Tesla Model 3: On Junk Bonds, Production, and Batteries


Tesla has said all-wheel drive will become available in the future.

Goldman Sachs was the lead underwriter of the eight-year bonds.

Tesla Inc.'s (NASDAQ:TSLA) CEO Elon Musk has always been a controversial and vocal mouthpiece for the electric auto company, often to the detriment of the company's stock. At Tesla's "Handover Party", the electric-car maker said the base Model 3 will still start at $35,000 and will offer an EPA-estimated 220-mile range. Junk-rated companies have taken advantage of insatiable appetite for yield by stripping protections that investors would have insisted upon in another era, and buyers may not bother amid the buzz that surrounds Musk's clean-energy ventures.

Nevertheless, said Valerie Potenza, the head of high-yield research at Xtract Research LLC, "it's a very lousy set of covenants". Tesla has constructed the offering to raise more money using Gigafactory 1 as collateral, pushing previous creditors lower on the totem pole.

The Tesla Model Y will be the next pillar in the company's assault on traditional carmakers, following the successful launch of the electric Model 3 - a BMW 3 Series rival that has yet to reach most customers, but for which Tesla is understood to have half a million orders. The announcement conjured up a fantastical vision of Musk flipping a switch to suddenly transform all of the Tesla vehicles on the road into self-driving robots. "This is more in the double B range", he added, referring to a higher speculative debt rating.

If only traditional auto and other tech companies were as bold as Tesla.

Mystery text:: The Gold Coast Bulletin claims they received a text message on August 4, one day before news of the split broke that suggested that the unnamed Queensland sporting identity had been spending "many nights" at Amber's Gold Coast accommodation.

To that end, Musk told investors following last week's quarterly earnings report that: "When we make mistakes, it is because we are stupid, not because we are trying to mislead anyone".

Mark Holman says he'll pass.

Tesla had issued four convertible bonds to date - the company now has US$3.3bn outstanding - but it has never before accessed the public unsecured bond market. Being a famous person who makes movies and electric cars respectively is certainly hard for reasons beyond my ken, but the number of vaguely-worded statements issued about the end of a "normal relationship" lead me to believe otherwise. "Where will Tesla be then?"

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