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Tesla Motors Inc (TSLA) Model X Buyers Loaned Elon Musk $125m

Tesla Motors Inc Model-X

Tesla Motors Inc  is gearing up to produce the Model X right now, and there’s a legion of EV fans out there who have already ordered their own. A running tally on the Tesla Motors Club forums says that bookings of the Model X have hit over 29,000. There is some concern over the number of bookings that have been cancelled, however.

Tesla Motors Inc Model-X

The crew at the Tesla Motors Club forums takes the booking numbers from people who have ordered a Model X in different regions and dds them all together. Their count shows that bookings picked up in July, hitting 1,224 for the month. That brought the three month average above 1,000. Total bookings hit 29,465 if the tally is believed.

Counting the Tesla Motors Model X

The 29,465 number doesn’t take cancellations of bookings into account, and those are more difficult to number than total bookings. In order to account for bookings that have been withdrawn, the tally uses an average of 20 cancellations per month through 2015.

Up to December 2014, there is pretty good info about the number of people who have booked the Model X. Elon Musk stated in the earnings call for the three months through the end of 2014 that close to 20,000 bookings had been made. The count assumes this at 19,500 and winds out the cancellation numbers from there.

Tesla Motors  hasn’t been open about the exact number of Model X bookings there are, so the TMC forum count is likely the best number we’re going to see before the firm puts the first Model X on the road.

Tesla will report its earnings numbers for the three months through June on Wednesday after the market closes on Wall Street. We don’t know whether Mr. Musk will deign to address Model X booking numbers, or the release date of the SUV. It’s clear that those with shares are a little nervous ahead of the figures.

Tesla Motors sells the Model X

The $5,000 down payment on the Model X has helped Tesla Motors keep its finances in order over the last year. With more than $125m taken from fans to date, the car has offered at least some support to the firm as it strives to reduce its constant losses.

We’ll see just how deep those losses are when Tesla Motors shows off its numbers on August 5. The firm likely burned a lot of cash in the three months through June, but it also secured a credit line during the period that will give it a reserve to use, even if the Model X has troubles from the start.

Nishit Madlani, of Standard and Poor’s, says that Tesla Motors has “protection against any potential execution missteps or inefficiencies” as it tries to get the Model X out the door.

The “liquidity cushion” that Mr. Madlani says will help Tesla Motors may not save those with shares from a raucous market. Tesla earnings can bring a huge jump or dip in the value of the firm and tomorrow’s numbers, which are right on the cusp of the Model X launch, should be no different.

Tesla Motors looks for sales

Of the 25,000 bookings that TMC reckons have been made for the Model X, less than 100 percent will convert into sales of the EV SUV. A lot of people will see that they can’t splash out the extra $70k or so needed to secure the car and withdraw their booking. More will take a look at the Model X and decide they don’t like it.

The portion of people that pull out of their booking once orders open up will be of prime importance for the future of Tesla Motors. Tesla Motors will be forced to send $5,000 per cancelled booking back to buyers. That could cause short term cash problems.

That could be a danger for the firms cash flow in the three months through September, but only if the Model X is seen as a very very poor car once it’s released. Wall Street is betting that the Model X will be met with the same kind of reviews

Getting deeper into debt at Tesla Motors

The $125m that Elon Musk has loaned from those that like the look of the Model X is a sign of the faith that Tesla Motors fans have in him and the next EV SUV. That’s not the only source of debt at Tesla, however, and the firm is likely to get deeper into that hole before it manages to pay it off.

The credit line that Tesla Motors  put together earlier this year is a short term solution to a long term problem. Tesla Motors spends a huge amount of money on research, on building Superchargers, and on building the Gigafactory.

It makes a certain amount of money selling the Model S, but nowhere near enough to cover the huge costs it has saddled itself with. The Model X, if Tesla can produce it in high numbers, may be able to turn the firm’s cash flow positive, but traders shouldn’t bet on it.

Tesla Motors CEO Elon Musk has a penchant for growth, and a love for research and investing. Though he may be able to make cash flow green before the end of next year, it’s not likely that he’ll want to turn a profit.

Dan Galves of Credit Suisse says that “external funding over the next 12 months is likely, we believe strong access to credit markets makes straight debt financing more likely.”

Tesla Motors won’t be able to bring in enough cash to fund the Model X roll out and all of the other projects it’s working on. That means taking on debt in order to get the job done.

Crowdfunding the Model X

After taking bookings for the Model X back in 2012, the release of the SUV has come to resemble a Kickstarter campaign rather than the release of a major car. There’s no problem with that, and the model seems to be working for Tesla Motors.

If it gets a car that people can love out the door in the next couple of months, Tesla can claim the first major success in crowdfunding the car. Those with $5,000 to lend out indefinitely will also be able to claim they made a good decision.

Tesla Motors  may not pay out interest on the debt it took on from those that booked the Model X, but there are other rewards.

Elon Musk and the rest of the team aren’t clear on when the first Model X will ship, but it will happen in the next eight weeks. Those that loaned Tesla money for longer will get their Model X first, likely the best reward that fans of the firm could hope for.

Adam Jonas of Morgan Stanley reckons Tesla will get 50 units of the Model X out the door before the end of the quarter. The first 50 buyers have likely kept their $5,000 with Tesla since 2012, a three year loan to secure their September delivery.

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