We remain short shares of (and long put options in) Tesla, Inc. (TSLA), which I consider to be the biggest single stock bubble in this whole bubble market—a company so landmine-filled that I think it can implode at any moment regardless of what the broad market does. To reiterate the three core points of our Tesla short position:
1) Tesla has no “moat” of any kind; i.e., nothing meaningfully or sustainably proprietary.
2) Tesla loses a huge (and increasing) amount of money despite relatively light competition but will soon be confronted with massive competition in every aspect of its business.
3) Elon Musk is extremely untrustworthy.
In Tesla’s long history of insane events, August had to be the most insane month ever, thanks to a completely fictional series of tweets Musk posted about a supposed $420/share bid to take the company private, thereby triggering an onslaught of lawsuits (and a billion-dollar plus liability), an SEC investigation (on top of an existing SEC investigation which may be preventing the company from raising desperately needed capital), and a tearful interview with the NY Times in which a guy living on a $72 million estate and commuting to work in a G650ER confessed to extensive drug use, admitted his “go private tweets” were a fabrication, and—being the pathological liar that he is—couldn’t even avoid lying in this “confessional interview” when he said that after attending his brother’s June wedding in Spain he immediately flew back to Tesla’s factory when in fact he spent several more days partying in Spain before flying to Ireland to visit the set of “Game of Thrones”, a fictional series comprised of devious, murderous characters who collectively have “a magnitude” (to use a favorite Musk expression) more integrity than the CEO of Tesla.
(As an aside, for those of you who still fantasize about a Tesla go-private deal at the roughly $80 billion fully-diluted enterprise value that Musk’s fictional Tweet implied, keep in mind that this fall nicely profitable Volvo—with a great brand selling 2x as many cars as Tesla and multiple upcoming electric models-- plans to IPO later this year at a valuation of $30 billion.)
Concurrent with the Musk “fake go-private craziness,” Tesla safety and financial whistleblower Martin Tripp posted on Twitter a substantial amount of damning photographic evidence before deleting his account the next day at the behest of his lawyer, and then the next day a new whistleblower emerged, accusing Tesla of illegally wiretapping its employees and failing to report the theft of $37 million of raw materials (as well as—presumably non-deliberately—employing a substantial drug trafficker).
Early in August Tesla released a horrendous Q2 financial report, showing a GAAP loss of $717 million and free cash flow of negative $812 million, forcing a major slash in projected 2018 capex for this manufacturing-intensive alleged “hyper-growth company.” (And recall that in July a memo leaked to the Wall Street Journal revealed that Tesla is so hard-up for money that it’s begging its suppliers for retroactive rebates, calling the needed cash “essential to its continued operation.”) On the Q2 conference call following the earnings release there were multiple anomalies and inconsistencies; Seeking Alpha published an excellent summary of several of them, and here’s a good summary of the 10-Q. And regarding those 5000 Model 3s Musk bragged about producing during the last week of the quarter, have a look at this. Meanwhile (courtesy of Twitter user @temp_worker) the most “exponential growth” at Tesla may be the number of mechanic’s liens filed against it:
Also in the Q2 earnings release was Tesla’s claim that that it will be GAAP profitable in Q3 & Q4 barring (and Musk said this on the call three times, as if he was trying to tell us something) a “force majeure.” However, I’ve run numbers every which way I can and the best I can come up with for Q3 is a GAAP loss of somewhere between $100 million and $300 million depending on the market for ZEV credits, and—as Models S&X demand continues to erode (see below) and a flood of competing EVs erodes the ZEV credit market—Q3 will be the best future quarter Tesla ever sees. Here’s a similar conclusion from one of the best Tesla analysts on Seeking Alpha.
