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Seems there is still problems producing the Model 3...to the point of acquiring the company that has been contracting with Tesla for several years...

http://www.businessinsider.com/tesla-buying-perbix-automated-manufacturing-2017-11

http://www.startribune.com/tesla-bu...er-of-factory-automation-equipment/455669603/

So, what did this deal cost Tesla?

Again, according to the local newspaper:

“Terms of the deal were not disclosed. A company spokesman said Tesla will pay stock and cash for Perbix and that the overall price would not have a material effect on its financial performance.”

As such, given the size, nature and location of Perbix, we suspect that the deal was likely worth barely in the low 8 digits. For such a small deal, and with Tesla being famously reluctant about issuing stock, one has to wonder why this deal is a stock and cash deal.

Soon after, we find out from SEC filings that Tesla registered 34,772 shares, or about $10M in equity, for this purchase. We also find that the owner of Perbix, James Dudley, can sell the stock immediately.

Based on this, it appears that James Dudley wanted cash but got Tesla stock instead. He likely turned around and sold the stock immediately after the transaction.

The usage of stock instead of cash in the transaction is unusual. A $50B company is having to sell stock to raise $10M to buy a supplier. Talk about cash management!

From an operating perspective, adding additional fixed overhead to an already bloated company is not good news. As we have written in the past, Tesla employs dramatically more labor than its peers in spite of claims of alien dreadnaught technology.

This can only lead to higher cash burn at Tesla and increase the breakeven point.


Sidenote:
a reader at Tesla-friendly publication Elektrek is reporting that employees working on projects unrelated to Tesla are being terminated.
 

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Nobody said producing and selling an all-new design would be easy or without problems. I seem to remember there being about a 2-year wait for the Gen 1 Volt after its initial publicity while the technology of the battery was made production-ready. (the concept Volt had NO battery at the time of its intro)
I applaud Elon for his forward thinking so many tech areas and I wish him all the success in the world. He is a genius.
p.s. I love my Gen 2 Volt, but remain open-minded about Model 3. And I think equity financing is a GREAT idea in this case.
 

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Tesla is hemorrhaging cash. That's pretty well documented. And equity is essentially free money. Makes sense to use equity if you can.

That said, I've never been a fan of vertical integration and from early on I thought Tesla would have been better off contracting out its production to Magna-Steyr. (Jaguar is doing that with its I-Pace). What Telsa/Musk does best is marketing. What it does not so well is most everything else, especially production. But Tesla has gone in the opposite direction and has tried to vertically integrate many operations.

Could be a result of management style. If you want something that can't be done a supplier will likely tell you that. It's not going to sign a contract to deliver what it doubts it can. Employees are different. If the message is "do it or be gone", employees will tell you what you want to hear and then not deliver. LOL So moving functions in house will give you what I've always called "the illusion of control".

Nobody said producing and selling an all-new design would be easy or without problems. I seem to remember there being about a 2-year wait for the Gen 1 Volt after its initial publicity while the technology of the battery was made production-ready. (the concept Volt had NO battery at the time of its intro)
No argument that manufacturing is very difficult, and you're recollection is right about the time from the reveal of the concept to the first deliveries. It was almost three years (not two) from the reveal of the concept which didn't have a battery to the first deliveries. However, once GM greenlighted production the Volt showed up as promised. How accurate GM is about delivery dates from several years out has always astounded me.

Quite a contrast with Tesla, which misses its production marks by wide margins even for the next quarter. My reservations about this acquisition would be that, as in the case of all acquisitions, for all the obvious reasons it's likely to slow things down. That's likely not the best of ideas at the moment.
 

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Tesla is hemorrhaging cash. That's pretty well documented. And equity is essentially free money. Makes sense to use equity if you can.
May be free for the company but not for current shareholders who see a reduction in all per share numbers.

KNS
 

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I wish Tesla well, I really do but I wonder how long this can go on before everyone starts to bail. This can't go on.
 

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I don't think a stock plus cash deal is at all unusual for a takeover. The mix depends on the financial interests of the owner(s) and buyer. You don't know if the owner then sold the Tesla stock. Also, unless you have access to the Perbix books (which Tesla would have as part of its due diligence), you have no idea about that company's assets, debt, operating costs, and cash flow. Aren;t you just guessing that Perbix is a significant net cash drain? If Tesla will become a major player in the autonomous driving market, then maybe owning Perbix makes sense and this is the right time. They have knowledge about the company and the market that we don't.
 

