Tesla’s Mess at the Top: Moody’s Gets Nervous

Decision-Making Chaos and Epic Strategy Flip-Flops.

“Tesla’s credit profile is strained” despite two “credit-positive” factors, Moody’s writes in a new report: These two credit-positive factors are: One, the repayment of $1.15 billion in maturing convertible debt ($230 million in November and $920 million just now), thus avoiding bankruptcy. Apocalypse not now. And two, after numerous delays and manufacturing hell, being able to mass-produce the Model 3, though “well under Tesla’s original forecasts.” And in terms of the positive, that’s about it. Then the report points at the decision-making chaos at the top.

Moody’s credit rating for Tesla – B3 with negative outlook – is six notches into “junk.” A further downgrade would push the corporate credit rating into the C-range (my cheat-sheet on corporate credit rating scales by Moody’s, S&P, and Fitch). Moody’s already downgraded the $1.8 billion of 5.3% notes, issued in August 2017 and due in August 2025, to Caa1. Friday, these bonds closed at 86.125 cents on the dollar, according to FINRA/Morningstar, trading at a yield of 8.1%.

There are factors outside the company too that get in the way – such as competition. It’s already huge in China, where Tesla is a flyspeck among dozens of EV makers. All foreign automakers will have to offer EVs in China. They’re investing billions of dollars in the brutal Chinese market to figure out how to profitably produce EVs at “affordable” prices.

Tesla can sell its Model 3 for $35,000 if it wants to, but it cannot do so without burning tons of cash. The average selling price of the Model 3s sold so far has been around $60,000, according to Moody’s estimates. That’s the price of a niche luxury car – and way beyond “affordable.”

By creating pent-up demand where people waited for years, Tesla was able to sell the initial batch of these luxury cars. These high-end sales “supported the operating profit generated during the third and fourth quarters of 2018,” Moody’s writes. But to sell the Model 3 in large numbers in the US going forward, Tesla will have to bring the average selling price down to around $35,000 – and do so profitably.

Alas, this “is proving to be very difficult to achieve,” Moody’s says. And this “insight” requires “a major reassessment of the elements of the Model 3 business model.” The math didn’t work from the beginning:

Tesla’s original plan called for production of the Model 3 to reach 10,000 units per week (or, about 500,000 annually) sometime in 2018 and anticipated that a low-priced Model 3 at approximately $35,000 would generate a gross margin approximating 20%.

By year-end 2018, weekly production was less than half of the originally-planned rate, and stood at approximately 4,300 units. Tesla’s reported gross margin achieved the 20% target but, importantly, this margin was supported by the sale of Models 3s with an average price that we estimate was about $60,000 rather than the $35,000.

Tesla has conceded that it would be extremely difficult to generate a profit on Model 3s priced at $35,000. This recognition contributed to significant shifts in operating strategy in an effort to reduce costs.

So to survive its efforts to bring the Model 3 price down, Tesla undertook several erratic cost-cutting measures, and then ended up reversing them even more erratically.

On February 28, Tesla announced that it would shut down most of its 106 retail stores and galleries in the US. The idea was to become largely an online retailer. This was a huge strategic move. No major automaker has yet been able to successfully switch to selling cars online only.

But someone didn’t think this through. There were no negotiations going on with landlords. They heard about it in the news – and called their lawyers. Just because CEO Elon Musk, who walks on water, says so doesn’t mean leases can be broken. It’s serious money: In its annual report, Tesla lists operating-lease obligations of $1.6 billion. Of this, $276 million are due in 2019 and $257 million in 2020. Sure, it would have been nice to shed this expense, along with the other expenses associated with retail outlets, including salaries. Laying off employees is easy, but then the empty stores would still incur lease expenses.

Someone at the company must have finally done the math. So on March 10, there is a sudden and total flip-flop, via Tesla’s blog:

Over the past two weeks we have been closely evaluating every single Tesla retail location, and we have decided to keep significantly more stores open than previously announced as we continue to evaluate them over the course of several months.

I get it. Musk announces that Tesla would close all stores, and then after the announcement, the company begins to evaluate “every single store” and checks with its lawyers, and reverses the decision. A lesser CEO who can’t walk on water would have done that before the announcement, and would have then scrapped the announcement.

And it gets better, in terms of flip-flops. In February, Tesla announced its second price cut this year for its Model 3, to stimulate demand that has been waning in the US, after the pent-up demand had been absorbed. But cutting prices with sagging volume burns up cash flow in a hurry.

So, on March 10, in the same blog post, Tesla does another epic flip-flop: “As a result of keeping significantly more stores open,” it would need to raise Model 3 prices on average by 3%.

Then there are sudden waves of layoffs after a hiring binge, starting in the summer of 2018, including the announcement in January of 3,200-plus layoffs that included part of the Model 3 delivery team in the US. This was followed by the layoffs entailed in shutting down its retail stores, now on hold, pending further flip-flopping.

Moody’s put this decision-making chaos in perspective:

Reversals of strategy reflect managerial and planning shortcomings. We believe that Tesla’s decisions to backtrack on plans to significantly scale back its retail outlets; to raise prices on the Model 3 after cutting them; and to make unanticipated employment cuts, all reflect shortcomings in the company planning and decision-making processes.”

Moody’s blames Tesla’s “ongoing pattern of senior management turnover and weak governance” for this decision-making chaos. Never once did it name the guy at the top.

