Tesla — the future of the automotive industry. But is there a future for Tesla?
Just a year ago Tesla looked as a fast growing company designed to make a revolution in the automotive industry. Her sedan on the battery-powered Model S was very popular among luxury car buyers. Autopilot system seemed much ahead of its competitors. CEO Elon Musk (Elon Musk) promised that more affordable Model 3 will soon descend from the conveyor and begin the triumphant March to the masses. Wall street was admired. The market value of Tesla has grown by leaps and bounds and even exceeded the performance of General Motors and Ford automotive companies with centuries of experience. But there were also problems.
Moreover, the announcement of the Model 3 is mired in failures and delays — “production hell”, says Mr. Musk, in addition to the efforts of Tesla in the development of the autopilot without the driver were marred by accidents, and the company continues to lose money quarter after quarter. Last week, the problems intensified. Authoritative rating Agency Moody’s Investors Service downgraded the company’s credit rating, fearing that it burns through cash. These concerns are quite serious: some analysts believe that Tesla could lose the working capital until the end of the year.
“I have some time ago said that Tesla is far from being a reliable option for investment or to be considered as a stable company, — noted senior analyst Investing.com Clement Thibault (Thibault Clement). Tesla is living on borrowed time and money over a long period.”
Tesla shares fell 8 percent on Tuesday and another 8 percent on Wednesday, and although they somewhat recovered on Thursday, less than three weeks securities Tesla has lost nearly a quarter of its value. Reflecting the growing concern about the ability of Tesla to repay debts, its bonds also fell in price. Those bonds, which will be valid in 2025, was sold Thursday for about 88 cents on the dollar. Tesla representatives declined to comment to The New York Times about the financial situation of the company.
But the last problem the brainchild of Elon musk go beyond its balance. Federal US officials are investigating occurred recently in a California accident involving a Tesla Model X — it ended detonating batteries and the death of the driver. Matters are complicated by the fact that in it, among other things, guilty autopilot. The latter was used during the accident in Florida in 2016, with the result that also killed the driver: security officers then came to the conclusion that the accident was not caused by a problem of automation, but revealed the shortcomings of the autopilot.
Finally, on Thursday, Tesla announced that it is Recalling 123,000 vehicles Model S was released before April 2016, to replace the bolts installed on the engine with the steering gear. Bolts in regions with cold climates, may corrode and break, leaving drivers with only manual control. The company added that no accidents or injuries related to the problem until it was.
All these changes — a test not only for Tesla but also for its Executive Director, who created the reputation of the inventor and visionary professional, creating from scratch a car brand, building the world’s largest battery factory and making progress in the development of the private space company SpaceX.
For many years, Tesla was kept on the enthusiasm of its customers and of number of investors, although in the 15 years since its establishment, it has received little profit. Presentation with announcements of new models, as a rule, caused almost a religious revival, and hundreds of thousands of customers with a big smile greeted each new statement of Mr. Mask. Under the expectations Model 3 nearly 400 000 potential customers make a Deposit in the amount of $1000 each.
In November, Elon Musk unveiled an electric truck, an incredible double Tesla Roadster and the Tesla pickup truck. He promised to start production of the truck to the end of 2019, despite the fact that the company has no plant for large-scale Assembly, and to overcome all the problems with the production of the Model 3 at the factory in Fremont still failed.
“Tesla is simply a presentation, not something real, but Elon Musk is a master to sound an attractive idea, said a senior analyst at Kelley Blue Book Karl Brauer (Karl Brauer). The problem is that begins a vague reality, and it consists of accidents with the Tesla, quality issues and long delays with access to declared production volumes Model 3. All together leads us to the question: can the company deliver?”.
Without a doubt, Tesla has achieved some success, which has forced even big name automakers to move quickly to catch up. She proved that there is a viable market for electric vehicles, and such machines can be very expensive. She became a pioneer in the methods of modernization of cars with software updates, by analogy with smartphones. And the autopilot started the race on the development of innovative assistance systems to drivers who can drive cars in certain circumstances, and to actively prevent collisions. However, today the technology Tesla has, it seems, surpassed the systems of other companies, including GM and Waymo (an offshoot of Google).
Elon Musk also faced judicial problems. In particular, we can recall his decision in 2016 on the absorption of SolarCity from Tesla. A group of investors filed the lawsuit that Mr. Musk had a conflict of interest because he was Chairman of this engaged in the production of home solar panels, the company founded by his cousins. Last week the judge gave the further course of this case.
In January, Tesla went with Mr. Musk on the new remuneration system, fully associated with the market value of the company and other performance indicators. If he will cope with all the tasks, you may be rewarded with shares worth more than $50 billion.
But the company repeatedly failed to meet stated deadlines, especially with the Model 3. Mr. Musk originally promised that the Model 3 will be released in 2017, and that the car will be sold 500 000 by 2018. He later lowered the forecast to 100 thousand Model 3 in 2017. In August last year he said that the company hopes to establish production of 20 000 vehicles per month by December, and added that no one should have doubts about the ability of Tesla to increase production volumes of Model 3.
But in the fourth quarter of last year, Tesla produced only 2425 instances of Model 3. In his latest plan, he expressed hope to increase the production of the Model 3 up to 2500 a week. It is expected that in early April the company will summarize the results of the first quarter. The success of the Model 3 are crucial. The company needs to deploy their business Model 3 to generate income to satisfy investors and to continue funding the development of future vehicles, including an electric truck.
Moody’s Investors Service came to the conclusion that this year Tesla will need to attract more than $2 billion from investors, to be able to Finance their activities, to continue investment, to pay the debts and other financial obligations for which the period is suitable. According to the Agency, Tesla this year will come into force bonds for $200 million, and in early 2019 and by another $900 million “Liquidity will be very limited to the end of the year, said in an interview with the senior Vice President of Moody’s Bruce Clark (Bruce Clark). — They need to restore confidence in the capital markets.”