[codex]

As of last quarter, Tesla had $777M in assets and a whopping $715M in liabilities--leaving a net balance of only $64M.

Given that their balance sheet is decreasing by an extraordinary $30M a month, that would have left only two months until the company was insolvent. No wonder the U.S. government wants their $465M paid back more quickly than planned.

The company has lost over $850 million since being founded in 2003.

[westicle]

That isn't actually what "insolvent" means. Insolvent refers to a situation in which an entity is unable to pay its debts as and when they fall due. Not whether they have a positive or negative asset position.

Strictly speaking, the balancesheet is irrelevant to Tesla's solvency.

My tennis club owns a property worth $20m from which it operates. It has debt of only $1m and repayment obligations of $100,000. It generates net revenues of $90,000. It is insolvent, with net assets worth $19m.

My startup technology company has no assets other than goodwill and intellectual property. It has no revenues. It has a line of credit from a financier sufficient to cover all expenses. It is solvent, with $1m of net liabilities.

[csomar]

Nope, your tennis club is not "insolvent". It's illiquid. It means it doesn't have cash but enough worth to take pay his obligations. At least, that's what Sal has explained in his KA videos.

[codex]

"Insolvent" can be defined either relative to cash flow or to the balance sheet; from http://en.wikipedia.org/wiki/Insolvency:

"Cash flow insolvency involves a lack of liquidity to pay debts as they fall due. Balance sheet insolvency involves having negative net assets—where liabilities exceed assets. Insolvency is not a synonym for bankruptcy."

[jordanb]

> The company has lost over $850 million since being founded in 2003.

I seem to recall that it takes the big 3 on the order of a billion dollars to bring a new automobile model to market. That includes the engineering, marketing, and the cost of tooling in the factories.

With that in mind, 850 million dollars doesn't strike me as being all that much capital for creating an entirely new automobile company.

[mkramlich]

> The company has lost over $850 million since being founded in 2003.

Lost? Literally? Since it's been lost I'd love to be the guy that finds those money bags laying around somewhere. But seriously, I'd suggest rather it's been spent, and probably spent mostly on R&D, which is precisely what any reasonable observer would expect an innovative new electric car company to be doing. Musk said even today I believe that within a month they appear to be headed to cash-flow positive. That's a huge good milestone for a new company to achieve, even more so in a bleeding edge one as theirs. And they've already built, sold and shipped 2 models of new product already, in customer hands. That significantly de-risks them. Completely de-risks? Of course not. But if you look at accomplishments to date, their momentum, and the degree of talent on board, I think the smart bet to make on them is up/long.