Tesla and Musk had a magic touch when it came to marketing. Walking on water was just a low-level activity. But that was then, and this is now. Read…  Tesla Falls from Grace with Americans, Facebook Plunges to the Ignominious Level of Goldman, Wells Fargo, Sears

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  91 comments for “Tesla’s Mess at the Top: Moody’s Gets Nervous

  1. Paulo
    Mar 15, 2019 at 9:00 pm

    If Tesla is barely limping along at the top a low-interest rate bubble economy, a time when the wealthy have tons of cash to bling around, what on earth wil happen when times toughen up?

    The Majors might have to merge and/or downsize, but they’ll still be around long after Tesla makes the text books. (Guess the subject)

    • Joan of Arc
      Mar 15, 2019 at 10:19 pm

      I’m worried about who will service my 2017 $35,000 Model 3 Tesla after they go bankrupt? The power windows have all been replace because they all stopped working at one time in the past. The sun roof leaked and so did the rear tail lights. The trunk leaked worst of all.

      • RagnarD
        Mar 15, 2019 at 11:37 pm

        Not sure whether JoA has high level sarc on…
        but the link above shows Tesla did engineer the trunk for rain / water.

      • intosh
        Mar 17, 2019 at 1:34 am

        The rear tail lights seem to be a recurring trouble spot for Tesla vehicles. Saw Model X and Model 3 with condensation inside the casing and/or non-functioning LED.

        • 91B20 1stCav (AUS)
          Mar 17, 2019 at 11:38 am

          Not condensation, those lamps are just leaking blinker fluid…

          A better day to us all.

      • Prairies
        Mar 17, 2019 at 10:04 am

        Think Delorian, only without proprietary parts. Enthusiasts in backyard garages will work on them and if you look up all the youtube videos of Tesla fires and mishaps, they come from untrained labour working on these cars.

    • timbers
      Mar 15, 2019 at 11:02 pm

      Why do you think we are at the top of low interest rates?

      Super Ultra Dove Powell has explicitly stated 0% interest rates and much larger QE is in the Fed’s tool box to combat recession. Yes, not lack of liquidity…not severe recessions like 2008….just plain recession.

      We are all Dove’s now. Super Ultra Dovish has been normalized. Mission Accomplished.

      • MD
        Mar 16, 2019 at 10:53 am

        More to the point – we’re all expected to be amateur speculators in order to provide for our retirement, and if we don’t take advantage of the rampant speculation low IRs engender, and jump on that train. then ‘more fool us’.

        Gone for good it seems are the days when one could rely on a steady, risk-averse 5% PA to build a pension pot.

        This ‘thinking’, and the failure to provide credible alternatives (apparently according to neoliberal dogma – there are none) is going to lead to major societal problems down the road – particularly as low IRs will push the price of putting a roof over one’s head even higher.

        • sierra7
          Mar 17, 2019 at 11:40 am

          MD:
          Nailed it…..

      • JZ
        Mar 16, 2019 at 11:05 am

        @Timbers Jay Powell sounds dovish, but if you examine his position, I think he is constrained. His current position is either deflation (tighten) which crushes everything or facing stagflation (ease) where economy sucks but real goods and services gets expensive.
        The 10 year long “easing” leading to better GDP without inflation is GONE.
        I can NOT tell what Jay Would do since I do NOT know his primary motive. Even he eases, once inflation inches up, he will HAVE to tighten or he faces extinction event of the FED.
        No matter he eases or tightens, the economy has already been FUBARed. (Fucked beyond all recognition)
        It is time to pay attention to economy, NOT price of the economy.

    • yngso
      Mar 16, 2019 at 11:24 am

      Tesla is a very fragile canary in the coal mine. When the punch bowl gets taken away, watch out!

    • Mar 17, 2019 at 11:16 am

      Like the depression of the 30’s the rich get richer. Tesla should eschew the mass market entirely, and just get a few of these out on the road. That’s the best ad. Meanwhile start selling Chevies at those dealerships for people who cannot afford M3. (Bait and switch?) Life is short, the window to profitability is long, (see Amazon) I want to see a Tesla PU on the ranch in Montana, being charged overnight from a solar panel. HYG is making new highs, so the yield on that debt will revert to the mean. Yield chasing junkies take note.

      • Mean Chicken
        Mar 17, 2019 at 9:24 pm

        Skate to where the money will be.

  2. Javert Chip
    Mar 15, 2019 at 9:00 pm

    I’m a retired CFO…and I can’t be the only person on the planet who wonders why “credit rating agencies” have 20-25 itty-bitty teeny-tiny gradations of credit score.

    Tesla on the verge of falling from “six steps below junk” all the way to “C” status just sounds like double secret probation.

    Credit rating agencies don’t exactly cover themselves in glory with their ratings credibility to begin with. Having so many little nooks & crannies just allows them to get tied up in their underwear.

    • NJGeezer
      Mar 15, 2019 at 11:44 pm

      Chip,
      Your irony-dripping comments beautifully complement Wolf’s reporting and analysis. Keeping the comments section classy yet cutting seems to be one of your callings, along with additional edification for the commoners. Always appreciate your additions.
      Keep up the great work.

      • Crocodile Chuck
        Mar 17, 2019 at 2:22 am

        What NJGeezer said

        Thread Winner!

        ;)

    • Jack
      Mar 16, 2019 at 5:32 am

      Yes Jav the Credit Rating agencies are part of the problem that got us to where we are now.

