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Tesla could pay off the rest of the DOE loan today, says CEO

Katie Fehrenbacher — Wed, 22 May 2013 14:51:08 +0000

Updated at 1:35PM PST: Tesla says in a press release that it has paid off the entire remaining loan from the DOE of $451.8 million on Wednesday afternoon.

Tesla’s CEO Elon Musk said a couple months ago that Tesla planned to pay off the rest of Department of Energy loan in five years, instead of the allotted ten. Now, according to a tweet from Musk, Tesla could pay off the entire loan today, nine years early. Musk tweeted:

Given govt loan repayment this week (prob Wed), Supercharger update will be next week. Work continuing independent of announcement.

In order to pay off the loan, Tesla is holding an equity and debt offering, and could raise a billion dollars (boosted from the initial $830 million) from selling shares and convertible senior notes. Musk says he’ll buy $100 million worth of common stock in the offering.

If Tesla pays back the entire loan today — or sometime soon — it will be a remarkable feat. Tesla raised a $465 million loan from the Department of Energy’s controversial Advanced Technology Vehicle Manufacturing program back in the Summer of 2009. The funds helped the company build its factory in Fremont and transition from a small scale manufacturer of its first-gen Roadster electric sports car into a larger scale manufacturer of its Model S electric sedan.

Tesla was one of only five companies to receive the loans, and one of three startups. Two of the other startups that raised funds from that program, Fisker Automotive and The Vehicle Group, are struggling. Fisker, which makes the electric hybrid sports car the Karma, is near bankruptcy and The Vehicle Production Group, which makes a natural gas-powered van for disabled passengers, has shut down.

Tesla can also afford to pay off the loan early because it’s just come off of its first profitable quarter in the company’s 10-year history. Tesla also generated a record amount of revenue ($561.8 million) in the quarter, and raised its annual guidance of the amount of cars shipped by 1,000 to 21,000 this year.

Tesla stock has been on a tear this month, and is was trading at $89.24 this morning.

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Tesla shares soar almost 30% in after hours on profit news

Katie Fehrenbacher — Wed, 08 May 2013 22:37:59 +0000

Tesla’s shares are soaring — even more than they already did this week — on news that the company has hit the milestone of delivering the first quarterly profit in the company’s history.

Tesla’s shares rose at one point almost 30 percent in after hour trading to over $70 per share. Earlier this week Tesla’s shares had hit an all-time high of over $60 per share.

When Tesla held its IPO and started trading back in the summer of 2010, it went public at $17 per share. It’s $70-per-share milestone in after hours trading is more than four times that initial IPO price.

Tesla and CEO Elon Musk have ambitions far higher than this current marketcap and stock price. Musk has a payout package that allocates shares when Tesla’s marketcap adds $4 billion up until it reaches $43.2 billion, along with accompanying operating milestones.

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Tesla delivers 1st profit, record revenue and boosts Model S guidance to 21K

Katie Fehrenbacher — Wed, 08 May 2013 21:28:41 +0000

Electric car maker Tesla Motors delivered Wednesday on its promise that it would turn its first profit ever in the first quarter of 2013 and also generated a record amount of revenue, giving it the confidence to increase the guidance for its annual Model S sales by 1,000 cars. At the same time, Tesla admitted that $68 million, or 12 percent, of its revenue for the quarter came from selling ZEV credits, something which has been riling other auto makers.

For the quarter, Tesla generated $11.25 million in income, compared to a net loss of $89.87 million for the year for the first quarter of 2012. On a non-GAAP basis Tesla said net income for the quarter was $15.42 million.

Ten-year-old Tesla also set a revenue record for the quarter, which isn’t surprising given this was the first quarter where it had a full three months of full-scale Model S production. Tesla generated $561.8 million in revenue for the quarter, compared with revenue of just $30.17 million for the first quarter of 2012.

There’s been a lot of talk about how much of Tesla’s revenue and profit for this quarter would come from the sales of zero emission vehicle (ZEV) credits to automakers. The LA Times reported that Tesla can make $35,000 per Model S car sold in ZEV credits, which could generate up to $250 million for Tesla this year.

Tesla addressed that point in its shareholder letter and said that Tesla generated $68 million from ZEV credits for the quarter, or 12 percent of revenues. If Tesla generated that amount for each quarter it could bring in $272 million from ZEV credits for the year. However, Tesla said that it expects its use of ZEV credits to decline because the ZEV credits only apply to a sixth of international sales, compared to half of U.S. sales.

Tesla is so confident of its manufacturing capabilities this quarter that it raised its guidance for the year by 1,000 cars. Tesla now says it expects to ship 21,000 Model S cars, instead of 20,000. Tesla says it is receiving orders of over 20,000 cars per year.

