"Bear Case" issues

[nishjunankar]

Long term debt in the bear case is far too low. Reducing debt from 12.57BN to 5.15BN would necessitate them paying off 7.42BN in debt, when its seemingly likely that they will have to actually take on more debt just to continue operations.
While they could also fund operations and pay back debt at maturity by raising more equity, the "bear case" cannot seriously assume a weighted avg market cap for an equity raise to be more than double the current market cap ($70BN vs $33BN) .
Furthermore, using a gross margin of 25% (which is what the company guides to) in the bear case is also overly bullish. The point of a bear case is to put in pessimistic assumptions, and taking the word of the company in this case, when they have a history of overpromising, as a pessimistic estimate is wrong.
Further, the usage of EV/EBITDAR&D as the valuation metric is unrealistic for the "bear case". When making intentionally pessimistic assumptions, the pessimism should carry over into your estimate of how the company is valued by the market in 2023. While I can see the argument for EV/EBITDAR&D in the bull case, I think it makes sense to value it on EV/EBITDA or EV/EBIT in the bear case.
Furthermore, the unit sales in the bear case is also not pessimistic enough. It uses the same estimate for EV market size as the bull case and only adjusts TSLA's market share. To construct a proper bear case the market size estimate should be lower than in the bull case.

[jefffhaynes]

Why is it likely they will have to take on more debt? Everything we know points to the debt they took on recently being a buffer vs actually needed.

[nishjunankar]

The model has them coming up with $7.42BN to pay down the maturing debt and this is a company that has been losing nearly a billion dollars every year in the past. And yes they're projected to not lose as much this year, but in a "bear case" the assumptions are supposed to be pessimistic. If they don't sell as many cars as expected or have cost overruns again they'll lose a bunch of money again

[InternetJohnny]

Wow, this didn't age well 😅