      It would be great if Wolf does an article on them “ three scoundrels “, those walking on water and conjuring wine on whim kinda articles :)

    • Bruce walker
      Mar 16, 2019 at 7:53 am

      Why all the top brass at all credit rating agencies aren’t in jail is a mystery. Not really a mystery. Socialism for the 1 percent capitalism for the rest. Wake up!! Have a nice day

      • HillBill
        Mar 16, 2019 at 9:34 pm

        Why? Because they’re all owned by Warren Buffet, who also owns such losers as KHC, Buffet destroyed the USA with his insurance scam’s, he invented “Collect premium, Deny Claims’, which destroyed the entire health care world. Made himself rich on investing claim money, and denying claims.
        Why is Buffet still lionized? Probably because he owns everything, and of course people who own BRK were making a lot of money.
        The emperor has no clothes, this is a known-known.
        When will it all start coming down? I suspect pretty soon, Boeing brand has been destroyed, Heinz, at the current rate ‘intrinic assets’ or ‘good-will’ will be worth zero.

        What’s the diff between TESLA & Boeing? Well Tesla made the USA public and its customers the guinea pig for self-driving cars, but Boeing made the 3rd world, by not telling Indo/Afro pilots how to disable the auto-pilot. Tesla as a brand was always BS, but Boeing was real until they move the OP to Chicago.

        • Dale
          Mar 17, 2019 at 9:30 pm

          Interesting thing about Boeing:
          1. Market cap about $200B, even after the recent damage.
          2. Negative book value!

          And, yes, @HillBill seems to be right. I believe Boeing’s complete financialization started with its move to Chicago.

      • wkevinw
        Mar 17, 2019 at 10:08 am

        I’m pretty sure the credit rating companies are virtually not regulated. At least that’s the way it was some time ago. It was even mentioned in the move The Big Short that one of the professionals trading bond derivatives wasn’t aware of that.

        They taught us that as freshmen or sophomores in college decades ago.

        Pretty scary.

    • Rcohn
      Mar 16, 2019 at 10:50 am

      There is a difference between TSLA the stock and TSLA the car company. As a stock it’s market cap is still among the highest of all car companies , approaching that of BMW.
      As a car company it has accomplished amazing things . It has become a major factor in the luxury car market , often exceeded sales of BMW and Mercedes in the US. Although it has not produced 10,000/ week it has reached almost 5,000/ week.But TSLA the car company also faces some major issues.
      It lost half the Federal credit of $7,500 as of the beginning of this year and is due to lose the rest after June 30. There have been numerous reports of significant delays in repairing cars. And EVERY major car manufacturer will have EV offerings by 2022.
      Everyone who has seriously followed TSLA has known that the $35000 price is a dream and that average price was north of 50000

      • Escher
        Mar 17, 2019 at 7:25 am

        From some of the comments, and reading other bulletin boards the Tesla build quality seems inconsistent at best. Not really the hallmark of a luxury car, and completely unrelated to the EV aspects, so inexcusable IMO.

        • Mean Chicken
          Mar 18, 2019 at 10:44 am

          Low production vehicles aren’t to my knowledge, known for consistent quality.

    • yngso
      Mar 16, 2019 at 11:26 am

      …and it’s still wildly overvalued…

  3. Mike R
    Mar 15, 2019 at 9:10 pm

    So spot on ! I would love to see this realistic commentary, posted over at a website like Inside EV’s, that worships Tesla and Musk, as if Tesla was Gold, and Musk was god.

    The Model Y so called ‘reveal’ would certainly fall under the Moody’s characterization … “all reflect shortcomings in the company planning and decision-making processes.”

    It was a HUGE fail, particularly noting, end of 2020 is a LONG way from today, and especially since one has to cough up $2500 just to get in line for a Model y. Its NOT a deposit. It does not cover any cost of the car. and they call it a ‘processing fee’, so as to make sure it doesn’t have an unfavorable tax treatment on their accounting balance sheet. Anyone plunking down $2500 between now and the end of 2020, is just begging to see that money go up in smoke. Stand in line as an unsecured creditor if tesla goes belly up before then, which is a rapidly increasing probability.
    Incredibly poor timing for a Y reveal, and worse, it looks like (as one pundit called it), a slightly ‘lifted’ Model 3, rather than anything resembling an ‘SUV.’ OMG, what a slam. The most underwhelming ‘reveal’ ever.

    • Dale
      Mar 17, 2019 at 9:34 pm

      Tesla always was, of course, an inside joke. This is evident from the names of their offerings:

      S-3-X-Y

      Sexy, maybe. Credible? Maybe not.

      But SpaceX is looking very promising.

  4. Gorbachev
    Mar 15, 2019 at 9:33 pm

    Unreal what the man has done.Started major car co.

    from zero. I am rooting for him.

    • andy
      Mar 15, 2019 at 9:41 pm

      Agree. We also have two major taxi hailing companies, five major scooter companies, and 152 major cloud companies within 5 mile radius.

    • California Bob
      Mar 16, 2019 at 9:55 am

      “Unreal what the man has done.Started major car co.”

      Um, no:

      https://en.wikipedia.org/wiki/History_of_Tesla,_Inc.

      Musk came along later and kicked the ‘starters’ of the company out.

    • curiouscat
      Mar 16, 2019 at 11:01 am

      Yes. Impressive. Started a car company from scratch. Reminds me of John Delorean. Can’t wait for an updated version of Back to the Future.

