Elon Musk Blogs to Clear Up Confusion About Tesla
Clearing the FogTesla recently raised some money in the capital markets, and SEC rules prohibited them from talking to the media during a 'blackout' period before the shares were sold. During that forced-silence period, some claims were made about Tesla that Elon Musk, the CEO of the company, wants to respond to. He wrote a rather long blog post to clear up these "misconceptions". Here's the short(ened) version of what he had to say...
First, Musk wants to make clear that the SEC filings have to include all possible risks to the company (they basically almost go as far as: "A nuclear war could negatively impact our company"), but that those scenarios don't represent what the company feels is most likely or the current state of affairs. Musk writes:
"Public company financing documents are fundamentally about ensuring investors are informed about every possible risk, even those that are highly improbable, and one has to describe those risks using language that is discomforting at best. Consistent with those principles, we described a relatively pessimistic scenario for Tesla, which was incorrectly interpreted by some to be what we thought was the most likely scenario."
Secondly, Musk wants to make clear that the money that Tesla got - 225 million dollars - was not required to keep the company afloat, just to keep going. Musk describes it as 'risk reduction', or in other words, as a rainy day fund: "Barring any disasters internally or with suppliers, Tesla is actually on the verge of becoming cash flow positive and will not have to spend any of the money raised, at least until we embark upon a major new vehicle program. In the public call with investors, I tried to make this point, but perhaps should have emphasized it more: we expect Tesla to become cash flow positive at the end of next month."
Thirdly, the number of vehicles to be delivered in the next couple quarters can look misleading:
As for the reduced vehicle delivery guidance in Q3 and Q4 of this year, it is unfortunate that we are at the steepest portion of our production ramp. This gives the appearance of being much further behind than we actually are. Our production rate in the last week of September was roughly 100 vehicles, four times greater than our production in the first week of September as we overcame supply constraints. If the calendar were simply shifted a few weeks to the right, Tesla would have exceeded the 500 vehicle delivery target for the third quarter. In fact, I am pleased to report that we completed production of 359 vehicles last quarter (delivering over 250 of those to customers) and have already made our 500th vehicle body. While we are indeed a few weeks later than we would like, this is perhaps not a terrible outcome for a product as advanced and complex as the Model S, particularly given that Tesla is doing manufacturing of full vehicles for the first time with a new team and new suppliers.
And finally, Musk says that Tesla has "never asked for or even hinted at postponing repayment of the [DOE] loan", and that Tesla will in fact start repaying the DOE loan early. "I am happy to announce that we will be initiating an advance payment today to prefund the principal payment that is due in March 2013."
Via Tesla Motors