– Is Tesla going bankrupt? This is a question that I’ve actually had a lot of recently. And it’s kind of, this is hilarious. Elon actually had this giant tweet stream, if you guys haven’t seen it, April Fools joke, of course. “Despite intense efforts to raise money “including last-ditch
mass sale of Easter eggs, “we’re sad to report that Tesla has gone “completely and totally bankrupt. “So bankrupt you can’t believe it.” That’s kind of like a shot
at Trump, I guess, right? And then there’s this photo here, “Elon was found passed
out against a Model 3, “surrounded by ‘Teslaquilla’ bottles, “the tracks of dried tears
still visible on his cheeks.” Bravo to Elon for having
a great sense of humor and posting this. Gives me a renewed sense after
that kind of act of hubris a couple weeks ago with
the Facebook thing. But let’s just talk
about this real quickly in all seriousness, because they definitely are in a squeeze right now financially. Maybe they’re at the brink. But going bankrupt isn’t
really something that I see possible for their future, and I’ll talk about that in a second. But the key is how fast
they can produce Model 3s. So here you have their Model
3 Tracker from Bloomberg. Now it’s a bit slow to
respond, and Tom and these guys have done a great job here. You can see that there was a dip where they actually shut down production, which was first spotted here, and then Tesla confirmed, and then, so this, I think, is a pretty
great way to look at it. I don’t know how far out, when
they have these trends here, I’m not really, how far out that is, maybe a week, maybe two
weeks, and I’m not quite sure how they’re doubling production
here in a week or two. It doesn’t make any sense to me, but Elon did just recently report that, in an email to employees,
that they’re hitting 2,000 Model 3s per week. Now, we don’t have a date yet,
or let me just double check. I don’t think we have a date
yet for the next Q1 reporting, but usually it’s pretty soon and often, within a day or two
after the quarter ends, we get an update letter
which we don’t have yet. You can see here only the Q4 results. So very soon we’ll have
more details on that, but this report from
Jalopnik here showing that Elon sent an email stating
that they were making 2,000 Model 3s per week is great news. And basically that should
be the end of the discussion when it comes to them going bankrupt. But just to kind of put some
kind of a logic behind it in how it works, there’s
a great video here by The Rest Of Us, which is
a fantastic YouTube channel you should check out. Really great job at
explaining concepts like this, and in the video he talks about a company, that there are three kind of pipes that keep a company operating and the idea is that losing money is fine as long as you have money in the bank, as long as you have cash on hand. Once you run out of cash on hand is when the company dies. It’s a very, very well done video, I’ll put the link down there. But there are three kind of pipes here, Operations, Investing, and Financing. Operations is essentially
the money you make or lose on your actual product, in this case Tesla cars, energy, etc. Then you have your investments. And this one notably is
the Gigafactory, as well as other factories potentially,
or other build outs, costs of materials, those kind of things. Then you have the third one
which is your financing. And so this is stocks, the money you make off of going public, is a
big event, and then also they just did the bonds, they started selling
those a couple months ago. And then also you can just
raise a new round of capital which dilutes your shares and all that. My friend Gali has a great
channel called HyperChangeTV also where he goes kind of
in depth and all that stuff, he has a great background in finance. So I’ll link to his channel
as well to dig into that. So the point being that as
long as their cash reserves aren’t completely depleted,
then they will survive, and they’ve been able to
survive basically by continuing to get better rounds of
financing and things like raising money through
the bonds and all that. So those are coming
kind of short, I think, and they might need more cash which means they would probably
end up diluting shares. But the real pinch, the real
problem about this pipe here, this financing one, is
that Moody has recently downgrading them, and so that
makes financing harder to get because then you have to
pay higher interest on it. And so that really, really hurts. Now, the key point though
is that if they can get the Model 3 ramp up fast
enough, then that operations one will start to generate money. And as soon as that happens,
all of the other problems will kind of resolve
themselves because cash is kind of the air that they need to breathe. And my opinion is that the investment, the companies, the firms, and the individual investors
that have financed Tesla to this point are so deep that they’re past the point of no return, that they could not and
will not let Tesla fail because that would be detrimental
to their own investments and they’re so deep into it
that I don’t think that this financing pipe is going to run out. Now I’m not a financial
advisor, you know there’s obviously more going on here. But that is my view of it. As we hear more and more good
things about the Model 3 ramp and them making that, I think that a lot of these discussions
are going to die away. But if you want to know more,
I’ll put a link to this video, which again, I think does a
really great job explaining it as well as my friend Gali’s
channel called HyperChangeTV which has some really good
thoughts and analysis on this. All right, and with that, the
Model 3 was actually named The Automotive Car of the
Year by Popular Mechanics. Imagine that. So it’s kind of like a nice
little cherry on top here from all the stuff we’ve
talked about today. The Car of the Year. I mean, that’s a pretty, pretty big honor. I definitely think they deserve it. This car is a game-changer. It’s really gonna help us achieve the kind of mass market
adoption of electric vehicles, even though it is pretty
expensive, of course. I think it’s going to shift
peoples’ perception of EVs as the Roadster originally
did, and then the Model S did, and X and all that. So I think we’re still, it’s a catalyst. It may not be the most-selling
EV ever of all time. It probably will be in the short term, but then in the long term
I definitely could see a Honda or Toyota or
somebody else coming out with the truly $17,000 EV that is great and still worth buying, and
then that becomes the one. So kudos, Tesla, again for this award. I think it’s well-deserved. And with that, let’s hop over to Q&A.