    • yngso
      Mar 16, 2019 at 11:35 am

      The only things major about it is the overvaluation and the hype.

  5. andy
    Mar 15, 2019 at 9:33 pm

    Enron Mask can sell alloy wheels for $5,500. Dont have extra $5,500? You get plastic wheel covers on $45K car. The man is a genius.

    • ian
      Mar 16, 2019 at 2:23 am

      I guess he is really, to figure out just how dumb people are and exploit it, not to mention riding the tax subsidy bonanza. An electric vehicle is no more than a city runaround and for that i get it, but who would pay 45k for this purpose other than a nutter? And 100k for a model S runaround? Certifiable.

      • alex in san jose AKA digital Detroit
        Mar 16, 2019 at 3:21 am

        Isn’t there a quote that goes something like, “No one ever went broke underestimating the intelligence of the American public”?

        • 91B20 1stCav (AUS)
          Mar 16, 2019 at 2:47 pm

          Alex-believe H.L. Mencken’s quote was ‘taste’, rather than ‘intelligence’, but the two do seem to be inextricably linked (one must not, however, conflate ‘clever’ with ‘smart’. it appears there is a surplus of the former and a paucity of the latter, these days…).

          Regarding Tesla’s management, it now looks to be taking a page from our nation’s current executive style, i.e. : “…ready, shoot, aim…”. May we all find a better day.

      • intosh
        Mar 17, 2019 at 1:45 am

        I know someone who paid $76K CAD for his Model 3. The picture of the car is his Facebook profile picture. Well worth the price.

        • Mean Chicken
          Mar 18, 2019 at 10:49 am

          Actually I agree with the price, when I crunch the numbers it comes out to about $1M each if I were to attempt the same.

      • Ed
        Mar 18, 2019 at 9:23 am

        Ian – My guess is that the average Tesla owner is significantly more intelligent and successful than the average American.

        I am rooting for Tesla because I genuinely believe Musk is building an innovative, disruptive product that has the potential to improve the world. Tesla has been a force that has pushed every major auto maker to product a quality EV.

        The oil and automotive industries have been far too powerful for far too long and there dominance is coming to a screeching halt. I will likely purchase a Tesla or another EV because the technology is much smarter, and I will take joy in taking part in the collapse of the car companies, oil industry, car dealerships, and every other ancillary business that profits off of the inefficiently and destructiveness of gas powered vehicles.

        Tesla inspires people because they serve as an example that the status quo can be knocked down by doing the right thing and not just chasing profits.

  6. Mar 15, 2019 at 9:39 pm

    I’m sorry, Mike R, you’re completely wrong and confusing us with facts. ;) To add to your narrative and to take two comments from InsideEVs’ Model y reveal livestream:

    “Tesla’s margins should be healthy over the next few years…” (Joe Martin with 8 upvotes and 2 downvotes)

    “Likely tonight’s reveal of the Tesla Model Y all-electric sport compact-SUV/CUV will going foreword[sic] become the comparative reference benchmark for all other EVs in that class … Model Y reveal will be a bad night for the anti-Tesla crowd but they do gain something… a new Tesla model they can gibe against (timing, price, demand, production supply, etc). Should hold them over till the Tesla Truck reveal later this year.” (CDavis, many upvotes)

    I particularly like “reference benchmark for all other EVs in that class”. ROFLMAO

    • KMOUT
      Mar 15, 2019 at 10:11 pm

      Cash hemorrhagic vanity project at the cost of the middle class taxpayer.

      • Duke De Guise
        Mar 16, 2019 at 11:27 am

        As a middle class taxpayer, I feel honored to subsidize the virtue-signalling and luxury tastes of “the best and brightest,” who are so superior to me and my lowly ilk.

        Please, sir, give it to us again, but harder…

        • Bill from Australia
          Mar 16, 2019 at 10:44 pm

          I can help you there, please bend down.

        • Niko R.
          Mar 18, 2019 at 1:53 pm

          I’ve interrupted my wife’s WFH teleconference with my hysterical laughter on this comment.

      • Ed
        Mar 18, 2019 at 9:28 am

        KMOUT – Gas powered vehicles are more heavily subsidized by tax payers. Who do you think pays for the roads and foreign wars that guarantee cheap gasoline and millions of miles of inefficient highways?

  7. Gandalf
    Mar 15, 2019 at 9:52 pm

    As much as people like to laugh at Musk these days, and predict the doom of Tesla, you have to give him credit for boosting the profile of electric cars, and at least trying to manufacture them in the U.S.

    After Tesla is dead and buried, 80-90% of electric cars in the world will be manufactured in China. Just like cellphones, laptops, TVs, and solar panels. Things are already headed well in that direction. Berkshire Hathaway invested in one of those companies

    So let’s all keep laughing at crazy Elon…. ha.. haha…. ha…..???

    • Mar 16, 2019 at 3:38 am

      I’m not American, Gandalf, so there’s no tug of patriotism there; when it comes to cars, I’m a committed agnostic. For such as me, Musky is pure comedy gold, long may he trip over his tongue! :)

  8. AJA
    Mar 15, 2019 at 10:39 pm

    Tesla is turning out to be a huge Ponzi scheme.

