Tesla Has 1 No Moat 2 Big Losses And Competition 3. Untrustworthy CEO – Stanphyl

Updated on

Mark Spiegel’s Stanphyl Capital is famous for its questioning of Tesla but its biggest alpha comes from his picks in small caps – see below for an excerpt on Tesla Inc (TSLA) from their August  2017 letter. But first… although he is known as Elon Musk’s number one enemy, Mr. Spiegel makes most of his money from killer small cap picks. His under the radar small caps which could pop just based on this piece (if we discussed it publicly) were profiled in ValueWalk’s 2nd edition of our quarterly premium newsletter. Below is an excerpt on Tesla short thesis and the role of electric cars in china in that regard.

Also see:  Tesla Tax Incentives: When Will The Federal Credit Start To Wind Down?

Get The Timeless Reading eBook in PDF

Get the entire 10-part series on Timeless Reading in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

As noted in previous letters, this year’s terrible performance has been primarily due to our short position in Tesla, whereby despite having an overwhelming number of facts on our side (detailed, as usual, below) the stock is up 67% this year.


And then of course we’re short Tesla, which I still 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.

A number of smart people have reached out to me to express their belief that Tesla is among the most obvious shorts they’ve ever seen (yes, I know—“crowdedness” on the short side is temporarily propping it up) and that I’ve thus been writing about it to the point of overkill. There may be something to that, and thus going forward I’ll somewhat reduce the amount of space I allocate to the company in this letter, focusing just on a few key developments in the current month followed by updated links to its massive competition. I shall also always reiterate the following three core points:

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 is every aspect of its business.

3) Elon Musk is extremely untrustworthy.

In August Tesla released a disastrous Q2 2017 earnings report with record cash burn and—excluding the one-time injection of Zero Emission Vehicle credit revenue—a record loss. Rather than rehashing how bad things were, you can read this perfect summary of the quarter from Zero Hedge supplemented by this one from Seeking Alpha as well as this one showing what a disaster the battery storage division remains. Meanwhile, the Model 3 will be a huge sales disappointment when reservation holders realize that fewer than 100,000 of them will qualify for the $7500 tax credit and almost nothing can be done in the car without a multi-step process on the touchscreen-- not even changing the windshield-wiper speed, adjusting the air vents or opening the glovebox! In other words, in some circumstances operating a Tesla Model 3 may be as dangerous as texting while driving! And of course Tesla will make little (if any) money on the car, as it currently loses a fortune on models starting at twice the price.

Importantly in late August, the Wall Street Journal published a terrific exposé of something I’ve written about in these letters for a very long time: Tesla’s dangerous and deceptive deployment of its so-called “Autopilot.” Upon this article’s publication I considerably re-upsized our short position (with a fairly tight stop!) as Tesla—due to its awful fundamentals—survives only on Musk’s reputation among his Kool-Aid drinking acolytes, and the feedback I’m now seeing in multiple forums (both in reaction to that story and a number of other deceptive practices from the company) is that those cult members (and their lazy media enablers) are finally starting to regurgitate some of that Kool-Aid.

Also in August came this great new analysis destroying the cost-saving myth of Tesla’s “Gigafactory.” And then I present you with the following two August headlines-- the first relates to a comically priced (and in this case, comically headlined) unsecured junk debt offering (subsequently upsized to $1.8 billion, and nearly instantly selling below par) as a perfect metaphor for this entire bubble market, and

he second is an educational jolt for anyone out there naïve enough to think Tesla’s “secret sauce” is that “it’s really a battery company”…


So here’s Tesla’s competition in cars…

The All-Electric 2017 Chevrolet Bolt EV

GM CEO: Chevrolet Bolt Is Our Platform For A Huge Range Of Vehicles

All New 200-mile Nissan Leaf Coming September 2017

Jaguar I-Pace: 2018 production car set for September 2017 debut

Jaguar Land Rover says half of its new cars will have electric option by 2020

Audi Launching Three Electric Cars Beginning 2018

Daimler to invest $11 billion in electric vehicles

Daimler brings forward electric-car goal

New Mercedes EQ Concept ride review

Porsche Mission E electric car to have wide range of variants

BMW to introduce electric 3-series in September 2017

BMW Flexible vehicle architecture to enable electrification of every model series