Perhaps the most important ongoing Tesla story is the seeming evaporation of North American Model 3 backlog, at least for the versions currently being sold with a starting price of $50,000. Tesla has now abandoned its “reservation list” and thrown open orders to all comers while (as evidenced in on-line forums) reducing the delivery time to as little as one to two weeks, and fresh credit card data from research firm Second Measure indeed shows Model 3 demand to be a disaster, and here’s a great new overview from Seeking Alpha indicating the same. In fact, in July two giant lots in California were discovered holding thousands of Model 3s baking in the sun, some of which were covered with dust and seemingly unmoved for weeks. And this excess inventory is piling up despite the fact that-- according to a new leak given to Tesla fanboy blog Electrek-- Tesla is suffering through a Q3 Model 3 production miss.
Keep in mind too that after December 31st the Model 3’s (and all Teslas’) $7500 tax credits will be cut to $3750 for six months, then $1875 for six months, and then goes away completely. As this realization sinks into the minds of those awaiting the mythical $35,000 base-priced Model 3 (a car delayed multiple times already and now unavailable at least until the second half of 2019, if ever), look for an onslaught of additional reservation cancellations, as hinted in this fine article from the L.A. Times.
Meanwhile, the Model 3 continues to reveal itself to be a complete lemon; the latest survey from True Delta ranks it dead last among all available vehicles! In fact, even Musk finally admits the cars have a quality problem—good luck making money running a car company like this:
And when you do need service (and you will, regularly!) good luck getting it, with multi-week waits for appointments and multi-month waits for parts! And remember, almost nothing can be done in the Model 3 without a multi-step process on the touchscreen—not even changing the windshield-wiper speed, adjusting the air vents or opening the glovebox. Thus, operating a Tesla Model 3 may potentially be as dangerous as texting while driving.
And keep in mind that 2018 is showing a year-to-date decline in Model S&X sales vs. 2017, even before the widespread availability this September of the new Jaguar I-Pace electric SUV which received fabulous reviews (and handily beats Tesla in comparison tests) and is $13,000 cheaper than the Model X and $7000 less than the Model S, gaps that will widen substantially as Tesla’s tax credits phase out. In fact I drove the Jaguar yesterday and I can assure you that no one who drives it will say it isn’t much nicer than any Tesla:
And the Models S&X sales decline is also occurring before the near-term introduction of an onslaught of other luxury EVs in addition to the Jag—the Audi e-tron to be formally unveiled in September and available in Europe this winter and the U.S. next spring, the Mercedes EQC, also to be unveiled in September and available next spring, and the Porsche Taycan (previously called the Mission E), available late 2019. And all those cars (except the Porsche) will be priced significantly less expensively than the comparable Tesla even before their U.S. buyers enjoy the $7500 tax credit that will soon expire for Tesla, while the Porsche’s base price will be similar to that of the base Tesla Model S. Hmmm, Tesla or Porsche… tough choice!
Meanwhile Tesla continues to downsize its SolarCity division while a securities fraud case accusing Musk of using Tesla to bail out his (and his family’s) interests there proceeds; Zero Hedge included an excellent summary of the suit by Twitter user @TeslaCharts in this story about SolarCity’s latest retrenchment, which will undoubtedly help fuel that fraud case, as will this later story describing how Tesla sales people have no idea when the solar tiles or PowerWalls used to justify that merger will ever be available. (Remember that when Musk was promoting that merger he used fake solar tiles on a fake house at a movie studio… How appropriate!)
And hey, remember when Musk called the heroic Thai cave diver a “pedo” after the guy said Musk’s stupid “mini-sub” was useless? You probably thought that incident was over (and so did I!), but with Musk the fun never ends—he revived the feud a few days ago on Twitter:
Well guess what, Elon? He is suing you!
Meanwhile, Tesla is increasingly besieged by a wide variety of lawsuits for securities fraud, labor discrimination, worker safety, union-busting, sudden acceleration and lemon law violations, and new ones appear on a regular basis, while the list of departing executives is so long that Jim Chanos recently said that the only other times he’d seen anything like it was during the waning days of Enron and Valeant. Congratulations, Tesla: you’re a company in great company!
