In his Daily Market Notes report to investors, while commenting on Tesla Inc (NASDAQ:TSLA)’s Q1 earnings, Louis Navellier wrote:
Q1 2021 hedge fund letters, conferences and more
The Good And Bad News
The good news: The company’s revenue rose 74% and earnings were 17.7% higher than analysts’ consensus estimates.
The bad news: Tesla collected a record of $518 million in carbon/EVtax credits, plus a $101 million short-term gain from selling 10% of its $1.5 billion Bitcoin investment. In other words, Tesla made $619 million in the first quarter from extraordinary items.
In 2020, Tesla received $1.58 billion in EV tax credits, but only made $721 million, so the company actually did not make money making EVs! Clearly that trend is persisted in the first quarter of 2021, since excluding extraordinary items of $619 million, Tesla continues to sell its vehicles at a loss. However, Tesla is becoming increasingly efficient, so the focus is now shifting to its new Berlin factory. If Tesla can finally make money on its EV manufacturing without incorporating its EV tax credits, then this will be big news that Tesla can potentially compete long-term with the efficiency of legacy auto manufacturers, like Ford, GM and VW Group (includes Audi & Porsche).
Tesla Is Losing Its Mojo
The sad truth of the matter is the EV revolution is now being led by China and Europe where sales and government EV tax incentives are much stronger. At last week’s Shanghai Motor Show, VW Group was introducing exciting new EV models (e.g, A6 e-tron), while Tesla was noted for a disgruntled Tesla owner jumping on the roof of a Tesla shooting “brake failure,” which was also printed on her t-shirt. Although Tesla said they would address the protestor’s complaint, the fact of the matter is Tesla is losing its “mojo” that is had just last year. Other protestors went to the Shanghai Motor Show to “express their dissatisfaction” with Tesla vehicles. Complicating matters is that Tesla’s lost mojo is partially due to the fact the company at end of the year stopped giving away free Powerwalls, Model 3s and $250,000 Roadsters, to YouTubers that accumulated “referral credits.” Many of these YouTubers, who are EV fans and promoters, are now increasingly sponsored by Chinese EV manufacturers, like Xpeng.
For Tesla to get its mojo back, the company has to get ahead of the EV media cycle that is increasingly being dominated by its competitors announcing exciting new vehicles. Tesla’s reputation may have also been hurt by Elon Musk bragging about buying Bitcoin and then quietly selling 10% of its $1.5 million investment for a $101 million quick profit after promoting Bitcoin. Furthermore, appearing on Saturday Night Live (SNL) this weekend is also raising some questions about Elon Musk, who appears to be increasingly obsessed with his fame in possibly an unhealthy way. Hopefully, for Tesla’s sake, Musk can have a successful SNL appearance, rebuild his reputation and refocus on introducing innovative vehicles as well as efficient manufacturing plants in the upcoming months.
