Shares of Tesla Motors Inc (NASDAQ:TSLA) surged today, climbing nearly 7% in midday trading after the automaker’s fourth quarter deliveries were reported. Then shares quieted down after Tesla delivered the second bit of news in a one-two punch that moved the markets. Some bad news was served up along with the good in the form of a recall in connection with the garage fire in November. Early headlines on that so-called recall, however, were misleading.
Tesla Motors Inc (NASDAQ:TSLA)’s deliveries rose an astonishing 29% during the fourth quarter. According to Tesla Vice President Jerome Guillen, they delivered 6,900 cars during the fourth quarter—enough to beat their guidance of 6,000 vehicles for the quarter by 20%. He made the announcement today at the North American International Auto Show.
Stone House Capital Partners returned 4.1% for September, bringing its year-to-date return to 72% net. The S&P 500 is up 14.3% for the first nine months of the year. Q3 2021 hedge fund letters, conferences and more Stone House follows a value-based, long-long term and concentrated investment approach focusing on companies rather than the market Read More
Tesla issues adapter recall
Tesla Motors Inc (NASDAQ:TSLA) has taken a proactive approach in fighting back against concerns about the risk of fire in its Model S sedan, first with a software update and then with upgraded charging cables. Tesla reportedly sent a letter to the National Highway and Transportation Administration late last week informing the agency of the recall. The NHTSA lists the recall as being on a little over 29,000 of Tesla’s vehicles, but in actuality, this is nothing but the same story reported last week. Tesla is mailing new upgraded charging cables to Model S owners. The vehicles themselves, are not technically being recalled, even though this is how the NHTSA has listed this fix, according to CNBC.
But has anyone noticed that there haven’t been any Tesla fires in two months? Or that General Motors Company (NYSE:GM) recalled nearly 400,000 pickup trucks after eight fires? Apparently not.
Tesla remains Morgan Stanley’s top auto pick
The lack of news and outrage about the fires in GM Silverado and Sierra pickup trucks is very telling. While Tesla Motors Inc (NASDAQ:TSLA) had three fires—two in accidents and one while a Model S was charging—GM has had eight fires and pushed out a massive recall. Apparently having a fire in a gasoline-powered vehicle is so common that the headlines just don’t grab attention like headlines about a fire in a Tesla do.
Morgan Stanley analyst Adam Jonas and his team remind us that there are approximately 25,000 Model S sedans on the road which have driven 170 million miles. With three fires, that’s one every 57 million miles, compared to the U.S. average of one every 15 million miles.
Moving past the Tesla fires
They also report that while many investors were asking them about the Tesla fires, no one bothered to ask them about the fires and massive recall General Motors Company (NYSE:GM) had to do, which involved 370,000 of its 2014 pickup trucks. Of course Tesla Motors Inc (NASDAQ:TSLA)’s recall is much smaller, but it includes pretty much all of the vehicles it has delivered. Bears will undoubtedly jump on this part of the story since General Motors Company (NYSE:GM) delivered nearly 10 million vehicles in all of 2013, making that 370,000 number pale in comparison to how many of its vehicles are on the road.
However, Jonas and his team say as long as the fires do not affect Tesla Motors Inc (NASDAQ:TSLA)’s total addressable market, then they were nothing but “background noise to the most exciting auto story in generations.” They say there could be “any number of reasons” investors decide not to buy shares of Tesla at their current levels, but they don’t think that the risk of fire is one of them.