Tesla’s margins are also improving significantly, and the company has a target of 25 percent gross margin by the end of 2013. This quarter Tesla delivered 17 percent gross margin, up from 8 percent in the last quarter of 2012. That 25 percent margin is without ZEV credit, Tesla noted.

Tesla shares jumped almost 30 percent in after hours trading on Wednesday to over $70 per share.

Tesla CEO Elon Musk said in the call with analyst and media:

On ZEV credits: Musk said he expects a decline of ZEV credits in Q2, and Q3 and potentially no ZEV credits in Q4.
Tesla plans to spend $200 million in capital expenses in 2013, and that includes things like Model S factory tooling, new product development, and building out the Super Charger Network.
Musk said Tesla has no plans right now to raise more funding.
Tesla has a seen a meaningful improvement on demand because of the financing product.
10,000 Model S sales are expected from Europe, 5,000 are expected in Asia. “China is a wild card,” said Musk. Up until the second quarter of 2013, all of Model S sales have been in the U.S.
Tesla’s top focus this year is on improving the efficiency of production of the Model S.

Updated at 3:10PM PST, with information from Tesla’s call and the stock price.

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10 milestones Tesla hopes will make it a $43 billion company

Katie Fehrenbacher — Wed, 08 May 2013 17:53:38 +0000

The stock of electric car maker Tesla Motors hit an all time high of over $60 per share this week. Partly that’s because later this afternoon the company, led by entrepreneur Elon Musk, plans to announce what it says will be its first profitable quarterly earnings in Tesla’s history . While Tesla is enjoying the brightest time in its decade-old lifetime, Musk, and the company’s board, actually have far grander ambitions than the current already impressive $6.4 billion marketcap.

According to documents prepared for Tesla’s upcoming annual meeting, Musk has an equity and stock grant package — called “2012 CEO Grant” — which was granted last summer, and which would deliver him another 5 percent of Tesla’s total shares if Tesla meets certain milestones and certain marketcaps. Musk is already a fabulously wealthy person, but it’s the operational company milestones, and accompanying soaring marketcap, which underscore Tesla’s ambitions.

The first tranche of the grant becomes available if Tesla’s marketcap hits $7.2 billion, and one of its operational goals is met. The remaining parts of the grant become available for every $4 billion added to the marketcap, along with an additional operational milestone, until the market cap reaches $43.2 billion and all ten of the operational milestones are met (see the milestones below).

As of April, when the documents were filed for the annual meeting, none of the milestones had yet been met, and Ford and GM had marketcaps of $53 billion and $40 billion respectively. For comparison’s sake, Apple — which Tesla has often times been compared to in its approach, brand and leader — has a marketcap of $430.52 billion.

Successful completion of the Model X Engineering Prototype (Alpha)
Successful completion of the Model X Vehicle Prototype (Beta)
Completion of the first Model X Production Vehicle
Successful completion of the Gen III Engineering Prototype (Alpha)
Successful completion of the Gen III Vehicle Prototype (Beta)
Completion of the first Gen III Production Vehicle
Gross margin of 30 percent or more for four consecutive quarters
Aggregate vehicle production of 100,000 vehicles
Aggregate vehicle production of 200,000 vehicles
Aggregate vehicle production of 300,000 vehicles

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Electric car startup Coda getting buried in lawsuits

Katie Fehrenbacher — Tue, 30 Apr 2013 18:25:17 +0000

Back in January we noted how following a trying year, electric car startup Coda Automotive was quietly dealing with a number of lawsuits over unpaid bills. These lawsuits followed layoffs and slow sales of the company’s first car on the market, a much delayed electric sedan. Well, a couple months later, Coda’s legal troubles have compounded with more lawsuits and the fate of Coda appears highly uncertain.

While Coda settled a couple of those billing disputes from earlier this year, two of those companies that settled have filed new lawsuits stating that Coda didn’t begin paying the agreed upon settlement fee. Auto supplier CDH Detroit said that in a settlement agreement with Coda in early March, Coda agreed to start paying CDH Detroit monthly installments of $28,186 for almost a year, resulting in a total bill of $338,234. In the new suit filed April 26, CDH Detroit said that Coda allegedly missed that first monthly payment (embedded below).

Car engineering and development company RLE International (as well as an affiliate contract work company RTECH) said that Coda also settled with them and agreed to pay them $50K a month for a year and a half, but didn’t start paying the first monthly bill. The suit, dated April 25, alleged that Coda owes them $850,029.15 in total (embedded below).

In addition, events company Exhibit Works filed a suit on March 19, alleging that Coda owes them $242,265.27 (embedded below). A company called BET Services has filed a suit on April 24 alleging that Coda owes them $454,228 plus interest (embedded below). A billing and accounts receivables company called Corporate Billing filed a suit back on January 16, alleging Coda owes them $248,800 for an unpaid bill for auto parts (embedded below). And there’s at least two other pending suits in Los Angeles County Court.

