Elon Musk's grand transportation vision

[Pedestrian]

Originally Posted by BrownTown

That may be true, but he's still not going to jail. Worst case scenario is some sort of fine that's insignificant in relation to his net worth.

And it's most likely nothing happens. Elon Musk is pretty much teflon. He rivals only Donald Trump in terms of constantly saying absolute BS and still having an army of rabid fans willing to proclaim him the best thing since sliced bread.

You are probably right that any fine won't itself hurt him much but this article explains Tesla's problems. And if he were to lose Tesla, I'm pretty sure it would be a major psychological blow that might change his willingness to propose grand schemes like the subject of this thread:

The Game Has Changed at Tesla
By Charley Grant
Aug. 17, 2018 12:04 p.m. ET

Tesla’s investors, captivated by the electric car maker’s future growth prospects, have ignored its rickety finances. That is no longer possible.

Tesla is in trouble after a chaotic week. Elon Musk’s supposed plan to take the company private at $420 a share looks more like a fantasy. The Securities and Exchange Commission is investigating the company on multiple fronts, including issues related to disclosure about production of the Model 3 sedan. Shares dove 8% Friday morning.

The SEC investigation is a threat to investors, albeit not in the way one might expect. Whatever fine might come if Tesla was found to violate regulations would have minimal impact. The most important impact is Tesla may struggle to raise the cash it badly needs while the investigation is going on. Few investors will buy new shares in a company under investigation. Those who would will likely demand tough terms, which would come at the expense of current investors . . . .

https://www.wsj.com/articles/the-gam...s&page=1&pos=2

Could he go to jail? Not likely based on what he has done so far. But very rich people have been known to, often times after losing most of their wealth when their principle businesses went down. We know Musk has a high net worth in the stock of Tesla, SpaceX and so on but those companies don't actually make any money and Musk clearly doesn't want to raise cash through public share offerings that might dilute his holdings and, as a result, his control.

[BrownTown]

Originally Posted by Pedestrian

Could he go to jail? Not likely based on what he has done so far. But very rich people have been known to, often times after losing most of their wealth when their principle businesses went down. We know Musk has a high net worth in the stock of Tesla, SpaceX and so on but those companies don't actually make any money and Musk clearly doesn't want to raise cash through public share offerings that might dilute his holdings and, as a result, his control.

Trust me, I am fully aware of his issues. I even put my money where my mouth is by buying put options against the stock after it went up 10% based on Musk's fraudulent tweet. I was merely pointing out that even though it was blatantly illegal it's more of a PR issue than a legal one because in the US white collar criminals like Musk virtually never get taken to account. His biggest "risk" is having a mental breakdown at this point or suffering a heart attack from the stress or drug overdose.

[Will O' Wisp]

Originally Posted by BrownTown

Trust me, I am fully aware of his issues. I even put my money where my mouth is by buying put options against the stock after it went up 10% based on Musk's fraudulent tweet. I was merely pointing out that even though it was blatantly illegal it's more of a PR issue than a legal one because in the US white collar criminals like Musk virtually never get taken to account. His biggest "risk" is having a mental breakdown at this point or suffering a heart attack from the stress or drug overdose.

Musk has exposed himself to an extremely significant risk though, not of criminal prosecution but of literally being forced to choose between losing his company or going bankrupt. Given Tesla's current burn rate, unless something radically changes Musk is going to need a liquidity injection by early next year to stay afloat. Even if he doesn't go to jail, even if he isn't prosecuted, does Musk still strike you as a man banks are going to lend billions upon billions of dollars to without any sort of preconditions?

Ironically, this is exactly what what drove Musk's so often compared predecessor Howard Hughes into exile. In the late 50s he was unable scrap up enough cash internally to finance a fleet of new jet aircraft in order to keep of with his competitors, and the banks demanded constraints be placed his unstable leadership as a precondition to issuing loans. The loss of his independence broke Hughes, he locked himself up in a hotel room in Vegas and never came out.

[BrownTown]

Originally Posted by Will O' Wisp

Musk has exposed himself to an extremely significant risk though, not of criminal prosecution but of literally being forced to choose between losing his company or going bankrupt. Given Tesla's current burn rate, unless something radically changes Musk is going to need a liquidity injection by early next year to stay afloat. Even if he doesn't go to jail, even if he isn't prosecuted, does Musk still strike you as a man banks are going to lend billions upon billions of dollars to without any sort of preconditions?

Personally I wouldn't lend my money to Tesla no matter who the CEO was.