So here is Tesla’s competition in cars (note: these links are continually updated)…
Jaguar Electric IPace SUV Available Summer 2018
2019 Jaguar XJ to be reborn as high-tech electric flagship
Jaguar Land Rover will boost spending to $18 billion to fund EVs
2019 Audi E-Tron To Charge Faster Than Tesla Supercharger Network
Audi e-tron Sportback in 2019 to be its second EV
Porsche Cross Turismo to be its second EV
Mercedes 2019 EQC To Be Unveiled This September
Mercedes Plans Electric S-Class to Challenge Tesla’s Flagship
Mercedes Wheels Out Electric Car Roadmap, Car And Battery Factories Everywhere
2019 Hyundai Kona Electric gets 250-mile range rating in the U.S.
14 new EV models by Hyundai-Kia by 2025
Chevrolet Bolt Offers 238 Miles On A Single Charge For $37,495
GM to introduce 3 more electric cars before 2020, battery cells at <$100/kWh
2018 Nissan Leaf: 150 miles for $30,875, 200+ mile model by late 2018
Nissan Leaf-based SUV coming in 2020
Volvo Polestar 2: 350-mile range, £30,000 starting price
Volvo To Start Selling Electric Trucks In 2019, Some Will Hit The Road This Year
VW will build EVs in 16 factories in zero emissions push
Volkswagen I.D. Crozz 311-Mile Electric CUV For $30,000-ish Before Incentives
VW’s All-Electric I.D. Vizzion Coming With 400 Miles of Range
BMW will export iX3 electric SUV to Europe, U.S. from China
BMW to have 25 electrified models by 2025
Ford plans $11 billion investment, 40 electric vehicles by 2022
Toyota, Mazda, Denso create company to roll out electric cars beginning 2019
Toyota to market over 10 battery EV models in early 2020s
Infiniti will go mostly electric by 2021
PSA will launch full-electric Peugeot 208 and DS 3 Crossback in 2019
ALL-ELECTRIC MINI COOPER COMING IN 2019
Smart Will Electrify Its Entire Line-up By 2020
SEAT's first electric car is due in 2020
Opel will launch full electric Corsa in 2020
2019 Skoda e-Citigo confirmed as brand's first all-electric model
Skoda planning range of hot all-electric eRS models
MG E-Motion confirms new EV sports car on the way by 2020
Aston Martin to create all-electric car brand
Fiat Chrysler bets on electrification for Alfa, Jeep and Maserati
Maserati to take on 'Porsche and Tesla' with Alfieri, new SUV and four EVs
Renault prepares to double production of Zoe EV
Rolls-Royce is preparing electric Phantom for 2022
Citroen preparing EV push with 80 per cent electrified range by 2023
Honda will offer full-EV or hybrid tech on every European model by 2025
All-electric Bentley four-door coupe to use EV tech from Porsche Mission E
Subaru to introduce all-electric vehicles by 2021
Ssangyong e-SIV concept previews 2020 EV
Dyson Moves Ahead on $2.6 Billion Electric Car Plan
235mph Lucid Air due in 2019 as electric BMW 7 Series rival
Borgward BXi7 Electric SUV Flies Under The Radar
Detroit Electric promises 3 cars in 3 years
SF Motors reveals two electric SUVs for 2019 with 300 miles of range
Two new electric cars from Mahindra in India by 2019; Global Tesla rival e-car soon
Saab asset owner NEVS plans electric car production
EVelozcity Raises $1 billion For EV Startup
Flush with new cash, electric-car company Faraday Future hopes for a fresh start
And in China…
Daimler & BYD launch new DENZA electric vehicle for the Chinese market
BAIC and Daimler to Build $1.9 Billion China Plant
Daimler and Baidu to Enhance Strategic Cooperation in Automated Driving
Volkswagen makes €15bn bet on electric cars in China
Volkswagen Group China’s mega-factory in Foshan will strengthen e-mobility strategy in China
VW signs deals for EVs, autonomous driving in China
Audi to launch 7 new energy vehicle models in China by 2020
GM China raises new-energy vehicle target to 20 models through 2023
Nissan & Dongfeng to invest $9.5 billion in China to boost electric vehicles
Toyota to Introduce 10 New Electrified Vehicles in China by 2020
Infiniti bringing EVs to China’s luxury car market