  9. Bobber
    Mar 16, 2019 at 12:30 am

    The Saturn-sedan-based Model 3 killed them. Consumer Reports put the nail in the coffin. Resale value is gone. Quality and service are questionable. I think Elon Musk got caught up in the fame and took his eye off the ball, smoking weed in public, calling people pedophiles, disrespecting the SEC, and such. Another year of self-destruction and he’ll be in the league of Joey Buddafuko, Tonya Harding, Jeff Skilling, Pee Wee Herman, etc.

    • RangerOne
      Mar 16, 2019 at 10:50 am

      The reality is though the company would be fine if they could make a profit on a $35k model 3. Inspite of Musk making a ton of mistakes.

      • Bankers
        Mar 16, 2019 at 11:33 am

        If there is a market at that price, I suppose there is. A lot of costs are material and startup, so you have to be asking who is being subsidised and how, and will receive longest in the competition. That goes from rates policy, tax, direct state support etc. The Germans say they could not make a Tesla in basic costs at what Tesla is doing, even using eastern European labour, and the Chinese are ahead in unit price but not in range and probably not in electronics package. The Leaf has the highest number produced so far. So it is a mixed picture and I would not jump to any conclusions. The shorter ranged Chinese roughly eq. ( probably inferior) of a Tesla go for around 20k I think, the Leaf in US is around 35k, but that is very rough and you would have to have a good look at specs. Here you have expected sales 2019 ( might be off who knows)

        https://cleantechnica.com/2019/02/18/top-10-best-selling-fully-electric-vehicle-brands-in-2019/

        (Try cleantechnica.com/2018/01/29/cheapest-electric-cars-available-comparisons-thoughts/ for some rough price comparisons)

        So I supose we will see if Tesla manages to bring down the price and survive financially with low margin, if it can do that at the right rate to keep the market it hopes for.

    • Hunter Thompson
      Mar 16, 2019 at 12:18 pm

      I love the way everyone focuses on Musk smoking weed.

      I’m old enough to remember an era when most people who got promoted enough in a company to have and office, had a bar in that office. The TV show Madmen captured that rather well I thought.

      Likewise, nobody asks if the head of GM for the list of prescribed medications he/she is taking.

      I don’t like Musk, and I wouldn’t invest a penny into his companies. They only work when given huge government contracts and subsidies (Remind me to write my congressman about why my tax dollars go to Musk!). But, its rather unfair that people fixate on the fact that, OMG, Musk was seen smoking pot in a place where to do so is as legal as it is for VP to have a bar in their office. I continue to have the impression that as technology has advanced the intelligence of its users has declined. Five minutes on the internet is very good proof of that!

      • Ed
        Mar 18, 2019 at 9:34 am

        Hunter – Tesla is one of the few American car companies that hasn’t declared bankruptcy and been bailed out by the gov’t.

        Every vehicle has been heavily subsidized by the tax payers when including bailouts and tax breaks. That doesn’t include the massive tax subsidies all major oil companies get.

        The reason Tesla gets bad press is because they are a legitimate threat to the establishment. What do you think would happen to the economy if everyone started driving EV’s? EV’s pose a giant threat to several major industries and the powers at be will do anything possible to avoid mass adoption.

  10. Harvey Cotton
    Mar 16, 2019 at 3:53 am

    Hyperloop and The Boring Company make Tesla look like SpaceX.

    • yngso
      Mar 16, 2019 at 11:46 am

      Yup, Elon should stop trying to reinvent the wheel or automobile, and focus on wher he can be ahead of the o¿pack and have fun.

  11. Lisa
    Mar 16, 2019 at 6:49 am

    Awful lot of parallels in the consequences for the US population from POTUS “decision making chaos”. Some one once had an idea, now no one even has a clue, on what to do, when to do, and how to do it.

    • 91B20 1stCav (AUS)
      Mar 16, 2019 at 3:05 pm

      Lisa-check! When the majority of players no longer consider anything but next quarter’s payoff to be important, the majority of players become clueless, spouting the tired cliché ‘who knew?’, as an explanation for the growing wreckage. A better day to us all.

  12. Unamused
    Mar 16, 2019 at 7:04 am

    =>Reversals of strategy reflect managerial and planning shortcomings.

    Severe shortcomings, and terminal. But whose shortcomings are they?

    =>Never once did it name the guy at the top.

    Of course not. The illusion of adequacy must be maintained, so the evasions and the gaslighting must continue.

    “A tyrant father will have liars for his children.”

    Robert Ingersoll

  13. Xypher2000
    Mar 16, 2019 at 10:21 am

    Ponzi scheme unraveling…

  14. Unamused
    Mar 16, 2019 at 10:38 am

    Tesla may be destined for failure, but Elon has been wildly successful, which only goes to show that he doesn’t have to be smarter than the other industry executives: he only has to be smarter than his investors.

    Dishonesty may not be the best policy, but it usually seems to work rather well, which probably accounts for its widespread popularity.

  15. Max
    Mar 16, 2019 at 11:02 am

    So much pessimism on this board. Have any of you ever bothered to drive s Tesla or talk to owners? I have and can tell you it’s an incredible product and feat of engineering. I have yet to meet an unhappy owner, but I concede there may be some out there. Nevertheless satisfaction rates are much higher than ICE cars.

    Is musk flawed? Yes! Are the execs at big-auto flawed? Certainly!

    Tesla has the auto industry on its heals. That’s great news for consumers. Who cares if Tesla wins or looses. We as the consumer win in the end. And Musk will be in the history books regardless of Tesla’s future.