[Pedestrian]

Originally Posted by BrownTown

His biggest "risk" is having a mental breakdown at this point or suffering a heart attack from the stress or drug overdose.

Or being confronted by a rebellious board finally aware of its own legal jeopardy.

[BrownTown]

Originally Posted by Pedestrian

Or being confronted by a rebellious board finally aware of its own legal jeopardy.

Doesn't really work when half the board is people Musk himself put there due to their loyalty to him including his own brother.

[Pedestrian]

Originally Posted by BrownTown

Doesn't really work when half the board is people Musk himself put there due to their loyalty to him including his own brother.

At some point, people begin to realize they have to look out for themselves. Ask Paul Manafort or Michael Cohen, just as 2 examples.

[BrownTown]

Originally Posted by Pedestrian

At some point, people begin to realize they have to look out for themselves. Ask Paul Manafort or Michael Cohen, just as 2 examples.

Of your 2 examples only one really applies. Paul Manafort didn't cop a plea, he went to trial. And right now it's looking like the jury is hung so he might end up the smartest guy in the room if he skates on all these charges while all the other rubes pled guilty.

[Pedestrian]

Originally Posted by BrownTown

Of your 2 examples only one really applies. Paul Manafort didn't cop a plea, he went to trial. And right now it's looking like the jury is hung so he might end up the smartest guy in the room if he skates on all these charges while all the other rubes pled guilty.

I don't want to get this thread closed by talking politics here so I won't. But the Tesla Board is not immune to be held to account for their own fiduciary duties and they know it, or should. It's a lesson the Theranos board is now learning.

Establishing what the board knew and when is key to the SEC’s probe. For instance, if Mr. Musk didn’t show the board a relatively firm deal with potential investors, it could indicate that the conversations weren’t as far along as he suggested when he tweeted that he had “funding secured” for a deal.

https://www.wsj.com/articles/sec-pre...s&page=1&pos=6

But if he did tell them the complete details of what now appears to be very tentative negotiations for deal funding and they failed to clarify for stockholders after Musk's disastrous tweet, they could have their own hot water to boil in.

Meanwhile, things are getting really sticky at Tesla:

Some Tesla Suppliers Fret About Getting Paid
By Tim Higgins, Marc Vartabedian and Christina Rogers
Updated Aug. 20, 2018 4:48 p.m. ET

Tesla Inc.’s tumultuous year has fueled concern among some of its suppliers about the auto maker’s financial strength after production of the Model 3 car drained some of its cash, according to industry executives and documents.

A recent survey sent privately by a well-regarded automotive supplier association to top executives found that 18 of 22 respondents believe that Tesla is now a financial risk to their companies, according to the document reviewed by The Wall Street Journal . . . .

Delays this year in the production of the Model 3 car drained Tesla’s cash, which fell by $1.13 billion in the first six months of the year to $2.24 billion . . . .

Tesla’s cash and cash equivalents fell to $1.69 billion as of Aug. 12, according to the records. That was largely because it repaid $500 million of a revolving credit line in July. Tesla plans to tap that same amount again later this quarter, according to the records. That, plus additional cash flow that Tesla anticipates from an increase in vehicle deliveries in the second half of the quarter, is expected to leave it with several hundred million dollars more in cash at the end of September compared with three months earlier, according to the records.

To conserve cash, Tesla has asked some of its capital-equipment suppliers in recent weeks for cash back ranging from 9% to 20% of what the company paid dating back to 2016, according to people familiar with the requests. In one email to a supplier reviewed by the Journal, Tesla asked for help to make “an immediate impact” by providing a rebate on products already purchased . . . .

One parts supplier was asked by Tesla for a 10% reduction on costs across the board going forward, a person familiar with the matter said in an interview. This person said the request was extreme, saying other auto makers typically seek savings of 1% to 2% on individual parts or programs.

The supplier said Tesla indicated it would ask to extend the payment terms to 120 days from 60 days if it didn’t get the price reduction, a length rarer among auto makers than a 90-day term.

Eleven of 23 responding suppliers in the survey said Tesla had asked them to extend payment terms . . . .

Public records show 16 companies since October have taken the unusual step of filing mechanic’s liens—or legal claims seeking unpaid compensation—against Tesla claiming bills haven’t been paid for supplies and services. Previously, only four liens had been filed against Tesla in all of 2015 and 2016 combined . . . .

https://www.wsj.com/articles/some-te...s&page=1&pos=2

A few months ago Tesla might have solved its cash problems with a secondary stock offering or by selling bonds but both those options could be problematic with an active SEC investigation.