Finally, former Coda employee Tony Bulchak just filed a class action lawsuit against Coda on Monday. Since the case is so new, the online complaint isn’t available yet, but I’ll update this when it is. I would assume the class action is over the layoffs, but I’ll confirm that when the documents are online.

Like how Fisker Automotive is now unraveling, Coda Automotive seems to be coming apart at the seams as well. Media reports are starting to sound its death toll, too. How much longer til Coda files for bankruptcy?

CDH vs Coda

RLE/RTECH vs Coda

Exhibit Works vs Coda

BET vs Coda

Corporate Billing vs Coda

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The Fisker hearing kicks off today, meanwhile unhappy customers emerge

Katie Fehrenbacher — Wed, 24 Apr 2013 16:20:32 +0000

Today is the day that Fisker founder Henrik Fisker, his co-founder Bernhard Koehler, and a couple others will testify before the House Committee on Oversight and Government Reform (they have a live stream video at 2PM EST). If you didn’t catch the Solyndra hearings, the whole thing is a spectacle; all of the testimony is drafted and circulated in advance, and the committee members use the time after the testimony to publicly grill the panelists.

It’s scripted to the extent that the Oversight and Government Reform Committee already sent me a quote that’s supposed to sum up the hearing before it occurs. Committee Chairman Jim Jordan, R-Ohio, said:

It is hard to understand why the Department of Energy ever thought Fisker was a viable company that should receive taxpayer money. The Obama Administration owes the American taxpayer an explanation as to why this bad loan was made in the first place, and what they are going to do to minimize the loss that taxpayers face.

Well, I do agree with that statement, even if I don’t agree with the need to conduct a long hunt for some political cronysism between Fisker and the DOE over the loan. As I said in my piece on Fisker published last week (A Look Under the Hood: Why Electric Car Startup Fisker Crashed and Burned), I think the search for political cronyism is actually distracting from the disturbing financial story of Fisker’s now defunct broker Advanced Equities, which worked with Fisker’s VCs to raise over $1 billion without much value to show at the end of the company.

Reading through Henrik Fisker’s prepared testimony this morning, it’s also interesting to see his perspective on Fisker now that he’s not working with the company any more. He mentions numerous times in his testimonial that the company sold 2,000 Fisker Karmas that “perform well and customers love them,” and are “operating smoothly and continue to receive fantastic customer reviews.”

That’s not necessarily true. Fisker customers have been coming out of the woodwork and complaining about problems with the cars, and how they’re having trouble dealing with these problems now that the company is in financial dire straits. In March, Karma customer Kelly Stewart actually filed a lawsuit against Fisker and a dealership in Greenbelt, Maryland called Capital Cadillac Company claiming that the car was not performing as expected (the complaint and an exhibit letter embedded below).

Ms. Stewart bought a Karma in March 2012, and three weeks later she said she had electrical, battery, alignment, and heating and cooling problems. In the letter (Exihibit B) from the Maryland dealership to Fisker the dealership exec wrote:

It [the Karma] has been out of service for 87 days even though it is less than 9 months old and has less than 8,000 miles on it. To date the dealer has been unable to correct the problems and it is out understanding that these problems are systemic with these cars.

Problems with the Karma cars have also been documented by Consumer Reports’ second review (the one it did again after the first Karma car it bought almost immediately died), and Consumer Report’s review gave the Karma a failing grade.

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Fisker fails to deliver 1st government loan payment, DOE has already taken $21M

Katie Fehrenbacher — Tue, 23 Apr 2013 02:50:37 +0000

Electric car startup Fisker Automotive did not pay its first $10 million loan payment due to the Department of Energy on Monday, reports the LA Times. At the same time, the DOE has already seized $21 million from Fisker from a reserve account close to two weeks ago anticipating a default on the loan, according to the Wall Street Journal.

The bad news is the latest in a string of problems for Fisker, which has also seen lawsuits pile up in recent weeks, and laid off 75 percent of its staff earlier this month. According to several media reports, Fisker has been prepping bankruptcy documents, but at the same time has also been trying to raise funds to restart production of its first car the Karma.

We detailed Fisker’s long disturbing story in our lengthy piece: A look under the hood: why electric car startup Fisker crashed and burned. On Wednesday the Committee on Oversight & Government Reform has scheduled a hearing where Fisker founders Henrik Fisker and Bernard Koehler are expected to testify and Fisker CEO Tony Posawatz has been invited.

Fisker raised $1.2 billion from over a thousand investors, including venture capitalists Kleiner Perkins and NEA, and drew down on a close to $200 million loan from the DOE. Fisker owes the DOE another $171 million. If Fisker files for bankruptcy, it will be one of the biggest losses in venture capital history.

