Tesla: Nothing More Than Visions?


October 26, 2016

Image titel:


Tesla: Nothing More Than Visions?


Elon Musk, © Tesla

With great fanfare, Tesla head Elon Musk announced what he had devised as a second masterplan. The corporation is not only to produce batteries for its Powerpack and Powerwall, but should also supply the added solar modules (takeover of sister company SolarCity is in progress). The new plan additionally includes aims to design several other electric cars – from trucks and smaller transport vehicles to buses. Considering the many unanswered questions about the production of Model 3, the “new” goals seem even more ambitious than the old ones (= 0.5 million in 2018 and even 1 million electric cars in 2020).

Moreover, the Gigafactory will require many more cash infusions. The latest report puts construction progress at 14%. The entire complex is said to require a total investment of USD 5 billion. Tesla partner Panasonic has invested there as well, although it is not quite clear what type of investment was planned. Because: Panasonic’s co-funding appears to be the supply of machinery and plants, which Tesla would have to finance on its own. There has been no communication about this so far. Maybe it’s a type of supplier credit and not a direct investment of up to USD 1.6 billion? Meanwhile, Panasonic will continue to deliver battery cells to Tesla, even if this arrangement raises questions of its own – for example, based on which terms Tesla accepts delivery (volume, price).

An interesting side note may be that Tesla is said to have told the SEC that there could be …


SolarCity and a lot of unanswered questions

Tesla has formally submitted its bid in the amount of USD 2.6 billion to take over SolarCity in exchange for its own shares at a ratio of 1 to 0.11. SolarCity, in which Musk has an above 20% stake as the biggest individual shareholder, manufactures solar modules and is managed by Musk’s cousins. However, the company is also around USD 3 billion in debt, which would have to be taken over as well (do Tesla’s creditors have a right to object?) and incorporated into Tesla’s balance sheet. Since SolarCity has recently announced a quarterly loss of around USD 250 million (based on GAAP, Tesla posted a loss of nearly USD 300 million in the second quarter), the close timing of the takeover bid has to be viewed with a healthy dose of skepticism.

Another Musk company, SpaceX (which uses rockets to send satellites into orbit), has loaned SolarCity USD …

Considering the remarkably high quarterly losses of SolarCity and the run time of the credits (it is said there are still 2016 due dates for repayment – only what I’ve heard, no guarantee it’s true), it begs the question whether SolarCity would even have survived if the Tesla bid hadn’t arrived. Tesla’s shareholders must be shocked at the prospect of having to accept more than ten million shares as a purchase price for a company with less than one billion dollar in revenue and USD 3 billion in debt adding onto Tesla’s. The threat of class action lawsuits is real, but they are mostly coming from cunning lawyers, who – at the end of the day – will receive the bulk of the settlement amount. The takeover, however, seems to already be a done deal considering Musk’s statements and the interests of the major shareholders.

Convertible bonds

Tesla’s USD 3 billion debt was mainly incurred in convertible bonds. To convert borrowed capital into equity, some of the bonds would need to become due. Repayment will not involve cash but shares. Their number will depend on the conversion ratio – and on the conditions of the bond, whether Tesla itself or the bondholders are able to push for conversion. Expectations are that the holders of certain bonds will make them available for bond repayment/conversion at a relatively low value (around USD 160/share) compared to Tesla’s current share price, allowing for non-recurring gains (share profit plus interest). The total amount is rumored to be USD 422 million. That there is a willingness to repay these bonds now indicates that there needs to be a fallback position before the debt of SolarCity is included into Tesla’s balance sheet after the takeover of the sister company.

My conclusion: Official sources see the next increase in capital occurring still somewhere in …


What’s noticeable is that four funds (but more than one fund from the same umbrella fund) bought another bundle of Tesla shares worth USD 4 million in the second quarter alone, despite already being heavily involved in the company and basically possessing the majority of shares together with CEO Musk. Maintaining such a high percentage and stake in a business is not something really common for funds. But it’s …

The catalyst for higher share prices at short notice could be the number of electric cars produced in the third quarter. The numbers floating around range from 20,000 to 22,000 units – independent of the expected loss posted (or even a fictitious profit according to non-GAAP?) this quarter.

Theoretical course development

After capital increase, a further drop in share price. Share prices of below USD 150 seem like a possible scenario. It all depends on whether Tesla can deliver some good news (sales figures) or whether the losses increase. Because of SolarCity – if the company should be consolidated into the Tesla balance sheet in the fourth quarter – the losses posted could even be much higher. The suspense will continue.

