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Pressed for Cash, Tesla Issues Junk Bond in Bid to Boost Model 3 Production

Automaker lowers price of Model X SUV to reflect “efficiencies.”

by on Aug.07, 2017

The first "saleable" Model 3 shown after rolling off the line at the Fremont plant last month.

Aiming for a massive increase in production to meet strong demand for its new Model 3 battery-electric vehicle, Tesla is issuing $1.5 billion in high-yield junk bonds.

The announced comes less than a week after Tesla said it had narrowed its losses for the second quarter. During a conference call to discuss the earnings report, CEO Elon Musk indicated the automaker might need a new cash infusion but would try to avoid issuing new stock.

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The new debt offering is meant “to further strengthen its balance sheet during this period of rapid scaling with the launch of Model 3, and for general corporate purposes.”

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Fear of “Manufacturing Hell” Has Investors Unplugging From Tesla

Model 3 ramp-up could prove seriously challenging, CEO Musk warns.

by on Aug.01, 2017

An SRO crowd gathers for the event marking the delivery of the first Tesla Model 3 on 7-28-17.

After spending months driving up the shares of Tesla, Inc., investors seemed ready to run on Monday after outspoken CEO Elon Musk warned that his company could face a half-year of “manufacturing hell” trying to ramp up production of the new Model 3 battery-electric sedan.

The Model 3 is Tesla’s long-awaited entry into the mainstream market, with prices ranging from around $35,000 to $60,000. The California carmaker is believed to have as many as 400,000 advance reservations. But it will face a serious challenge, Musk acknowledged, boosting production at the Tesla plant in Fremont, California to the point where it can roll out the promised 500,000 vehicles next year.

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Investors aren’t the only ones worried. A group of Tesla workers on Monday asked the company’s board to provide a plan that will, among other things, address worker safety during an aggressive ramp-up aiming to boost production almost five-fold from 2017 to 2018. Tesla has come under fire in recent months over allegations of unusually high injury rates at the suburban San Francisco plant.

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Tesla Sets Q1 Production, Sales Records

Despite analysts' caution, investors continuing driving up shares.

by on Apr.03, 2017

Tesla has been launching non-traditional showrooms and displays, like this one at a Nordstrom's.

Tesla got a jump on the rest of the auto industry, reporting late Sunday that it set new production and delivery records for the first quarter of the year.

That comes as particular good news for the Silicon Valley manufacturer of electric vehicles, Tesla stretching its finances as it prepares for the launch of the all-new Model 3 sedan later this year. Sales had slumped during the final quarter of 2017 due to a mix of production snags, including the shift to a new version of the maker’s Autopilot system.

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Tesla was forced to return to Wall Street late in the January-March quarter, raising about $1.4 billion in a new stock offering. Investors responded positively, despite CEO Elon Musk’s warning that the maker’s finances were “getting very close to the edge.”

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Tesla Warns of Slow Model 3 Deliveries.

Bad news for Tesla could be good news for Chevrolet’s new Bolt.

by on Oct.19, 2016

Tesla still hopes to have the first Model 3 sedans in production during the 2nd half of 2017.

Looking to buy one of Tesla’s new Model 3 battery-cars? You can look for a long wait.

Those who put in an early reservation for the carmaker’s first mainstream model might yet get a Model 3 delivered before the end of next year, Tesla now says more recent orders won’t be fulfilled until 2018. And some analysts questions whether the company will even meet that goal, considering its history of missing targets with new products.

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That could be good news for Chevrolet, however. The Detroit maker expects to start delivering the first of its own affordable, long-range electric vehicles before year-end, and battery supplier LG Chem said this week that it believes there will be demand for as many as 30,000 Chevy Bolt EVs in 2017.

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Tesla Deliveries Surge 70% in Q3

Upturn after EV maker’s first-half sales shortfall.

by on Oct.03, 2016

The Tesla Model X launch has been a thorn in the company's side, production still a challenge.

Tesla Motors saw third-quarter deliveries of its Models S and X battery-electric vehicles surge 70% during the third quarter, a significant improvement over recent quarters that saw the California-based manufacturer fall short of its targets.

Tesla also said that it expects deliveries during the fourth quarter to come in “at or slightly above” the July to September numbers, something that would put the maker on a path to rolling out more than 2,000 of the battery-electric vehicles, or BEVs, each week for the rest of the year.

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In turn, company officials have indicated that could translate into a profit for the maker – using non-standard accounting procedures – after some recent, heavy losses.

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Tesla to Complete SolarCity Takeover Despite Concerns

All-stock deal worth $2.6 bil, but critics cite conflicts of interest.

by on Aug.01, 2016

A series of SolarCity solar panel installations.