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No argument that manufacturing is very difficult, and you're recollection is right about the time from the reveal of the concept to the first deliveries. It was almost three years (not two) from the reveal of the concept which didn't have a battery to the first deliveries. However, once GM greenlighted production the Volt showed up as promised. How accurate GM is about delivery dates from several years out has always astounded me.

And then there is the Bolt EV. From concept to test mules in about 12 months and another 12 months to deliver the first production cars in December 2016.

Regardless of how Tesla wants to spin it, in my opinion they are at the test mule stage with Model 3.
 

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Discussion Starter #8 (Edited)
I don't think a stock plus cash deal is at all unusual for a takeover. The mix depends on the financial interests of the owner(s) and buyer. You don't know if the owner then sold the Tesla stock. Also, unless you have access to the Perbix books (which Tesla would have as part of its due diligence), you have no idea about that company's assets, debt, operating costs, and cash flow. Aren;t you just guessing that Perbix is a significant net cash drain? If Tesla will become a major player in the autonomous driving market, then maybe owning Perbix makes sense and this is the right time. They have knowledge about the company and the market that we don't.
You've got that backwards...Perbix doesn't have a significant cash drain...It is Tesla...and in business a $10M deal by a multi-billion dollar Corp would normally be an all cash transaction...:)

We'll know when he does...because there will be a required SEC document of the sale of the stock...

Perbix is NOT a player in the autonomous part of the game...The firm is a specialist in factory automation equipment.
 

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Direct information on Perbix disappeared with the web site. Electrek posted a video that survived.

https://electrek.co/2017/11/07/tesla-tsla-perbix-owner-sell-shares/

Details on the financial situation of Perbix prior may be hard to come by since it was privately held. From my chair it looks like a job shop that started taking on some limited automation house work. Those may be industry specific terms some folks won't understand (sorry).

TBH it looks like Tesla was after the engineering part of the company more than anything. A little late in the model 3 game but whatever.... The Perbix job shop FWICT isn't going to add much to Tesla's automation capabilities.

$10 mil + whatever isn't all that impressive of a selling price IMO. Job shops struggle to compete in general. It's impossible to know what Perbix's issues might have been. I don't think it was tax related - Minnesota isn't all that bad this way compared with other states.

 

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And then there is the Bolt EV. From concept to test mules in about 12 months and another 12 months to deliver the first production cars in December 2016.

Regardless of how Tesla wants to spin it, in my opinion they are at the test mule stage with Model 3.
While true the Bolt EV was in development well before the concept was shown. GM noted development of a 200 mile BEV back in 2013. And it looks like they were doing feasibility studies in 2012.

http://www.greencarreports.com/news/1082761_gm-working-on-200-mile-electric-car-says-ceo-akerson
 

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While true the Bolt EV was in development well before the concept was shown. GM noted development of a 200 mile BEV back in 2013. And it looks like they were doing feasibility studies in 2012.

http://www.greencarreports.com/news/1082761_gm-working-on-200-mile-electric-car-says-ceo-akerson
That link covers GM's first vision of the 200 mile EV, but it wasn't the Bolt. The original 200 mile EV was to be based on Envia's "magic" cell chemistry, which did not pencil out. GM started again from scratch in the spring of 2013, relying on hard engineering, not magic chemistry. They were playing with a"Sonicor" (Half Sonic-half Encore) EV mules in 2014 to test their new EV battery concept prior to the public announcement and the Bolt's production-intent concept body design in January 2015. And GM kicked their "machine that designs the machine" (Their Warren Technology Center and cadre' of world-class engineers and technologists) into high gear to bring the Bolt to true production, on time, without fanfare.

The story of the Bolt's development is best told the the Wired Magazine article linked below:

https://www.wired.com/2016/01/gm-electric-car-chevy-bolt-mary-barra/

So GM beat Tesla to the 200-mile $30K EV- and it must have PO'ed Elon no end, as he has been madly rushing the Model 3 to production (before it was ready) ever since - which may cost Tesla dearly.

But as Pam Fletcher wryly quipped, "Who wants to be second?".
 
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