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In the world of startups, when a company is new, new and modestly funded, it usually spends a few years away from the radar trying to develop a viable product or service. When the time comes to launch this business into the market, the start-up leaves the mode "stealthy" and reveals what she's done.
The stealth mode can obviously be a stressful time, but it can also be a nice episode in which the startup has the most desirable commodity: time. More importantly, this time is free of external judgments. The hope is literally eternal and no battle is fought.
Money ends up exhausting and the stealth mode is no longer practical. The company must be autonomous.
There are, however, times when a stealth retreat can be justified. Tesla is now in one of these periods.
Read more: Elon Musk grimaces up at the bank while Tesla finally raises more money
The company has just experienced a torturous 2018 year: CEO Elon Musk struggled to launch Model 3, failed to take Tesla privately, and was punished by the SEC. There was more, but it was the biggies. On the positive side, the second half of last year was marked by two consecutive profits for the first time in Tesla's history; and the automaker delivered 250,000 vehicles in 2018, a record.
In contrast, 2019 is a bad start. Tesla has regained its silver lining in the first quarter and its revenues have increased significantly, down $ 3 billion from over $ 7 billion in the fourth quarter of 2018. This year, a further increase in capital had already been announced. Tesla pulled the trigger, raising $ 2.7 billion (the offer consisted of both convertible debt and equity).
Tesla has two choices for 2019
This should dissipate much of the pressure in 2019 and give Tesla an opportunity to stoop and simply perform. Short sellers should be happy to be able to borrow more shares to bet against the company, but their most extreme representatives have also witnessed their "zero objective" arguments undermined by balance sheet improvement. from Tesla.
Two things could now happen. First, Tesla could seriously engage in what Musk now seems to consider as the Next Big Thing service, a robotaxi service. This has been spreading for a while. About three years ago, Musk realized that autonomous driving was the new idea in vogue in transportation, replacing the electric car revolution that had allowed Tesla's boom. It has pivoted and rotated quickly. At an event organized a few weeks ago with investors, we saw the fruits of this effort: self-sustaining technologies that were convincing and focused on Tesla.
Musk told Morgan Stanley's analyst, Adam Jonas, that the autonomy would engulf all of Tesla's adventurous spending. So it is safe to assume that much of the new capital could go in that direction.
But there is a second possibility: to become a functional carmaker.
Tesla has always been a dysfunctional automaker. It was not a big deal, since being a functional automaker in 2010 would have meant the fate of Tesla. The auto industry needed to be persuaded enough to attract enough customers to take a wild ride with an electric car.
But now is the time for Tesla to put aside these childish games. Indeed, Tesla dominates the market of electric cars. This dominance, however, is still quite small because the electric vehicle market is rinkydink. It is essential that Tesla strengthens its dominance as this market grows.
Why? Because the cost structure to attack the electric vehicle market for a new entrant to the traditional industry is not daunting. Automakers are making so much money selling pickup trucks, SUVs and luxury vehicles now that they can afford to spend money on the "problem" of electrification.
But for Tesla, the cost structure is totaling. The company does not really have any other company. He sells electric vehicles or bust. Given its financial vulnerabilities, Tesla needs most of the profits from electric vehicles to add to its balance sheet. That's the only way for her to survive. And the price of this survival is a functional execution. Incredibly boring, functional performance.
A crazy dream for Tesla
My dream is for Tesla to use his $ 2.7 billion wisely and say, "Thank you very much, now we are going underground for a while to be able to find a way to make money more consistently by building and selling cars. "
According to Musk's comments on autonomy, this will not happen. I would therefore be content with the same statement, which was simply aimed at setting up a functional self-driving service in the coming years. Whatever the case may be, the stealth mode would be a prerequisite for one or the other of these decisions.
Musk has trouble controlling his tongue, so I'm not optimistic. BUT, Tesla stealth is not unprecedented.
Take robotaxi technology. I've spent a few weeks digging the subject, and it's actually incredibly impressive. In summary, Tesla has developed a gigantic online multiplayer game, superimposing reality into a kind of real-time simulation and using its large fleet of vehicles (equipped with cameras and sensors) as actors. In simple terms, robotaxi tech creates an artificial intelligence simulation usable by the fleet, then imposes it to reality and merges the two environments. Basically, it's "The Matrix Reloaded", when Neo combines the real and virtual worlds of the movie.
Tesla had not said a word about it until the recent investor presentation; the only information provided by the company was to provide fully autonomous hardware updates and autopilot updates, Tesla's existing semi-autonomous system. Tesla designed its own chip for the robotaxi plan (after previously using Nvidia's state-of-the-art chips), and if another company came out of stealth mode after performing it while selling a quarter of a million of vehicles, it would have been a staggering entry into the self-driving sector.
The result is that Tesla can do stealth. It now contains a little of what we could call money "eff-you". My recommendation is to take the money and shut it down for the rest of the year.
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