    To all the naysayers I say go find something useful to do with your life instead of being a couch potato critic.

    • njbr
      Mar 16, 2019 at 12:06 pm

      Arrogance begets spite.

      Now where have I heard the comment “Only I can fix it”, followed by much non-fixing?

      But the true believers still believe.

    • Ed
      Mar 18, 2019 at 9:38 am

      Max – I totally agree with you. Tesla produces the best cars by a wide margin and is a disruptive force. The negativity is being generated by the establishment in the mainstream media. The oil and auto industries see a legitimate threat and will do anything to protect their bottom lines.

  16. nick kelly
    Mar 16, 2019 at 11:08 am

    Where will the electricity come from in China to power all those EV’s.

    The boosters will all say Solar but for years mainly from coal.

    • Kent
      Mar 16, 2019 at 12:13 pm

      China is building more nuclear power plants than the rest of the world combined.

      • Ra
        Mar 16, 2019 at 12:20 pm

        Trump also had to go all protectionist on imports of solar panels from China because they make them much cheaper than the Americans can.

      • nick kelly
        Mar 16, 2019 at 12:25 pm

        China is # 1 in coal NOW and building fast. Roughly 70% of the energy consumed in China is obtained from coal, making it one of the most coal-reliant countries in the world. …

        The approvals to build a coal plant in China are about the same as building a house here.. (the guys across the street have been delayed for a year in case the wreck they needed to tear down had asbestos.)

        Enter: ‘new coal plants’ to find out about the coal boom there.

        Given China’s concern for safety and pollution the nuclear news may be even more alarming. There is no equivalent of an Environmental Impact Study for anything.

        • njbr
          Mar 16, 2019 at 12:37 pm

          Coal is down to about 60% now…

          …..Over the last decade, China’s investment in renewable energy and natural gas has surged. In 2017, almost half of global renewable energy investment came from China, totaling $125.9 billion. This is more than double the $53.3 billion that China invested in renewables in 2013. China is becoming the largest market in the world for renewable energy. It is estimated that 1 in every 4 gigawatts of global renewable energy will be generated by China through 2040.

          https://chinapower.csis.org/energy-footprint/

        • nick kelly
          Mar 16, 2019 at 3:51 pm

          Read the Chinese govt link. After a slew of happy thoughts it cut to the chase: ‘the govt is committed to increasing non- fossil fuel to 20% by 2030.’

          So the CCP itself is telling us China’s main power source in 2030 will be coal (it is far from well supplied with accessible Nat Gas, being a major importer.)

          Given China’s growth this means more coal plants.

          A non Chinese govt source confirms this:

          CoalSwarm published a report on September 26 2018 warning that 259 gigawatts of coal power capacity – equivalent to the entire coal power fleet of the United States – is being built in China despite government policies restricting new builds.

          This blog reported last month that China was building 46 gigawatts of coal power that had been shelved or suspended, and which was discovered by CoalSwarm through an analysis of satellite imagery.

          The new estimate by CoalSwarm takes the 46 gigawatts found by satellite imagery and adds other projects in the pre-construction/construction phase, as well as 57 gigawatts of shelved projects that seem likely to go online in the near future.

          Chinese gov stats are notorious for manipulation. In this case it seems to have just lied about coal plants.

          Although unrelated to energy the CCP’s statements about the the world’s largest concentration camp for an entire people are one guide to its veracity.

      • Bet
        Mar 17, 2019 at 4:53 pm

        Drove by two of them yesterday on a 120 Mile drive from Beijing to Tanjain Plus some of the most genourmous coal plant stacks I have ever ever seen. That sucker dwarfed the high rises. Looked like a tower from Sauron. In the heavy polluted skies it’s silhouette looking like a hair raising menace

        • Mean Chicken
          Mar 18, 2019 at 12:37 pm

          Yes, the world needs to offshore everything to these low wage countries since their production costs are lowest.

          Consider; there’s enough unexploited wildlife habitat remaining in Africa to keep this strategy going for at least a couple more decades, probably longer if we can continue subsidizing offshoring. Divide and conquer, offer them a few EV’s to sedate restlessness. As long as everyone is kept entertained with convincing narrative, the decades will slip by.

    • njbr
      Mar 16, 2019 at 12:29 pm

      Yes the dirty power plants are an issue, but…

      ,,,,Based on calculations from iCET, the Chinese fleet
      average GHG emission rate for 2009 for major
      domestic and multinational car manufacturers was
      about 179g/km or about 219 g/km assuming that
      upstream emissions account for 18 percent of total
      GHG emissions. Thus, in five of the seven regions
      shown above, the Nissan Leaf GHG emissions are lower
      than the 2009 Chinese fleet average.

      http://siteresources.worldbank.org/EXTNEWSCHINESE/Resources/3196537-1202098669693/EV_Report_en.pdf

      But the percentage of power in China from green sources rose from 18% in 2009 to 26% in 2017. For reference the US was at 18% in 2017.

      As the green nature of the power increases, the environmental advantage of the EV increases.

  17. yngso
    Mar 16, 2019 at 11:58 am

    The fundamental problem is Elon’s enormous ego fed by former successes. He shoudn’t have tried to fight the giants who have been making cars for many decades, but provided brilliant electech to them.
    Every analyst with two working brain cells has predicted a recession in a tear or two. Oe of the auto giants may pick up Tesla for a song if it has something they need.