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Fisker lawsuits piling up, another from its web designer over alleged unpaid bills

Katie Fehrenbacher — Sat, 13 Apr 2013 20:28:35 +0000

Following a lawsuit over not paying rent for the month of April, electric startup Fisker Automotive was hit with another lawsuit on Friday. Filed in Orange County Superior Court, Fisker’s web site and mobile designer Ignited is suing Fisker over an alleged $535K in unpaid bills (embedded below).

Ignited says it provided Fisker with creative services, advertising, web design, and creative and media buying services. Along with the lawsuit from Fisker’s landlord, the company was also served a class action lawsuit for laying off 75 percent of its workforce, and allegedly not giving the former employees 60 days notice (which would violate the WARN Act). So that’s three lawsuits filed against Fisker this month, and I have a hunch there’ll be more coming.

Fisker appears to be close to bankruptcy and according to Reuters last week, the company hired a firm to look into bankruptcy, and could file at any time. Fisker’s founders have also been asked to attend a hearing on April 24 in Washington D.C., organized by House Republicans. Fisker drew down on close to $200 million in a government loan from the Advanced Technology Vehicle Manufacturing Program.

Fisker raised at least $1.2 billion in funds over the company’s five and half year lifetime. Fisker was backed by venture firms Kleiner Perkins (Ray Lane was a board member) and NEA, and worked with now-defunct broker Advanced Equities.

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Fisker’s landlord says pay rent or get out

Katie Fehrenbacher — Fri, 12 Apr 2013 21:34:36 +0000

The landlord of electric car startup Fisker Automotive has filed a lawsuit this week that alleges that Fisker has to pay its April rent on its property in Anaheim, California or leave the premises. In a lawsuit filed in the Superior Court in Orange County, California (embedded below) on April 10, landlord WWG Canyon Corporate Owner says that Fisker owes it $174K for rent for the month of April.

Row of Fisker Karmas

The landlord says Fisker has 5 days to pay or they’ll be evicted. Fisker entered into the lease on December 10, 2010. According to Reuters Fisker could declare bankruptcy as soon as this week. If Fisker isn’t paying its bills, it certainly looks to be getting closer to filing BK. The company laid off 75 percent of its staff last week and was then served with a class action lawsuit for allegedly failing to give those employees 60 days (the WARN Act).

Fisker’s founders have also been asked to attend a hearing on April 24 in Washington D.C., organized by House Republicans. Fisker drew down on close to $200 million in a government loan from the Advanced Technology Vehicle Manufacturing Program. Fisker also raised $1.2 billion in funds over the company’s five and half year lifetime. Fisker was backed by venture firms Kleiner Perkins (Ray Lane was a board member) and NEA, and worked with now-defunct broker Advanced Equities.

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Fisker hit with lawsuit over layoffs

Katie Fehrenbacher — Mon, 08 Apr 2013 04:12:58 +0000

Struggling electric car maker Fisker Automotive has yet another thing in common with infamous solar panel maker Solyndra. Shortly after Fisker laid off 160 of its workers — or 75 percent of its staff — last Friday, law firm Outten & Golden hit the company with a class action lawsuit alleging that Fisker violated the Warn Act, which requires companies with 100 or more employees to provide at least 60-days notice before conducting mass layoffs or closing plants.

I reported that Outten & Golden was investigating Fisker and interviewing employees last Friday, and Auto News has the full report of the filed lawsuit, as well as a PDF of the filing itself. Outten & Golden won a $3.5 million settlement against Solyndra using a similar suit.

Fisker Karmas

The suit, filed Friday in U.S. District Court in Santa Ana, Calif., against Fisker alleges that the company violated both federal and California state WARN acts, and the class action lawsuit was filed on behalf of lead plaintiff and former Fisker employee Sven Etzelsberger. The suit is asking for an unspecified amount of damages including unpaid wages and accrued holiday pay for 60 days, as well as legal fees.

Fisker laid off 160 employees last week and has kept 53 around to negotiate with the Department of Energy and to work on selling its assets. Fisker owes the DOE the first loan repayment at the end of this month for its $193 million loan. The company hasn’t made a car since the Summer of 2012, reportedly saw potential acquisition and investment bids from two Chinese auto makers fall through in recent months, and announced last month that its founder design Henrik Fisker had left the company over disagreements.

Filing for bankruptcy is a very real next possible step for the company. Fisker has reportedly hired a bankruptcy lawyer to look at its options.

Fisker has raised over a billion dollars in private funds, including money from Valley venture capitalists Kleiner Perkins and NEA. The company has sold a couple thousand of its $100,000 electric hybrid Fisker Karmas to customers, including celebrities like Al Gore, Matt Damon, Leonardo DiCaprio, Justin Bieber and the Game.

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