Despite concerns about potential conflicts of interest, Tesla Motors said Monday morning that it would complete its takeover of the solar power company SolarCity, a move it believes will lead to numerous synergies in its broader green energy strategy.

Tesla CEO Elon Musk said the all-stock, $2.6 billion deal will almost immediately result in $150 million in cost-savings, describing the deal as a “no-brainer” that “we should have done sooner.” But reaction has been skeptical since the proposed takeover was announced more than a month ago.

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Together, Tesla and SolarCity “expect to save customers money by lowering hardware costs, reducing installation costs, improving our manufacturing efficiency and reducing our customer acquisition costs,” Tesla said in a statement.

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Tesla Production Up, But Sales Fall Short of Goal

Investigation ramps up into fatal Model S Autopilot crash.

by on Jul.05, 2016

The Model X accounted for barely a third of Tesla's second-quarter production.

While the U.S. new car market is clearly slowing down after a spectacular rebound from the Great Recession, Tesla Motors continues to boost sales at a double-digit pace – but still managed to fall short of expectations.

Tesla says it delivered 14,370 vehicles during the second quarter, but that was 15% less than the 17,000 the battery carmaker had predicted as recently as May. While Tesla had been hoping to roughly split production between the Model S sedan and newer Model X battery SUV, volume was still weighted more than two-to-one towards the electric sedan, apparently reflecting ongoing quality and production problems with the utility vehicle.

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News of the weak market performance comes at an inopportune time for Tesla. The maker is facing an investigation by the National Highway Traffic Safety Administration over the fatal crash of a Model S being driven in semi-autonomous Autopilot mode. There has been growing concern about the system, with numerous reports of it being misused by owners.

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Rising Lithium Prices Threaten to Short-Circuit EV Market

Tesla's projected top-end sales takes all of world's current lithium production.

by on Apr.18, 2016

Rising lithium prices, in part because of the locations of the mines, could crimp EV sales going forward.

The plunging price of petroleum isn’t the only thing threatening to derail demand for battery-based vehicles. At a time when most commodity prices – everything from oil to gold to copper – have been on the decline, traders continue to bid up the fundamental component of today’s electric vehicles: the lithium used in the most advanced batteries.

The raw material, lithium carbonate, more than doubled in price towards the end of last year, and the trend has continued upward, pushing to as much as $23,000 a ton in recent weeks. And that’s even before the battery-car market builds any real momentum.

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California-based Tesla Motors, for example, produced just 50,000 vehicles last year, but it hopes to start nudging towards 500,000 once its new Model 3 gets into production late in 2017. And as tough new global emissions and fuel economy mandates phase in, even mainstream manufacturers will be expanding their use of battery-based powertrains. (more…)

Tesla Issues First Recall for New Model X

Problem comes as battery-carmaker struggles to ramp up production.

by on Apr.12, 2016

The Tesla Model X displaying its falcon doors.

Already struggling to overcome a series of production start-up problems, Tesla is recalling virtually all of its new Model X battery SUVs, the maker confirmed.

The recall is the result of a faulty latch in the third row that could cause the seats to come loose and fall forward in a crash. The news follows Tesla’s acknowledgement that it has run into a series of problems ramping up production of the Model X which was launched last September, about two years later than originally planned.

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The various problems with the Tesla Model X have raised concerns about the Silicon Valley automaker’s even more ambitious plans for its next offering, the Model 3, which is expected to reach production in late 2017. More than 300,000 potential customers have placed initial, $1,000 deposits for the planned battery sedan since its unveiling on March 31.

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“Hubris” Hurts Launch of Tesla Model X

Production of battery SUV behind schedule; raises concern about plans for Model 3.

by on Apr.05, 2016

Tesla has run into a variety of problems with the Model X, including its falcon doors.

Technical problems, along with the company’s own “hubris” led to a shortfall in first quarter production at Tesla Motors, primarily of the new Model X battery-electric SUV.

The Silicon Valley automaker says it delivered 14,820 vehicles during the January to March quarter, insisting it is “on track” for its full-year target. But production was heavily lopsided in favor of the older Models S battery-electric sedan, with only 2,400 of the newer Model X utility vehicles rolling out of Tesla’s plant in Fremont, California.

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“The root causes of the parts shortages wereTesla’s hubris in adding far too much new technology to the Model X in version 1,” the company said in blunt terms, adding it was also impacted by “insufficient supplier capability validation, and Tesla not having broad enough internal capability to manufacture the parts in-house.”

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