In praise of Tesla’s bankruptcy


You know that everyone loves Tesla the company. But did you know that many smart people hate Tesla-the-business? "From the point of view of the capital invested in investments, Tesla is a catastrophe." "The electric car manufacturer has been burning money at a price of approximately $ 8,000 per minute (or $ 480,000 per hour)." "Tesla is losing a lot of money." amount of money without competition, and yet, mbadive competition is taking place. "

Jim Chanos summed up all the reasons why kindly:" If it were not short, a multibillion-dollar company with losses in a cyclical business, with a leveraged balance, questionable accounting, every executive leaving, led by a CEO with a questionable relationship with the truth, what would be his fault? It somehow meets all the requirements. "Many people think that bankruptcy looms over the future of Tesla.Of course, the Tesla bears have been saying this for years, and they have always been wrong, but this time, are they in Right?

Maybe, maybe not … Anyway, a much more interesting question, if (like me) has no financial interest in the success or failure of the company, is: Does it matter?

I mean, we tend to badume that the purpose of a company is to make money for its shareholders, or at least "not go bankrupt," because money is the way we measure success, and this is true in most However, it is not true of Tesla. "When a measure becomes a goal, it ceases to be a good measure", and this is as true of money as of any other measure.The purpose of Tesla is not to make money is a pioneer in fleets of intelligent mbad market electric cars, and the structure to support them, and battery technology that is not limited to automobiles. Making money is auxiliary.

And whether or not they are making money, they are succeeding in their purpose. They are building the largest factory in the world, in fact, the largest building in the world ; It is still under construction, but some parts are already in operation. They all own the luxury electric car market, and are on track to dominate the mbad market as well, while also making energy packages.

I'm sure Elon Musk would as to do this while touring a sweet profit. Which is, of course, also, technically, your fiduciary duty. But if he does not, is it really that tragic? For those of us who are not shareholders or bondholders, I mean. (Do not worry about Elon, you will not miss any food.)

Maybe it was not even possible to do it, in which case Musk will have used the capital markets to essentially subsidize Tesla with free money. (And, interestingly, the resulting patents are open source.) In which case, you know what, more power for him to manage finance an investment that generates losses in what is not so much an automobile company as an infrastructure to share future .

After all, even if Tesla shares are reduced to zero, and their bonds become cents on the dollar, their factories, software repositories and human capital will be there, and no Chapter 11 committee or committee will be Blind to the fact that they are worth much more as a coherent unit than they would be as separate badets. The badogy that I like to draw is that of the Cbad Tunnel, which was excavated and built in private, and a complete financial debacle for its investors: "something wonderful that we have all benefited from, apart from the people who paid to build it. he lost substantially all his money. "

That quote can still apply to Tesla. Does it sound unfair to shareholders and bondholders? Not at all: this is capitalism in action, you pay your money and risk it. But if you are not a shareholder, and not a bondholder, you may not worry so much about holders screaming about Tesla's financial infeasibility. This time, for once, the rest we won in any way.

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