  18. Enzo
    Mar 16, 2019 at 12:04 pm

    I haven’t watched a Formula E race yet this year, but I still haven’t heard anything about Tesla competing there. OK, its not impossible to build and sell cars without a race team. But ….

    First, manufacturers have successfully used that as a part of marketing higher priced vehicles. Ferrari is the obvious example. If you want to create an image that makes people want to plop down $60-80k for a car, the publicity around racing is one way to do it.

    It would seem especially true in a new field of technology like EV. Prove the concept where people can see it…… on a race track.

    Second, racing is not just about marketing, but also about development. If you want to test your development where you are pushed to your limits, then racing is a way to do it. You find out what works and what doesn’t work.

    Third, the one thing that is obvious about watching any Formula E is that you very quickly learn that EV’s are not just about Tesla. Mercedes is there. Audi is there. I think Ferrari helps a team out but doesn’t race under their own brand. If the Tesla fanboys and fangirls think that supporting Tesla is the only way to support EV’s, then a Formula E event quickly tells a spectator that EVs will be around whether or not Tesla fails. What you see very quickly is that there are lots of other companies heading into EVs, and that they are willing to go racing to both develop and market their EVs.

    Of course, the sneaking suspicion when you see a highly hyped EV company missing from something like Formula E is that they know they couldn’t compete. While a big company can afford to come in last place and then just say “we are hear to develop the technology”, Tesla might not be able to do that. It would be very embarrassing for Tesla to get lapped a couple of times in what are relatively short races.

    The thing about racing is that you have to show up on the given day and compete. You can’t just say “hey, our factory didn’t deliver our race car on time, so can we put off the race for a couple of months.” A race team has to show up on the day of the race and race what they can bring. Tesla being missing makes it seem like they know they can’t do that and that if they tried the results would be embarrassing.

    • char
      Mar 18, 2019 at 9:01 am

      Racing is not a good setting for electric cars. The most important differentiator is the weight of the battery. Going from 100% to 0% instead of 90% to 10% will save a lot of weight but the battery will be gone after a race. Not an issue when racing when tires also cost $4k a race but it is a giant problem on the road. Making a very light single race battery isn’t hard but is not useful for road cars

    • nick kelly
      Mar 18, 2019 at 1:50 pm

      Ferrari is an extreme outlier in autos. It sells de-tuned racing cars to the public and has no interest in selling them a $60 K car. The new ones begin at over 250 K.

      Note that although majority owned by FCA the latter doesn’t use Ferrari to burnish the image of their mass market offerings. It would prefer the public not even connect them.

      Although I think the days of ICE- racing improving mainstream ICE cars are behind us, this may not be true of E cars. These will largely focus on endurance, i.e, range.

      We can assume that if relevance to the mass market is desired, there will be no equivalent of the ICE pit stop for gas ( as well as tires) unless it’s a charging stop for a long distance rally.

      It’s conceivable to allow a E race with battery swaps but not of much relevance to mass sales.

  19. CoCosAb
    Mar 16, 2019 at 12:17 pm

    Hello.

    Tesla is just another Socialist Corporation that, since the start, can only survive if the STATE, via taxpayer exploitation, awards “him” (corporations are “humans” in USA!!!) with subsidies.

    Without this Socialism Tesla, and some other Socialist goodies like ZIRP/QQE and very soon NIRP, “he” cannot survive.

    They build vehicles for a very tinny market – the wealthy people – and that market as a very narrow range of buyers, that have many other better choices for cars.

    • char
      Mar 18, 2019 at 9:03 am

      It is a car company, they are all state connected.

  20. Laughing Eagle
    Mar 16, 2019 at 2:05 pm

    Nevertheless satisfaction rates are much higher than ICE cars. I question this fact as to where you found it. Maybe it was Consumer Reports saying Tesla owners would buy their car again compared to other brands. Maybe for the X and the S, but not the 3. Anyone buying a Tesla is taking a risk this company will be around in 5 years and then where are they going to get parts. The ICE is not going away as all the techy changes to engines in the past years, as now a four cylinder is as powerful as the old 6 cyl, and gets better gas milage.
    Without Musk’s hype this company would not exist. He cannot produce enough of his 3 car brands and now he wants to introduce the Y car.
    There are too many reports on the internet of faws with its 3. And to fix any car in an accident, it is very expensive.
    The EV is still in the hype stage in my opinion, because these electric engines will never see 300,000 miles like a ICE engine, and also where are all those used batteries going to be disposed, as they are not recylable like ICE cars. EV cars are much more expensive than any ICE product for the long run.
    No question the S is a great car, but it is only for the rich, as they will trade every 3 years, not having to worry about its long term problems, which will be the used car market buyer.

  21. Remy Lebeau
    Mar 16, 2019 at 7:58 pm

    There is a lot of Must hating across the internet. I take him at his word when he says his whole goal was to push renewable transportation / energy. Kudus on him for duping wall street to value the company for more the GM (that had just gone BK BTW) and getting subsidies, just like the major oils Cos, to further his agenda. He did open source all the Tesla patents.

    He did bring the rest of the auto industry, kicking and screaming, in to the future.

    I suspect, he will not be involved in Tesla much longer. At this price Apple, with their pile of cash, will most likely take over, and kill the company.