Thoughts: High book profits should either be used to secure against increasing share prices (puts) or be realized. Long-term sell options (in 2017/18) with a very depressed price development (USD 100 – 200) are highly speculative (risk of losing the total invested), but could be interesting as an addition for experienced investors who like speculating – with lower limits based on the assumption that the share price will be pushed up for some time.

Please consider: At the beginning of this year, Tesla shares fell from above USD 240 to as low as USD 140 within only one-and-a-half months. What’s it to keep from happening again? There are signs that it may do so.

Risk warning

Investors must understand that buying and selling shares is done at their own risk. Consider spreading the risk as a sensible precaution. The fuel cell companies mentioned in this article are small and mid-cap ones, i.e., they do not represent stakes in big companies and the volatility is significantly higher. This article is not to be taken as a recommendation of what shares to buy or sell – it comes without any explicit or implicit guarantee or warranty. All information is based on publicly available sources and the assessments put forth in this article represent exclusively the author’s own opinion. This article focuses on mid-term and long-term perspectives and not short-term profit. The author may own shares in any of the companies mentioned in this article.

Author: Sven Jösting

Here are interesting and current articles on the topic of hydrogen – stocks and the stock market!

Economic prospects for companies in the hydrogen sector | Future, stocks & hydrogen companies on the stock exchange and more…

Which hydrogen companies will prevail in the competitive market in the long term? Get tips and cartwheels and learn more about risks or opportunities. Our stock market specialist and expert author Sven Jösting reports critically, independently and competently.

Jul 15 2024

Only a third of NIP projects approved

Interview with Elena Hof, Paul Karzel and Jörg Starr from CEP The Clean Energy Partnership or CEP...
Jul 15 2024

Switzerland’s largest H2 plant

Energy group Axpo and the company Rhiienergie have launched the first H2 production plant for...
Jul 15 2024

Why hydrogen stocks can fall even further

Max Deml’s stock analysis In the past, hydrogen was usually isolated from fossil fuels such as...
Jun 13 2024

H2 Bank Selects Seven Projects”

The European Commission is allocating nearly 720 million euros to seven projects for renewable...
Jun 13 2024

World’s one-of-a-kind H2 test lab

Electrolyzers on the test bench In Hydrogen Lab Bremerhaven, manufacturers and operators of...
Jun 13 2024

First commercial green hydrogen production

Solar Global operates electrolyzer plant in Czech Republic An electrolyzer in the town of...
Jun 12 2024

Hydrogen 3.0

“Are we on the cusp of a hydrogen revolution or merely witnessing the build-up of another bubble?”...
Jun 12 2024

Mechatronic H2 pressure regulator

Up until now, Italian company Landi Renzo has been mainly known for its conversion sets for gas...
Jun 11 2024

Establishment of a metrological infrastructure

Flow measurement of high-pressure gas and liquid hydrogen In the field of flow measurement, the...
Jun 11 2024

FRHY Stack, first of its kind!

Technology platform for high-rate electrolyzer production The cooperative FRHY project, which...
Jun 10 2024

HySupply – German-Australian hydrogen bridge

Acatech and BDI show what’s feasible Defossilizing the energy system is an important goal of the...
Jun 05 2024

In the beginning was the refueling station

Creating planning security through the development of H2 infrastructure We have long discussed the...
Jun 04 2024

Digital potential

Low-cost green hydrogen through digitalization Plans to expand Germany’s hydrogen landscape are...
Jun 04 2024

A new energy infrastructure is emerging

“Green” and “blue” ammonia from other continents to come to Europe Ammonia produced from...
May 31 2024

Fuel cell systems for grid hardening

Interview with Christian Leu and Benedikt Eska from Axiosus An important but often neglected area...
May 30 2024

A new energy infrastructure is emerging

“Green” and “blue” ammonia from other continents to come to Europe Ammonia produced from...
May 16 2024

New CFO for H-Tec Systems

Electrolyzer manufacturer H-Tec Systems underwent restructuring at the turn of the year and...
May 16 2024

One-man show continues to grow

Hydrogeit Verlag celebrates its 20th anniversary The Hydrogeit Verlag publishing house has been...
May 15 2024

Hydrogen for the post-coal era

Nuclear energy also to power electrolysis in Hungary In May 2021, Hungary published its national...
May 15 2024

Hüwener to lead OGE

Thomas Hüwener will become the new management spokesman for transmission system operator OGE from...

1 Comment

  1. Arno A. Evers

    Those, which have as many activities (tasks)
    running in parallel, as Elon Musk,
    need a big number of good staff,
    which is able, to handle them all favorably.
    To my humble observation, over years,
    there is still enough room for improvement(s)…


Leave a Reply

Discover more from H2-international

Subscribe now to keep reading and get access to the full archive.

Continue reading