Since selling Easter Eggs didn’t work out last month, how the heck is Tesla not going to bankrupt itself before it takes over the auto and energy industries? After all, the mainstream media agrees with the TSLA PermaShort Industrial Complex that Tesla will, without a shred of doubt, go bankwupt any second now.

April Fools’ jokes aside1, Tesla’s financial plan is neither desperate nor-last second, and isn’t designed to avert a sky-is-falling bankruptcy that isn’t in the cards in the first place.

Reduced to three words, the plan is: Model 3 Profits.

Huh? What? It has to be more complicated than that!
Nope.

To elaborate, here’s Tesla’s 2018 Growth Plan, which is the culmination of the original 2006 Master Plan:

  1. Scale manufacturing of Model 3, the iPhone of Cars.
  2. Demonstrate with Q3 or Q4 2018 results that manufacturing and selling Model 3 is profitable. Worst case, if Elon’s too optimistic as he has been in the past, Q1 2019 is the profitable quarter. But I think it’s a 2018 thing.
  3. The stock goes up a ton, based on results/profits and anticipated future revenues on essentially unlimited demand for the iPhone of Cars.
  4. With stock price and market cap high, raise funds to reinvest in even higher volume & more profitable Model 3 production, plus fund the launch of Model Y (the iPhone Plus of Cars), Semi, the Pickup, and the new Roadster2. Fundraising will be easy when the world realizes that Tesla is no longer a niche, high-end player but has transformed into a mass market, profit-making powerhouse.

Four simple steps.3

OTOH, if Tesla is unable to profit on Model 3 at scale, then they’d have a Big Problem. However, there’s no evidence that this plan will fail. All evidence points towards success, as the Model 3 ramp accelerates.

Remember, something like this happened when Tesla announced its first profitable quarter in 2013. Back then, profits elevated Tesla from its former status as ‘long-shot startup’ to a ‘successful luxury EV manufacturer, but still risky.’ This time, Model 3 profits will transform Tesla from its prior niche/luxury status into Unstoppable Conqueror of the Automotive Industry.

This basic plan of raise funds, invest in assets, grow, demonstrate positive results, raise more funds, grow more, and repeat is what Tesla has been doing from the beginning, and is what they’ll be doing for many years to come until they achieve full spectrum dominance of the global transportation and energy industries. Tesla’s growth curve will take decades. Recall Amazon’s 20-year growth story.

Eventually, Tesla will become a cash-generating powerhouse with Model 3, Model Y, the Pickup, and the Semi producing hundreds of billions in revenue and tens of billions in profit. At that point, Tesla’s debt – no matter how large it is – will be a nothingburger.4 Not nothing as in zero, but nothing as in ‘factored within, and not deleterious to, an overall market cap of many hundreds of billions of dollars.’5

  1. A non-trivial percentage of Wall Street took Musk’s ‘Tesla Goes Bankrupt’ April Fools’ joke literally and the stock dropped 6% on April 2nd, on top of the prior 12.5% drop that was engineered by Shortville’s ‘Impending Bankruptcy’ FUD-storm in late March.↩︎
  2. Musk’s Tweet on April 13 said Tesla will not ‘need’ to raise funds this year. Strictly speaking, this is true. Once Model 3 profitability is established, Tesla will present its fundraising as a way to accelerate future business development and capital expenditures, not a necessity for current operations.↩︎
  3. Unlike an Underwear Gnomes Financial Plan, Tesla’s has four consecutive steps with no question marks. If the gnomes could ever figure out step two, they, too, might be able to avoid bankwuptcy.↩︎
  4. Apple currently has 122.4 billion of debt; more than ten times Tesla’s. Shockingly, Tim Cook has yet to devise plans for a mass sale of Easter Eggs to stave off bankwuptcy. A critic might say, “Unfair comparison; Apple is profitable, Tesla is not.” When Tesla hits profitability on Model 3, that argument is roadkill.↩︎
  5. Even then, the TSLA PermaShort Industrial Complex will be happy to tell you that Tesla’s bankruptcy is coming at any moment!↩︎