In a stunning call with investors, Elon Musk, Chairman of Tesla apparently communicated to investors that the company expects to have first cars with largely production tooling in about 1 to 2 weeks. Setting aside any Reg FD issues, we believe that this call, along with the size of the planned capital raise has fundamentally changed the risk profile of Tesla.
- Tesla communicated Model 3 ramp to investors ahead of the capital raise has disastrous consequences.
- The small raise means Tesla will run out of money during a bad Model 3 ramp and make it difficult to get future raises on advantageous terms.
- On the current path, we believe there is a better than 50% chance Tesla will be reorganized in the next 12 to 24 months.