Tesla shares plunge after outlook and production guidance

Shares of Tesla Motors are plunging after investors poked through the company’s earnings report and subsequent conference call and uncovered some unsettling prospects for the maker of electric vehicles.

Palo Alto-based Tesla was down about 10 percent after the stock opened Thursday morning.

During the Wednesday conference call, a Bank of America analyst asked Tesla Chief Executive Officer Elon Musk and Chief Financial Officer Deepak Ahuja whether, based on Tesla’s current loan structure, the company was eyeing raising additional cash through a sale of its stock.

At first Ahuja said an equity raise wouldn’t be needed because the credit lines provide a good comfort level for the company. Ahuja expects Tesla will have close to $1 billion in credit to draw on by the end of 2015. Plus, the company anticipates it can harvest additional cash once the Model X starts selling.

“So we feel pretty comfortable overall on that front,” Ahuja said.

Moments later, though, Musk stepped in and clarified matters, suggesting that an equity raise could shave risk from Tesla’s financial picture.

“I don’t think that there’s not a need to raise equity capital,” Musk said. “There may be some value in doing so as a risk reduction measure. But to be clear, what we are saying is that even in the absence of any additional capital generation activity, we would have on the order of $1 billion. Basically that would be our minimum cash position.”

Matters weren’t helped when Tesla disclosed a reduced projection for shipments during 2015 of its electric vehicles, which are produced at the company’s factory in Fremont.

Originally Tesla had predicted it would ship 55,000 vehicles this year, but then lowered that to a range of 50,000 to 55,000 vehicles.

“We do think that it’s going to be quite a challenging production ramp on the X,” Musk said. “We only want to deliver great cars, so we don’t want to drive to a number that’s greater than our ability to deliver high quality vehicles. We actually have now produced several Model Xs off the Tesla production line, but this is a complex machine with several thousand unique components.”

A fascinating moment during the conference call arrived when Musk might have dropped a hint that the company might be eyeing an Uber-style service with self-driving vehicles. It started when a Morgan Stanley analyst asked whether Tesla might sell vehicles to ride-sharing companies such as Uber. Or might Tesla offer electric vehicles directly on demand from passengers — in other words, its own Uber-like service, the analyst asked Musk.

“That’s an insightful question,” Musk replied. “I don’t think I should answer it.”


Photo: Tesla CEO Elon Musk. (Patrick Tehan/Mercury News archives)


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  • BarackObama

    Why would Tesla get involved with self driving vehicles. There is far too much risk.

    Sure, they could make a version of the Model3 a jacked up mini SUV. Uber drivers would love it. Now add superchargers in town with a special Uber charge and uber can take a cut of virtually every Uber ride.

    You are damn right they would pay 50k if it mean they didnt have to fill up again.
    Entrepreneurs would buy 4 of them just so they can rent them out for 50% of the money.

    • Rusty

      Companies like Tesla thrives on hype, and self driving vehicles is hype. Sure….the company will never make a good profit, but Musk and the insiders will profit greatly.

  • Yoda Vigoda

    BarackObama: Because Elon Musk is known to be risk adverse?

    • BarackObama

      I mean.. You will have people staging accidents in order to file claims. Or some high profile person drives off a cliff

      Vs limited benefit

  • Joey B

    my wife has lease coming due and had asked to see the Tesla but it took a week for email reply and said they would get back to me it has been another week and still no info. i have decided to just put her in another MB. The funny thing is last year when my MB lease was up i asked for a demo on Tesla then and was just a big headache so i rolled into another MB. I just do not see Tesla making it! i have extra cars so i thought it would be neat to try one not totally relying on it. What happens when you have sold guys like me that have multiple cars and are left with only those that need longer distance cars?? biggest thing is follow up sucks! i really tried to buy one but count me out for good now.

    • BarackObama

      You don’t need multiple cars for a tesla.

      If you need to drive 500 miles and you have to absolutely be there overnight,
      you can
      a> find yourself leavinnnnnnng on a jet plane…..
      b> rent a car from b1> Avis b2> Hertz b3> National b4> Thrifty b5> Budget b6> National

      If you find yourself needing a 400 mile commute, you might
      a> get a different car
      b> effing quit.