Profile picture
Tomi @tomi
, 14 tweets, 6 min read Read on Twitter
1/ Short thread on $TSLA Model 3 reservations backlog and demand.

The Company said on July 2 they had 420,000 reservations for the Model 3 in their Q2 deliveries report. Let's put aside the 420 number for a minute, though it has a fun tie to the fake LBO at $420.
2/ On July 19, Needham & Co Analyst Rajvindra Gill estimated that 24% of the reservations (or roughly 100K) had been canceled. That would take the total reservations number to 320K, ceteris paribus (assuming no further cancellations amidst all the negative press, etc.)
3/ Per the Q3 deliveries report released on October 2, $TSLA deliveried 55.8K Model 3s in the quarter, or roughly 4.3K/week. Include one week at lower rates for Q4 to be conservative, and you're at 60K Model 3 deliveries since July 2.
4/ Now you are at 255K reservations. Per this graphic from @EnerTuition's SA article, they've basically exhausted the LR RWD backlog. There's likely some AWD and P versions left, but it's becoming increasingly clear most of the remaining backlog is the cheap $35K version.
5/ Per Statista, the average selling price of a new car is right in the $35K range, so it's probably safe to assume at least 50%, if not 67% of the original reservations were for the cheap ($35K) model, i.e. at least 210K.

$TSLA can't manufacture them, or it will die - per Musk.
6/ Let's update the math:
420K (reported reservations)
- 100K (estimate of cancellations)
- 60K (Q3/Q4YTD deliveries)
- 210K (Model 3s that $TSLA can't manufacture)
= 50K cars left.

If $TSLA kept rate of deliveries from Q2, they'd have exhausted entire backlog sometime during Q4
7/ Friday $TSLA announced customers need to place orders by Monday, or they won't receive the full $7.5K tax credit (it halves in January to $3.75K).

Angry customers have reported canceling reservations, knowing they won't be able to get the $7.5K break on their $35K Model 3.
8/ So if the entire pricey backlog is gone and $TSLA cannot manufacture the cheaper variations, tariffs stop them from selling cars to China (55-60% higher prices) and they're not done with homologation process to sell in Europe, which Musk already said is early/mid-2019 event...
9/ ...then who are $TSLA selling to? Even if they can hold deliveries steady w/ incremental organic demand (free Supercharger giveaway, near-free financing in Norway, et al.), how do their sales NOT collapse in Q1, to the point where the entire house of cards comes crashing down?
10/ This would all come out in due diligence if anyone were to invest a large enough chunk to keep the lights on for another year (at least $5B per other thread, plus the Saudis are now out) or if they tried to raise equity (debt no longer an option).

So, where does $TSLA go?

11/ TSLA:

$2.2B cash
($3B) payables
($0.94B) customer deposits
= (1.74B) needed

($230M) SCTY bond (Nov 2018)
($156M) TSLA loan (Dec 2018)
($940M) TSLA bond (Mar 2019)
= (3.07B) needed

($500M) Moody's minimum cash balance to operate the business
= (3.57B) minimum raise
12/ This all ignores the DOJ and SEC investigations, the two separate whistleblower lawsuits to both SCTY and TSLA, and assumes that TSLA runs at breakeven cash flow from now on.

I wouldn't count on the latter, and definitely wouldn't ignore the former when raising money.
13/ Some analysts continue to project cash burn throughout 2019 and $TSLA’s own guidance disappeared in the Q3 deliveries report.

If they aren’t at breakeven, the hole becomes much larger — burn in Q1 and Q2 were $0.7B and $1.1B.

Also: production projection didn’t hold, either.
Note: this thread by @ElonBachman gives great color to the conversion price rule on the March bond and is a must read
Missing some Tweet in this thread?
You can try to force a refresh.

Like this thread? Get email updates or save it to PDF!

Subscribe to Tomi
Profile picture

Get real-time email alerts when new unrolls are available from this author!

This content may be removed anytime!

Twitter may remove this content at anytime, convert it as a PDF, save and print for later use!

Try unrolling a thread yourself!

how to unroll video

1) Follow Thread Reader App on Twitter so you can easily mention us!

2) Go to a Twitter thread (series of Tweets by the same owner) and mention us with a keyword "unroll" @threadreaderapp unroll

You can practice here first or read more on our help page!

Did Thread Reader help you today?

Support us! We are indie developers!

This site is made by just three indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member and get exclusive features!

Premium member ($30.00/year)

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!