Tesla’s Demand Problems And MXWL Deal Thread On VIC

Tesla’s Demand Problems And MXWL Deal Thread On VIC
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Whitney Tilson’s email to investors sharing Tesla Inc (NASDAQ:TSLA) demand problems And Maxwell Technologies Inc (NASDAQ:MXWL ) deal thread on VIC.

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Interesting – read from the bottom up:

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Q4 hedge fund letters, conference, scoops etc

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420 - hkup881

Re: Re: Re: Re: Re: MXWL deal

I personally see huge synergies here with MXWL

-Save on legal defense costs

-Merge various SEC cases

-Acquire substantial legal defense experience (TSLA has over 500 lawsuits and climbing rapidly)

-Acquire a capable CFO with experience in stock promotion and massaging numbers

-New additions to the TSLA IR team (TSLA did just lose their head of capital markets (again))

I think there also could be new growth verticals for TSLA to explore in Foreign Corrupt Practices "newly acquired FCPA vertical." I don't know how they got Cuomo to agree to the Buffalo Giga-tax giveaway. But outisde of the US it would be illegal under FCPA, which MXWL has a lot of experience in.

You could almost say that this is an Acqui-hire situation for TSLA.

TSLA also picks up cash and working capital through this back-door offering of worthless stock.

Finally, it's a nice way to hand a fast win to their friends in China and accelerate their permitting

419 - surf1680

Re: Re: Re: Re: MXWL deal

Yes, it all started with a chicken farmer and a $49 boost pack from ebay:

418 - Harden

Re: Re: Re: MXWL deal

I think it is a really smart acquisition. Maxwell seems to have quite a bit of cash. So they are trading their overvalued equity for cash. The recent patent they filed + this acquisition makes me think they are interested touting some kind of proprietary technology and this gives them some ammuntion. Finally, the tech may not be all that bad and instead of what's commonly done (buying near all-time highs) they scoop it up cheap. But as you say; if this tech is really good I don't think other OEM's or strategics will let Tesla buy it with shares.

There is a write up on MXWL on VIC that's really good!

417 - werd725

Re: Re: MXWL deal

If there was any tech worth owning in MXWL, don't you think that Panasonic would have plunked down $100m when this pig traded at its 52-week low?

Instead, Elon issues $200m of worthless shares and now gets to stuff all kinds of costs into "merger-related expenses" in an effort to keep this fraud alive.

Or maybe he's acquiring MXWL's world-class finance talent...

416 - werd725

Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: MXWL Demand problems?


I don't buy the overeas cash argument. If we assume that 25% of Q4 deliveries were overseas (and therefore 25% of cash is overseas) and that overseas cash earns 1% (vs. 2.35% in the US), then the implied average cash balance improves from $1.25bn to $1.46bn. Hardly a material difference. Even if you assume that 50% of cash is held overseas (much closer to the historical delivery split prior to Model 3), then the average balance was only $1.75bn. Clearly, they are playing games with the cash balance, which works as long as sales are growing, but doesn't work when demand falls off a cliff.


The 420k reservation list is, of course, a lie. There may have been that many reservations at one point. But the vast majority of those were for a car that doesn't actually exist ($35k Model 3 eligible for full $7,500 tax credit) or were for cars that actually work (the Model 3 is clearly a certifiable lemon). Look no further than Elon and Deepak themselves. After pumping the reservation list for well over a year, on the Q4 call they decided that reservations were no longer relevant to the company. Read the transcript.

The indisputable fact is that flow demand for a $40k-plus piece of shit electric vehicle does not exist in the US outside of a few thousand die hard idiots in California.

415  - hkup881

Re MXWL: The reservations

They had a backlog for a $35k car with a $7500 tax credit that could serve as an Uber while you slept. That product doesnt exist and will never exist.

Hence, the reservations are melting away but Tesla is slow walking the refunds

414  - amr504

The reservations

Light -- why is it that you can go online and order a Model 3 for delivery in February (here in the States), if they have a 230K reservation backlog to fill?

I suspect the answer is that they don't have that 230K reservation backlog you suggest at the price points Model 3's are being offered, but perhaps there is a better reason.

413 - Light62

Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: MXWL Demand problems?

Additionally, two things on the Foreign Order front:

1) Just a point of correction - I went and checked the Q4 transcript and listened to the call.  David Tamberrino asks if the orders are better than the 20K in Europe and single digit 1000's in China and Musk responds "Yes, absolutely"; he isn't asking if those are the right numbers and that isn't the question Musk answers.


412 - Light62


Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Demand problems?

According to the Detroit News this week, all of those mystery Model 3s in parking lots last year, which the super-bears thought meant collapsing demand, instead had crappy paint jobs and were waiting for fix-up jobs before being delivered.

Updated on

Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)www.valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver
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