BMW will develop and produce electric Mini in China
Ford ramps up electric vehicle push in China
China's BYD tops global electric-car production for third year in a row
SAIC to spend $2.2 billion on EVs, connectivity, aftersales services
Honda debuts Everus electric car for China
Changan building large scale NEV factory
Mazda and Changan Auto join hands on electric vehicles
WM Motors/Weltmeister EX5 Electric SUV Launched On The Chinese Car Market
NIOS ES8 Electric Crossover debuts with half the Tesla Model X’s price tag
Geely invests $5 billion into new electric car factory in China
Chery Breaks Ground on $240M EV Factory in China
Chery's second EV plant open in Dezhou
Leapmotor’s electric car to hit the market in 2018
Alibaba-backed Xiaopeng Motors to raise US$2.7 billion this year
GAC Trumpchi to launch range-extended EVs
Guangzhou Auto To Launch Four New Electric Cars By 2020
Chinese carmaker Byton unveils its fully autonomous rival to Tesla's electric sedans
Chinese-backed electric car start-up Byton woos CES with model 40% cheaper than a Tesla
Great Wall Launches New EV Brand (ORA) In China
Singulato iS6 Electric SUV Debuts With 249-Mile Range
Singulato, BAIC partner to promote smart new energy vehicles
FAW (Hongqi) to roll out 15 electric models by 2025
JAC’s Electric Car Has A Range Of 500 Kilometers
ICONIQ to build electric cars in Zhaoqing with total investment of RMB 16 billion
Quianu Motor aims to grab share of US electric vehicle market
All-electric NEVS 9-3 sedans (nee Saab) being built in China
Youxia Motors raises $1.25 billion to start 2019 EV production
Wanxiang Gets China Electric Vehicle Permit to Make Karma Cars
Qoros Auto's new owner plans to be an EV power
JMC (Jianling Motor Corp.) Starts New EV Brand In China
Thunder Power electric cars at the Frankfurt motor show
Continental, Didi sign deal on developing EVs for China
Here’s Tesla’s competition in autonomous driving…
Tesla Ranks Last for Automated Driving
A Tesla self-driving blind spot that few are focusing on
Waymo is first to put fully self-driving cars on US roads without a safety driver
Jaguar and Waymo announce an electric, fully autonomous car
Waymo Expands Chrysler Self-Driving Fleet 100-Fold to 62,000
Uber, Waymo in talks about self-driving partnership
Lyft and Waymo Reach Deal to Collaborate on Self-Driving Cars
Cadillac Super Cruise™ Sets the Standard for Hands-Free Highway Driving
GM ride-hailing fleet would ditch steering wheel, pedals in 2019
SoftBank Vision Fund to Invest $2.25 Billion in GM Cruise
An Overview of Audi Piloted Driving
Updated 2017 Mercedes-Benz S-Class - first ride with autonomous technology
Nvidia to test fleet of robotaxis in 2019 with Daimler, Bosch
NVIDIA and Toyota Collaborate to Accelerate Market Introduction of Autonomous Cars
Volkswagen and NVIDIA to Infuse AI into Future Vehicle Lineup
Continental & NVIDIA Partner to Enable Production of Artificial Intelligence Self-Driving Cars
Bosch and Daimler join forces to market fully automated, driverless taxis by 2020
Intel’s Mobileye will have 2 million cars (VW, BMW & Nissan) on roads building HD maps in 2018
Volkswagen Group and Aurora Innovation Announce Strategic Collaboration On Self-Driving Cars
Toyota, Intel and others form big data group for autonomous tech
Toyota Adds $2.8 Billion to Software Push for Self-Driving Cars
Toyota Invests $500 Million in Uber to Get Self-Driving Cars on the Road
Nissan’s Robo-Taxis Will Hit the Road in March
Nissan and Mobileye to generate, share, and utilize vision data for crowdsourced mapping
Magna joins the BMW Group, Intel and Mobileye platform as an Integrator for AVs
Intel collaborates with Waymo on self-driving compute design
Fiat Chrysler to Join BMW, Intel and Mobileye in Developing Autonomous Driving Platform
Ford-Backed Driverless-Car Startup Argo AI Lures Talent
Ford to invest $4 billion in new self-driving vehicle unit
