Tesla Looking To Raise $500 Million Through Bonds Backed By Car Leases – Video


Flamethrowers aren’t the only hot ticket fundraising item entrepreneur Elon Musk has.

While the gimmicky item may bring in $10 million in revenue to The Boring Company, traditional investors are burning down the house when it comes to asset backed securities (ABS) from Musk-run Tesla.

Used Tesla Model 3 On Craigslist

With 2018 set to be a cash-burning doozy for the energy/automaking outfit, and estimates of up to $4.2 billion being blown (by which we mean invested towards growth) in that time frame being prognosticated by the likes of analyst Brian Johnson from Barclays Plc,  Tesla’s auto ABS business is booming, recently raising $546 million.

Basically, the bonds are backed by leases on Model S and Model X vehicles. Investors were lured in by advertised returns of “2.9 percent over benchmarks on lower-rated portions of the debt,” though Musk’s charisma and reputation for introducing well-received product is noted as a positive factor as well.

It’s not the first time Tesla has turned to the bond market for funds. Originally expected to raise $1.5 billion, the offering actually raised $1.8 billion, overachieving by $300 million. Now, with this latest offering looking pretty positive, it’s not surprising that, according to reporting from Bloomberg, the company plans “to become a regular issuer of auto ABS.

Source: Bloomberg

Categories: Tesla


Leave a Reply

18 Comments on "Tesla Looking To Raise $500 Million Through Bonds Backed By Car Leases – Video"

newest oldest most voted

Next to crowd funding ~400k deposits at $1,000ea, or Flamethrowers, auto-ABS are another way Tesla benefits from other’s credit-worthiness. Bonds aren’t backed by TSLA. They’re backed by the people who leased.

The cars going back to Tesla may take advantage of Tesla’s excellent resale (especially if resold by Tesla). So, risk in “residuals” is probably minimal, and liability from another round of warranty inexpensive.


Tesla projected loss in the last quarter around 3$/share. 200 million shares outstanding roughly? So that’s 600 million $ loss last quarter?

This bond offering covers 1 quarter loss then?

Those numbers look right to you?

yelp the loss 10% and after markets are losing money as well. GM should do capital funding at least they make a profit

Tell us why GM went bankrupt again?

Becuause they had too many trucks and SUVs at high prices and low gas mileage when oil prices peaked and the economy tanked.

That is what you would like it to be. It was a mixture of high debt loads which banks refused to roll over and defaults on leases.

This is the third time Tesla is raising money for the model 3 ramp up, despite originally claiming no more money was necessary to do the model 3. In addition to selling fictional trucks.

Cash funding your debt is not good. Investors are idiots then

“This is the third time Tesla is raising money for the model 3 ramp up, despite originally claiming no more money was necessary to do the model 3”

…in that quarter.

Serial Tesla bashers have created yet another Big Lie by leaving off the end of that sentence. And indeed, Tesla didn’t do any fund-raising in the quarter following that statement.

Here are his exact words: “our current financial plan does not require any capital raise for Model 3 at all.”

This doesn’t raise money for the Model 3. It’s nothing like that bond offering 5-6 months ago.

When Tesla leases a car directly to a customer they get immediate cash by borrowing against the value of the car via a “warehouse” line of credit. All Tesla did with this ABS deal was replace the borrowing on the warehouse line with borrowing from ABS buyers. It’s kind of like refinancing your house to get a lower interest rate.

The warehouse line now has a much lower balance, so Tesla can use it to lease more cars. But they already had a lot of room left on it, so it doesn’t really make a difference in 2018.

The net net is that Tesla needs more capital, but their last junk bond raise was a disaster in the aftermarket.

Say that again??

You have to remember that 6 Fool Cells/Tesla Shorts (along with Some Troll Out There) are serial Anti-Tesla trolls and are bitter at both Tesla and Elon’s success and their own failures in shorting Tesla so they come here to whine and snivel and spread FUD because that’s the kind of idiots they are.

Let us separate stock from bonds. In stock a high risk high reward strategy is rewarded with a high valuation because shareholders get all the benefit.

In bonds the same strategy is penalized by bondholders because they do not see any benefit beyond their coupon. In the debt market Tesla bonds are rated slightly higher than junk bonds.

This new strategy is a way to change the underlying risk of the bond by moving it to leaseholder instead of Tesla. Tesla’s tend to be purchased by high income people with good credit ratings. However only 30% of Teslas are leased.

Since Tesla approves the leases and is now incentivized to offer leases to anyone, this may be a bad deal for ALS bondholders.

Hey six the only disaster in the market was your losses on your shorts. Then again you don’t seem like a very savvy investor as you have no idea what you seem to be talking about. I bet you got into the bitcoin right about when it peaked at $19k and now you are probably over on the bitcoin sites crying like the petulant child you are on here.

LOL, if you google Barclay’s Brian Jones you find a Tesla bear with a 54% success rate. So his advice beats flipping a coin by a pretty small margin.

That said I hope Tesla manages to overcome those Model 3 production issues pretty soon because it will keep hemorrhaging money as it only sells low numbers produced at high cost.

FYI — These bonds are only open to commercial investors (you have to have an SEC license) and yet they are already over-subscribed by a 20:1 ratio. 19 out of each 20 professional investors who want to buy these bonds will have to wait for the next bond sale.

Licensed professional investor’s actions directly contradict what people who whine endlessly about Tesla in every story have to say.