Upcoming Hyundai Kona Electric SUV With 50 kWh Battery, 220 Mile Range

Hyundai plans long-range premium electric car in strategic shift

Honda to launch two new electric cars in 2018

Volvo Plans to Go Electric, to Abandon Conventional Car Engine by 2019

Volvo’s Polestar brand to build its own electric sports cars

Volkswagen plans to ‘leapfrog’ Tesla in electric car race

Ford to launch fully electric SUV with range of at least 300 miles & two electrified police vehicles

Ford, German Postal Service Form EV Joint Venture

Toyota, in about-face, may mass-produce long-range electric cars

New Mazda electric car due in 2019 

Electric Kia Stinger GT to rival Tesla Model 3

Infiniti to launch performance EV with Nissan tech by 2020

Nissan, Renault, Mitsubishi to share electric car platform

MG E-Motion confirms new EV sports car on the way by 2020

All electric Lucid Air to Start At $52,000 After Tax Credit

Maserati executive confirms electric Alfieri

Peugeot and Citroen Promise 450 km (280 Miles) Electric Vehicle in 2019

New 2017 Renault ZOE ZE 40: 400 km Range*, 41 kWh Battery

Seat to launch first electric car in 2019

Mitsubishi To Launch New All-Electric and PHEV Compact SUV Between 2017-2020

Subaru Considers Electric Versions of Its Cars to Leverage Brand

2017 Karma Revero (nee Fisker) launches with updates

Borgward BXi7 Electric SUV Flies Under The Radar

Skoda electric car range to grow 

And in China…

Daimler strengthens dedication to emission-free mobility with new DENZA 400km EV for China

Daimler to produce electric cars for EQ subbrand in China

Daimler, BAIC agree to make electric cars in China

Volkswagen To Launch 8 New Energy Vehicles In China

Volkswagen Eyes Third China Joint Venture in Continued Push Into Electric Vehicles

GM plans to launch 10 electric cars in China by 2020

Audi and FAW sign China electric car cooperation deal

Ford to Make Electric Cars in China Amid Green Drive

Ford, China's Zotye Auto plan JV to build electric vehicles

China's BYD has overtaken Tesla in the battery and electric car business

SAIC to spend $2.2 billion on EVs, connectivity, aftersales services

Toyota may mass produce electric cars in China in 2019

Renault, Nissan, Dongfeng Motor partner to develop electric cars in China

Renault-Nissan Alliance To Electrify China's Trucks And Vans

Volvo’s first all electric car will be made in China

Chery Breaks Ground on $240M EV Factory in China

Chery's second EV plant to open in May in Dezhou

NextEV NIO ES8 Is A Surprisingly Normal Electric SUV

New Chinese Car Brand: WM Motors To Bring EVs To The Masses

GAC Begins Construction of $6.5 Billion Industrial Park to Boost EV Business

China e-car newcomer Future Mobility to launch electric SUV in 2019

Honda to debut electric vehicle in China next year

The Singulato iS6 From China Is Aimed At The Tesla Model 3

Quianu Motor aims to grab share of US electric vehicle market

NEVS receives approval for electric car factory with capacity of 200,000 units per year

Karma Owner Building 50,000 Cars/Year Electric Car Factory in China

Here’s Tesla’s competition in autonomous driving…

Audi takes pole position in race for fully autonomous cars

Updated 2017 Mercedes-Benz S-Class - first ride with autonomous technology

Cadillac Super Cruise™ Sets the Standard for Hands-Free Highway Driving

GM Produces First Round of Self-Driving Chevrolet Bolt EV Test Vehicles

GM’s Cruise Automation does a 90-minute urban drive with no intervention

GM’s Cruise Automation Wades Into HD Mapping to Aid Autonomous-Car Efforts

Nvidia and Mercedes-Benz to bring an AI car to market within a year

NVIDIA and Toyota Collaborate to Accelerate Market Introduction of Autonomous Cars

Audi and NVIDIA team up to bring fully automated driving accelerated with artificial intelligence

Volvo and Autoliv team up with Nvidia for self-driving cars

NVIDIA Partners with Bosch for System Based on Next-Generation DRIVE PX Xavier Platform

Bosch and Daimler join forces to market fully automated, driverless taxis by 2020

Volkswagen and Mobileye sign agreement to develop autonomous driving

Toyota, Intel and others form big data group for autonomous tech

Autonomous Nissan Leaf Video

Nissan and Mobileye to generate, share, and utilize vision data for crowdsourced mapping