Lyft, Aptiv (formerly Delphi) partner on driverless ride-hailing at 2018 CES in Vegas
Lyft, Magna in Deal to Develop Hardware, Software for Self-Driving Cars
Hyundai, Aurora to release autonomous cars by 2021
Deutsche Post to Deploy Test Fleet Of Fully Autonomous Delivery Trucks This Year
Byton cooperating with Aurora on autonomous vehicles
Magna’s new MAX4 self-driving platform offers autonomy up to Level 4
Bosch Creates a Map That Uses Radar Signals for Automated Driving
Honda Targeting Level 3 Automated Driving By 2020, Level 4 by 2025
Groupe PSA’s safe and intuitive autonomous car tested by the general public
Baidu unveils autonomous driving platform backed by 90 global partners
Baidu plans to mass produce Level 4 self-driving cars with BAIC by 2021
BlackBerry and Baidu Partnering to Accelerate Connected and Autonomous Vehicle Technology
Tencent, Changan Auto Announce Autonomous-Vehicle Joint Venture
JD.com Delivers on Self-Driving Electric Trucks
NAVYA Unveils First Fully Autonomous Taxi
Fujitsu and HERE to partner on advanced mobility services and autonomous driving
Lucid Chooses Mobileye as Partner for Autonomous Vehicle Technology
First Look Inside Zoox’s Autonomous Taxi
Apple Is Focusing on Making an Autonomous Car System
Samsung, Harman gear up for self-driving automobiles
Mitsubishi Electric Develops Automated Mapping For Autonomous Driving
Hitachi demonstrates vehicle with 11-function autonomous driving ECU
DENSO and NEC Collaborate on Automated Driving and Manufacturing
Nuro’s Robot Delivery Vans Are Arriving Before Self-Driving Cars
Here’s Tesla’s competition in car batteries…
LG Chem targets electric car battery sales of $6.3 billion in 2020
LG Chem to build $1.8 bln EV battery plant in China
Samsung SDI Unveils Innovative Battery Products at 2018 Detroit Motor Show
SK Innovation building 20GWh of worldwide battery manufacturing capacity
New Toshiba EV Battery Allows 320km Charge in 6 Minutes
Daimler building eight battery factories
Panasonic Opens New Automotive Lithium-Ion Battery Factory in Dalian, China
Panasonic forms battery partnership with Toyota
CATL’s Chinese battery factory will be bigger than Tesla’s Gigafactory
CATL to set up battery cell manufacturing in Germany
BYD to quadruple car battery output with lithium site plants
GM inaugurates battery assembly plant in Shanghai
Honda Partners on General Motors' Next Gen Battery Development
VW Wants to One-Up Tesla With a Next-Generation Battery
Energy Absolute Plots Asian Project Rivaling Musk's Gigafactory
European Battery Alliance (EBA) is taking shape
ABB teams up with Northvolt on Europe's biggest battery plant
Chinese Battery Maker to Open Factory Next to Swedish EV Plant
Sokon aims to be global provider of battery, electric motor, electric control systems
BMW Group invests 200 million euros in Battery Cell Competence Centre
BMW Brilliance Automotive opens battery factory in Shenyang
BMW announces partnership with solid-state battery company
Toyota promises auto battery 'game-changer'
VW increase stake in solid-state batteries with $100M investment
Hyundai Motor developing solid-state EV batteries
Continental eyes investment in solid-state batteries
Wanxiang is playing to win, even if it takes generations
UK provides millions to help build more electric vehicle batteries
Rimac is going to mass produce batteries and electric motors for OEMs
Elon Musk Has A New Battery Rival (Romeo Power) Packed With His Ex-Employees
Bracing for EV shift, NGK Spark Plug ignites all solid-state battery quest
ProLogium Technology Will Produce First Next Generation Lithium Ceramic Battery For EVs
Here’s Tesla’s competition in storage batteries…
Panasonic
LG
AES + Siemens (Fluence)
GE
NEC
Hitachi Chemical
ABB
Saft
EnerSys
SOLARWATT
Sharp
Eaton
Kreisel
Leclanche
Lockheed Martin
UniEnergy Technologies
ENGIE
Blue Planet
Clean Energy Storage Inc.
