a non-issue: https://qz.com/1031702/all-the-times-elon-musk-has-trash-talked-teslas-tsla-stock-price-as-overvalued/

October 2013: “The stock price that we have is more than we have any right to deserve.”

October 2014: “I’m not going to sit here and say we deserve every penny.

September 2014: “I think our stock price is kind of high right now, to be totally honest.”

May 18, 2017: “I do believe this market cap is higher than we have any right to deserve.”

It's not what he said, it's how he said it. He did not follow the terms of his existing settlement with the SEC. That's the violation with potential consequences. The SEC has already said that they don't believe that there was any criminal intent with the latest stock price tweet.

[su27k]

Musk has said Tesla stock price is too high many times before, this is a non-issue: https://qz.com/1031702/all-the-times-elon-musk-has-trash-talked-teslas-tsla-stock-price-as-overvalued/

October 2013: “The stock price that we have is more than we have any right to deserve.”

October 2014: “I’m not going to sit here and say we deserve every penny.

September 2014: “I think our stock price is kind of high right now, to be totally honest.”

May 18, 2017: “I do believe this market cap is higher than we have any right to deserve.”

It's not what he said, it's how he said it. He did not follow the terms of his existing settlement with the SEC. That's the violation with potential consequences. The SEC has already said that they don't believe that there was any criminal intent with the latest stock price tweet.

What he said is exactly the same as the past statements, especially the Sep 2014 one. The SEC agreement is not about intent, it only covers tweets material to the company, the last time it's about the # of cars they'll produce, stock price is not material.