Tesla Losing Money Even Before Massive Competition Starts

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Mark Spiegel is famous for his bearish views of Tesla shares and his short position in the stock, but his biggest alpha comes from his picks in micro-caps which are under the readar – Indeed, 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 stock from Stanphyl’s latest letter to investors.

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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 55% this year. Although as a value investor it’s been tough to find new companies cheap enough to buy in this free-money-driven “everything bubble,” we do have a number of short positions (detailed below) that I think will work out quite profitably. So let’s get to the specifics…

As noted above, we remain short shares of 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.

The big Tesla news for October was the awful Q3 delivery number which included—due to production problems—just 220 Model 3s. This scoop from the automotive site Daily Kanban explains why those problems are likely to continue for months, and why 2018 Model 3 production is likely to be not much more than 1/4th of Tesla’s 400,000-car projection. Meanwhile, Q3 Model S&X sales were up just 4.5% year-over-year despite massive discounting (you can expect record losses when Tesla reports its Q3 financial results) and before the onslaught of luxury EV competition from Jaguar, Audi, Mercedes and Porsche beginning in 2018. In fact, over the next five years Tesla will have approximately one hundred 200+-mile electric competitors, and over 200 by 2025. (Please see the extensive links below.) And really, why would anyone buy a Model S when this car is available within 24 months?

Following the announcement of the awful Model 3 production number, both Daily Kanban (in an earlier article than the one linked above) and The Wall Street Journal did some terrific investigative reporting and discovered that the Model 3 production line is nowhere near ready. Then the Journal’s “Heard on the Street” column practically came right out and called Musk the lying fraudster that he is, as do multiple shareholder lawsuits.

Meanwhile, when it eventually does go into real production the Model 3 will be a huge sales disappointment, as reservation holders realize that fewer than 100,000 of them will qualify for the $7500 tax credit (unless the new Republican budget kills even that, which is a real possibility), 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. Thus, operating a Tesla Model 3 may potentially 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. But hey, at least Musk is laser-focused on getting things corrected!

In October, Nvidia—the maker of the primary computer processor for Tesla’s so-called “Autopilot” system—announced mid-2018 availability for its first processor capable of full self-driving. This provides further proof (in addition to the lack of necessary LiDAR) that since last year Tesla has been committing fraud in charging $8000 for “software upgradeable future full self-driving” for its current system. (And remember that in September Tesla’s SolarCity paid a $29.5 million fraud settlement. Ever hear of “the cockroach theory” of investing? There’s rarely just one!) In September, the National Transportation Safety Board partially faulted Tesla for last year’s fatal Autopilot crash, as the system not only allowed the driver to use it in a manner for which it was incapable but Tesla—with “a wink and a nod”—subtly promoted such use. Ironically, Tesla escaped even greater blame because the system it called “Autopilot” designed “as functioned” in that it was incapable of seeing—and thus stopping for—a giant truck turning broadside directly in front of it. In August the Wall Street Journal published a terrific exposé of Tesla’s dangerous and deceptive deployment of Autopilot, and this Seeking Alpha article offers additional color on that, as well as on Musk’s blatant and off-repeated lie that Tesla doesn’t discount its cars. And here’s Autopilot in its latest incarnation… watch out for that school bus!

Also in October, Tesla laid off hundreds of employees in its Models S&X division and hundreds more in its SolarCity division, apparently primarily to save money due to non-growth and fight potential unionization, but because Tesla claimed all the layoffs were “performance related” it bought itself a brand new legal problem on top of a massive number of ongoing lemon-law lawsuits, labor discrimination lawsuits and autopilot & investor class action fraud lawsuits. In fact, Tesla is rapidly becoming sort of a “full employment act for lawyers,” and that’s even before it brings in the bankruptcy lawyers!

And if you still believe the nonsense that “the great thing about Tesla is that it’s really a battery company” (as if that low-margin industry is anything to brag about) you must read this new overview of its so-called “Gigafactory” as well as this story about Tesla potentially buying car batteries from LG & Samsung. (It already buys and resells Samsung storage batteries.)

Finally for October I leave you with this:


So here is Tesla’s competition in cars (note: these links are continually updated)…