Swell Energy
Younicos
Powervault
Schmid
24M
Ecoult
And here’s Tesla’s competition in charging networks…
EVgo Installing First 350 kW Ultra Fast Public Charging Station In The US
Tritium’s First 350-kW DC Fast Chargers Coming To U.S.
Porsche plans network of 500 fast chargers for U.S.
BMW, Daimler, Ford, VW, Audi & Porsche form IONITY European 350kw Charging Network
E.ON to have 10,000 150KW TO 350KW EV charging points across Europe by 2020
Enel kicks off the E-VIA FLEX-E project for the installation of European ultra-fast charging stations
Europe’s Allego “Ultra E” ultra-fast charging network now operational
Allego & Fortum Launch MEGA-E High Power Charging network for Europe’s Metropolitan areas
Chargepoint Europe Gets $82 million in new funding from Daimler
ChargePoint - InstaVolt partnership; more than 200 UK rapid charge systems
UK's Podpoint installing 150kW EV rapid chargers this year; 350kW by 2020
UK National Grid plans 350kW EV charge point network
ChargePoint Express Plus Debuts: Offers Industry High 400 kW DC Fast Charging
Fastned building 150kw-350kw chargers in Europe
ABB powers e-mobility with launch of first 150-350 kW high power charger
Shell buys European electric vehicle charging pioneer NewMotion
BP buys UK's largest car charging firm Chargemaster
Total planning EV charging points at its French stations
Yet despite all that deep-pocketed competition, perhaps you want to buy shares of Tesla because you believe in its management team. Really???
Elon Musk, June 2009: “Tesla will cross over into profitability next month”
Tesla SEC Correspondence Shows A Pattern Of Inaccurate, Incomplete & Misleading Disclosures
Tesla: Check Your Full Self-Driving Snake Oil Expiration Date
As Musk Hyped and Happy-Talked Investors, Tesla Kept Quiet About a Year-Long SEC Probe
The Truth Is Catching Up With Tesla
With Misleading Messages And Customer NDAs, Tesla Performs Stealth Recall
Who You Gonna Believe? Elon Musk's Words Or Your Own Lying Eyes?
How Tesla and Elon Musk Exaggerated Safety Claims About Autopilot and Cars
When Is Enough Enough With Elon Musk?
Musk Talked Merger With SolarCity CEO Before Tesla Stock Sale
Tesla Continues To Mislead Consumers
Tesla Misses The Point With Fortune Autopilot Story
Tesla Timeline Shows Musk's Morality Is Highly Convenient
Tesla Scares Customers With Worthless NDAs, The Daily Kanban Talks To Lawyers
Tesla: Contrary To The Official Story, Elon Musk Is Selling To Keep Cash
Tesla: O, What A Tangled Web We Weave When First We Practice To Deceive
I Put 20 Refundable Deposits On The Tesla Model 3
Tesla: A Failure To Communicate
Elon Musk Appears To Have Misled Investors On Tesla's Most Recent Conference Call
Understanding Tesla’s Potemkin Swap Station
Tesla's Amazing Powerwall Reservations
So in summary, Tesla is losing a massive amount of money even before it faces a huge onslaught of competition (and things will only get worse once it does), while its market cap tops that of Ford and GM despite a $2.8 billion+ annualized net loss selling approximately 200,000 cars while Ford and GM make billions of dollars selling 6.6 million and 9 million cars respectively. Thus this cash-burning Musk vanity project is worth vastly less than its over $60 billion fully-diluted enterprise value and—thanks to its roughly $31 billion in debt and purchase obligations—may eventually be worth “zero.”