Subaru, Nissan hit highway with affordable self-driving

BMW, Intel, Mobileye & Delphi Developing Autonomous Driving For Multiple OEMs

Fiat Chrysler to Join BMW, Intel and Mobileye in Developing Autonomous Driving Platform

Continental Joins Autonomous Driving Platform from BMW, Intel & Mobileye as System Integrator

Ford expands fleet of self-driving test cars

Hyundai Presents Autonomous IONIQ Electric Prototype at 2017 CES

Waymo to supply autonomous hardware & software to any car maker

Lyft and Waymo Reach Deal to Collaborate on Self-Driving Cars

Lyft teams up with NuTonomy to put ‘thousands’ of self-driving cars on the road

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 Steers Into Self-Driving Car Venture With Partner

Lucid Chooses Mobileye as Partner for Autonomous Vehicle Technology

Cook Says Apple Is Focusing on Making an Autonomous Car System

Samsung Gets Green Light to Test Self-Driving Cars

BlackBerry to open autonomous vehicle hub

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

Here’s Tesla’s competition in car batteries…

LG Chem targets electric car battery sales of $6.3 billion in 2020

Samsung Presents Innovative Fast Charging Battery with 600km Range

Samsung SDI to build $358 million car battery plant in Hungary by 2018

SK Innovation Focusing on Becoming the Top Global Company for EV Batteries

Daimler's battery gigafactory begins Europe challenge to Tesla

Daimler builds battery factory in Beijing

General Motors China To Open Battery Factory In Shanghai

Panasonic Opens New Automotive Lithium-Ion Battery Factory in Dalian, China

China's BYD takes aim at Tesla in battery factory race

Contemporary Amperex’s Chinese battery factory will be bigger than Tesla’s Gigafactory

Contemporary Amperex building an EV battery/drivetrain facility in Europe
Energy Absolute Plots Asian Project Rivaling Musk's Gigafactory

BMW Shows Off Its Battery And Electric Motor Production Facility


Volkswagen will invest $3.7 billion in battery cell & electric drive plant

Hyundai Motor developing solid-state EV batteries

Jaguar holds talks with Ford and BMW over building a giant battery factory

Ultrafast-Charging Solid-State EV Batteries Around The Corner, Toyota Confirms

Kreisel Seeks to Overtake Tesla With Souped-Up Plug-In Cars

Wanxiang is playing to win, even if it takes generations

UK provides millions to help build more electric vehicle batteries

Former Tesla executives plan to build $4bn Nordic battery plant

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

Here’s Tesla’s competition in storage batteries…






AES + Siemens (Fluence)







GS Yuasa




Schneider Electric




Nissan - Eaton




Lockheed Martin

EOS Energy Storage

Energy Storage Systems Inc.

UniEnergy Technologies





Green Charge Networks

Imergy Power




Fluidic Energy

Primus Power

Simpliphi Power

redT Energy Storage



Blue Planet

Clean Energy Storage Inc.

Swell Energy

Tabuchi Electric




Powin Energy



ViZn Energy



Terra E

And here’s Tesla’s competition in charging networks…


EVgo Installing First 350 kW Ultra Fast Public Charging Station In The US

BMW and Volkswagen Take on Tesla Motors With a New U.S. Fast-Charging Network

Nissan and EVgo to build i-95 Fast-Charge ARC connecting Boston and Washington D.C.

BMW, Daimler, Ford, VW, Audi & Porsche JV for 350kw Charging On Major Highways in Europe

Porsche's latest electric car chargers put Tesla to shame

Chargepoint Europe Gets $82 million in new funding from Daimler

ChargePoint - InstaVolt partnership; more than 200 UK rapid charge systems

ChargePoint Express Plus Debuts: Offers Industry High 400 kW DC Fast Charging

Fastned building 150kw-350kw chargers in Europe

DBT unveils the 1st 150 kW universal ultra-fast charging station 

5 European fast charging networks form Open Fast Charging Alliance

Shell starts equipping petrol stations with electric chargers

BP in talks with electric carmakers on service station chargers

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???

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

Debunking The Tesla Mythology

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's Financial Shenanigans

Tesla: A Failure To Communicate

Can You Really Trust Tesla?

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 fully diluted market cap now exceeds those of Ford and GM despite a billion-dollar annualized operating loss selling just 100,000 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 approximately $70 billion fully-diluted enterprise value and—thanks to its roughly $10 billion in debt—may eventually be worth “zero.”

Leave a Comment