Tesla Motors Inc – How Much Worse Could It Get? (TSLA)

Lithium, the key component found in battery packs, is necessary to propel an electric vehicle. It’s the lifeblood of the vehicle, so to speak. The problem, however, is that lithium miners are having a hard time meeting the demand. And what is available is becoming stunning expensive.

Since the middle of 2015, lithium prices have jumped about 200%, reaching $20,000 per metric ton. And as lucrative as it’s become (and it will likely remain at those prices), it’s not as if the industry can easily ramp up output. Indeed, CEO Elon Musk has already commented “we would basically need to absorb the entire world’s lithium-ion production.”

More sources are being found and developed, but the math of the supply/demand dynamic is concerning. Battery prices could soar. Granted, they’ll soar for all EV companies, but Tesla Motors is the most vulnerable.

China Crash Raises Fresh Questions About Tesla’s Disclosures

Tesla is already the subject of a Securities and Exchange Commission investigation into whether it breached securities laws by failing to disclose the Florida crash prior to selling $2 billion worth of shares. The January crash would seemingly raise similar concerns.

With Tesla, still a minnow in the global auto market, soon facing new competition from deep-pocketed rivals including General Motors’ Chevy Bolt, its brand reputation has never been more important. The longer questions linger about the safety of its vehicles, and the company’s willingness to discuss potential issues, the more that reputation is put at risk.

SolarCity Raises $305 Million, but There’s a Catch

There are a couple of implications from the new financing announcement. One is that SolarCity’s funding costs are getting higher over time, meaning it’s generating less value for investors. Another is that it’s selling most of the cash flows it will get from customers, meaning there’s less and less upside potential in the future.

The flip side is that SolarCity has been able to get funding for its projects, keeping the company’s operations afloat for now. That’s a positive as SolarCity attempts to be bought out by Tesla Motors and transitions its business from financing leases and power purchase agreements to selling solar systems to customers with third-party financed loans.

The final point may be most important for those looking at the company today. If SolarCity can transition to cash sales or loans, it will generate up-front cash, lessening its reliance on financing transactions. If that’s the case, today’s rising financing costs won’t matter nearly as much as they would otherwise. But that’s a lot for a company like SolarCity to juggle, especially in the middle of a buyout process.

2 Reasons SolarCity May Be Headed for a Power Failure

“SolarCity is in dire need of cash. It’s already gotten two bridge loans from Tesla and it needs this deal to go through,” said Gordon Johnson, an Axiom senior analyst, told Real Money this week. Axiom, in its June 28 report on SolarCity, estimated the company wasquickly burning through its cash and would likely fall to near zero, or $1.4 million, by the fourth quarter. As a result, some Wall Street watchers have been whispering the “bankruptcy” word as it relates to SolarCity.

Chanos: Tesla/SolarCity raises governance issues

Video

Goldman Sachs Plays A Rotten Role In Tesla-SolarCity Deal

Summary

You’ve not met Aswath Damodaran? Allow me to introduce you.
Damodaran lays bare the many follies & misdeeds behind the TSLA-SCTY fairness opinions.
In the Tesla fairness opinion kitchen, Goldman Sachs wrote the recipe, furnished the ingredients, and supplied the spoon; Evercore and Lazard merely stirred the pot.
Goldman Sachs has been consistently wrong in forecasting Tesla performance, and (very quietly) already has slashed the 2017 revenue forecast it gave Evercore and Lazard.
Ben Kallo stops by with an important reminder for us all.

This shows why Tesla-SolarCity is a ‘crazy’ merger, Jim Chanos says

Jim Chanos called Tesla Motors’ proposed merger with SolarCity”crazy” and “the height of folly” while outlining his short positions in the stocks on Tuesday.

The short-seller from Kynikos Associates estimated the combined company would burn through $1 billion per quarter and “constantly need access to capital markets.” He described SolarCity’s business model as “just plain uneconomic.”

Stop Elon From Failing Again

THE ONE STOP DATABASE ON STOPPING ELON MUSK