    • smallworld
      Mar 16, 2019 at 9:52 pm

      Electric cars were very available in the 1920’s, there are still many around as collector items, they look like tall coffins with lots of windows.
      Portable cheap energy is what killed the electric car, e.g. cheap oil.

      The future?

      Remember that USA has +500 years of coal reserves the largest on earth, thus whoever controls the future USA soil will be the last man standing with portable energy income.

      China has entire electric city’s like kunming, even +5 years ago they did away with gas motorcycles, now everybody drives an electric skooter, you can’t hear them coming, and only the very rich can buy a car. Lot’s of the electricity comes from hydro. What I’m saying is that lots of Chinese citys are +50 years ahead of the USA; The USA is filthy and crowded/congested.

      Then there is Japan with the fastest trains on earth, and they’re working on underground trains that will travel fast than most aircraft in the USA. Clean beautiful city’s.

      IMHO Tesla is a scam, and Musk is PT-Barnum, and lots of people say here know about history of USA and its con-artists and don’t fear to point it out in public.

      • Bet
        Mar 17, 2019 at 4:45 pm

        I just left Beijing yesterday. Yes I agree China going to eat our lunch. With green energy and prolly much else. But as for clean cities.? On the ground perhaps. My lungs are very happy to have left. I could cut that dirty brown air with a knife and it blankets for hundreds of miles. On to Japan next. Wonder if I will end up glowing in the dark?

  22. Chris Garbor
    Mar 16, 2019 at 10:21 pm

    I always thought Enron Musk and Elizabeth Holmes would have been a great couple.

  23. Nicko2
    Mar 17, 2019 at 4:53 am

    So much irrational hate of Musk and Tesla…..I recall the same attidue directed against Apple.

    • Unamused
      Mar 17, 2019 at 8:57 am

      Nobody shorts Tesla stock out of hatred, Nicko. It’s mostly just a ravenous hunger for profit. But don’t take my word for it. Ask them yourself.

      Don’t take it personally. It’s just business.

  24. Chris Garbor
    Mar 17, 2019 at 7:41 am

    Musk realizes Tesla’s days are numbered and doesn’t want to go down with the sinking Tesla-tanic. He is trying to be forced out of Tesla, that is before Tesla implodes so he can point blame elsewhere and save his sociopath ego. Look for more SEC violation tweeting and pot smoking podcasts.

  25. Laughing Eagle
    Mar 17, 2019 at 6:15 pm

    I would not buy a Tesla product as I feel there product will lose more resale value over time than most cars.

  26. WSKJ
    Mar 18, 2019 at 11:22 am

    I have read the post and most of the commentary, some twice.

    Unmentioned in what I have read, herein above, has been the Tesla lithium battery factory (“the giga-factory”) which is in the State of Nevada, U.S.A., and is in production. Production is in partnership with Panasonic, and includes the PowerWall, and the PowerPack. An article at Electrek.com is informative.

    I have not been a Tesla fan, but as things now stand, a family member is in basic materials (=disclosure), and thus I have looked for bright spots under the Tesla umbrella. That the factory does exist, and is in production, was observed on a visit by said family member.

    As a U.S. citizen, I see the lithium battery factory as a bright spot in a country that has largely given up manufacturing. Ask yourself whether you own any device with a rechargeable lithium battery- I am guessing that you do.

    (The story of Goodenough, the inventor of the battery, is a big story. He says that he still (at age 92) has big ideas underway.)

    Using my online Dashboard (Apple) dictionary, I find that “battery” comes from Latin, via French and Middle English, and the original sense was ‘metal articles wrought by hammering’, giving me rein to designate gold a battery of value….

    For storage of electric power, the world has moved to the lithium battery as the preferred mode. If Tesla shares get cheap enough without Tesla going under, I should probably buy some.

    Wolf, the usual thanks for keeping us up to date on Musk’s Tesla. Hey, keep in mind that he’s keeping his options open: when there are difficulties with walking on water, we go UNDER the water (the Boring Company). lol

  27. Jayq9
    Mar 19, 2019 at 9:46 am

    Not a Musk acolyte by any stretch of the imagination however I have to share an observation or two on tesla, specifically the model 3.

    Just visited the Tesla site and if I pick the model 3 with no options, the price is in fact 35k + TTL. By no options I mean taking the base RWD setup, the black paint (all other colors are additional), and skipping on auto-pilot.

    Now that Tesla may lose money at that price or make less than its 20% margin goals I can believe. The only way I’m seeing the car go for 50k is if a) you choose the top of the line, dual motor AWD performance package and b) full auto-pilot capabilities.

    Does Tesla have hidden charges or usual dealer tricks where the 35k turns into a 50k car by virtue of the car dealer vacation fund needing funding?

    It’s easy enough to try just by going to the Tesla site and configuring the model 3 yourself.

    • Jayq9
      Mar 19, 2019 at 9:50 am

      P.S…regarding the hidden charges…is it that they are using the purported gas savings & tax credit to present a 42k car as being sold for 35k?

      Obviously gas savings vary depending on mileage and price of gas while the tax credit is going to only be useful if you have a tax liability and up to the amount of said liability.

    • nick kelly
      Mar 19, 2019 at 10:10 am

      No doubt the site says that BUT has anyone ever got one for that?
      It can be very difficult to get the base advertised sticker model of almost any car. As someone put it: the base model is glued to dealer’s floor if there at all. Think of it as an unprofitable vehicle to carry profitable options.
      Get back to us if you get one for 35 or if you know anyone who has.

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