GM to sell 2 new Bolt-based EV models by early 2019; 20 EVs by 2023

2018 Nissan Leaf debuts: 150 miles for $30,875, 200-plus mile model by late 2018

2018 Jaguar Electric I-Pace has over 25,000 confirmed orders

Audi Launching Three Pure Electric Cars Beginning 2018

Audi will build EVs in factories worldwide, CEO says

Honda to launch two new electric cars in 2018

2018 Hyundai Kona Electric SUV Will Have 220 Mile Range

Hyundai plans long-range premium electric car in strategic shift

2019 Porsche Mission E Priced Around $85,000; 80-percent Charge in 15 Minutes

Mercedes Announces First EQ Production for 2019

Mercedes spending €10 billion to electrify its entire lineup

Daimler Trucks launches E-FUSO and all-electric heavy-duty truck Vision One

Electric Land Rover “Road Rover” to launch in 2019

All new Jaguar and Land Rover vehicles will be electrified from 2020

Volvo to Go Electric by 2019

Volvo’s Polestar reveals its vision to be the new electric performance brand

Toyota, Mazda, Denso create company to roll out electric cars beginning 2019

Infiniti Performance EV On Sale In 2019

PSA will launch full-electric Peugeot 208 and DS 3 Crossback in 2019

Seat to launch first electric car in 2019

Volkswagen ID electric car to launch in 2020

VW will invest $1.7 billion in a roll out of electric trucks and buses

50 100% Electric Car Models By 2025 From Volkswagen Group

Ford to increase EV offerings beyond 2020 300-mile electric crossover

Ford mulls building electric van in Germany

Skoda Vision E revealed for 2020 production

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

Dyson looks to launch first electric car by 2020

BMW previews 2021 electric i5 production model

BMW to have 12 electric models by 2025

2022 Toyota electric car to use solid-state batteries

Renault to have 8 pure electric models by 2022

Rolls-Royce is preparing electric Phantom for 2022

Honda will offer full-EV or hybrid tech on every European model by 2025

Electric Kia Stinger GT to rival Tesla Model 3

Bentley plan for electric and hybrid car roll-out is well advanced

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

Maserati executive confirms electric Alfieri

Subaru Considers Electric Versions of Its Cars to Leverage Brand

Borgward BXi7 Electric SUV Flies Under The Radar

Detroit Electric promises 3 cars in 3 years

And in China…

BYD Plans to Expand Daimler Partnership With New EVs 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 new energy models in China by 2020

Audi and FAW sign China electric car cooperation deal

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

Ford Steers to Electric Vans in China

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

Geely’s Volvo gears up to make electric cars in China

Changan Spending $15 billion To Have 21 Pure Electric Cars By 2025

Chery Breaks Ground on $240M EV Factory in China

Chery's second EV plant open in Dezhou

Nio plans to speed into China’s electric car market

Leapmotor’s electric car to hit the market in 2018

Tesla Model 3 Watch Out: Here Is The XPeng Identity X

All The Specs Of The NextEV NIO ES8 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 venture Future Mobility names brand Byton, eyes U.S., Europe

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

Wanxiang Gets China Electric Vehicle Permit to Make Karma Cars

Qoros Debuts Its Super EV at 2017 Shanghai Auto Show

Thunder Power electric cars at the 2017 Frankfurt motor show

Here’s Tesla’s competition in autonomous driving…

On autopilot into the future: the Audi vision of autonomous driving

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

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

GM might beat its competitors to driverless car production

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

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

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

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

Continental Sees Huge Growth in Automated Driving, Unveils Mobility Tech

Delphi acquires autonomous vehicle software supplier NuTonomy

Ford expands fleet of self-driving test cars

Ford Buys Laser System Firm as It Boosts Driverless Car Development

Hyundai Presents Autonomous IONIQ Electric Prototype at 2017 CES

Google Plots to Conquer Self-Driving Cars

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

JD.com Delivers on Self-Driving Electric Trucks

Lucid Chooses Mobileye as Partner for Autonomous Vehicle Technology

Apple Is Focusing on Making an Autonomous Car System

Samsung enters autonomous driving race with new business, funding

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

Who Leads the Autonomous Driving Patent Race?

Here’s Tesla’s competition in car batteries…

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

Samsung Introduces New High-tech EV Batteries

SK Innovation to produce EV batteries with 500 km range in 2018

New Toshiba EV Battery Allows 320km Charge in 6 Minutes

Daimler to ramp up battery production

General Motors China To Open Battery Factory In Shanghai

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

China to build many gigafactories' worth of electric-car battery plants

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

ABB teams up with Northvolt on Europe's biggest battery plant

BMW Shows Off Its Battery And Electric Motor Production Facility

BMW Brilliance Automotive opens battery factory in Shenyang

Toyota promises auto battery 'game-changer'

Hyundai Motor developing solid-state EV batteries

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

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

ProLogium Technology Will Produce First Next Generation Lithium Ceramic Battery For EVs

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

Tritium’s First 350-kW DC Fast Chargers Coming To U.S.

Porsche is bringing its ultra-fast electric car charging stations to the US

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

ABB powers e-mobility with launch of first 150-350 kW high power charger

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

5 European fast charging networks form Open Fast Charging Alliance

Shell buys European electric vehicle charging pioneer NewMotion

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 (assuming 177 million shares “all-in”) now exceeds that of Ford and almost equals that of GM despite a nearly two-billion-dollar annualized net 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 $65 billion fully-diluted enterprise value and—thanks to its roughly $10 billion in debt—may eventually be worth “zero.”

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