Thursday, September 27, 2018

Noose Tightens Around The Necks Of Tesla And Musk!

Musk Should Be Feeling The Pressure
While the price Tesla stock has been trading at may give the impression Musk may eventually get past his recent problems reality indicates otherwise. It seems the noose is slowly tightening around the necks of Tesla and Elon Musk. While the iconic CEO has pushed a rosy scenario of future growth it has been a while since we have heard any good news flowing from Tesla and shareholders should be worried. In a head-to-head comparison in Motor Trend, three reviewers compared the Tesla Model 3, Chevy Bolt, and Nissan Leaf in a test, and only one person picked the Tesla. Many people would be surprised to know that the reviewers were comparing the base versions of the Leaf and Bolt, which cost $30,000-35,000, to the fully loaded Model 3 that costs more than $60,000.The pressures being applied are coming from all directions and calling into question just how stable and well anchored the company really is. Below is a list of a few of the problems nibbling away at Tesla's credibility and affecting future sales.
  •  Competition Rapidly Improving
  •  Debt Soaring While They Burn Through Cash
  •  Production Problems Continue
  •  Quality Problems Increasing
  •  Service Problems Leave Customers Unhappy
  •  Design Beginning To Stagnate
  •  A Malaise Is Settling Over The Auto Sector
  •  High Turnover In The Executive Suite
  •  A Rash On Publicity Questioning Elon Musk's Mental Stability
  •  Possible SEC Action Again ts Musk And Tesla For Stock Manipulation
  •  A Series Of High Profile Crashes Have Drawn Huge Attention 
  •  Buyer Subsidies Are Being Cut And Set To Expire
Adding to the pressure is that Ford recently made an important announcement of its plans to eliminate some of the company’s most well-known cars in North America, including the Fiesta subcompact, Fusion midsize sedan, Taurus large sedan, and the C-Max van. According to Ford’s quarterly earnings statement, this decision has been made following years of declining car sales. Dropping other models will allow the company to devote more resources to SUVs and trucks which have surged in popularity while consumers lost interest in passenger cars, which no longer have a monopoly on good gas mileage. More important to Tesla is that Ford's new marketing direction will allow Ford to expand into more electric vehicles bringing 16 battery-powered vehicles to market by 2022.

Volkswagen May Be Sporting A Game-changer
An article by Mike Shedlock via MishTalk, recently detailed how another powerhouse, Volkswagen, has launched a new electric vehicle initiative based on its new modular electric drive matrix. Volkswagen claims the technology platform developed specifically for electric vehicles or MEB will enable it to achieve a price-service ratio that will be instrumental in transforming the electric vehicle from a niche product into a bestseller. Volkswagen's ELECTRIC FOR ALL campaign will focus on putting 27 attractive MEB models at affordable prices on roads across the world by the end of 2022. Volkswagen contends it has placed its entire production knowledge in this platform designed from the outset to be 100 percent, uncompromisingly electric and that transferring this know-how to the electric age is a game changer.

While only two auto manufacturers are mentioned above, other companies are pursuing similar adjustments in marketing and these major players will put Tesla's feet to the fire. Diesel-gate the Volkswagen emissions scandal, also called "emissionsgate" that began in September 2015, when the EPA issued a notice of violation of the Clean Air Act to Volkswagen has in some ways pushed forward the call for electric vehicles. The German automaker had programmed turbocharged direct injection diesel engines to activate their emissions controls only during laboratory emissions testing but further tests showed they were emitting up to 40 times more NOₓ in real-world driving. Volkswagen deployed this programming software in about eleven million cars worldwide, including 500,000 in the United States, in cars built from 2009 through 2015.

Electric Vehicles continue to make up only a small part of auto sales. however, it is estimated that over 100 different electric cars are expected to hit markets by 2025. Only weeks ago Audi unveiled the E-Tron, an all-electric crossover and just one of its two new electric cars due to hit showrooms later this year, during a big bash in Tesla's backyard. After years of looking at all-electric concepts, the German luxury brands are finally launching products to compete head to head with Tesla. Mercedes-Benz revealed its own electric crossover earlier this month, the EQC, and BMW is also showing off another Tesla-fighting concept model. Audi's first fully electric auto will be made in Brussels and will arrive in the U.S. during the second quarter of 2019. It is important to note that all these companies will highlight styling and have no plans to take a backseat to Tesla.

History shows the automobile sector is an area where many have failed and promising investors a carrot in the future will only take Musk so far. One great example was the Delorean. I have become predisposed to discount, and have actually grown a massive aversion to "media hype", this is one reason you should color me skeptical. The city where I live, like other cities across the world, has a long list of bold men herald and declared to be "gods gift to business,"  many in the end flew too close to the sun only to crash and burn. Elon Musk appears to be struggling and the ramped up competition translates into Tesla getting little relief as both its stock price and bonds feel the heat of those many investors that are growing more skeptical of the company's ability to weather the coming storm.

Footnote; The first link below takes you to a negative overview of the company and the second is put out by a "rouge" mechanic that puts salvaged Teslas back together.  Both YouTube pieces merits watching.


  1. Good article. Musk is being hammered from all sides right now. TSLA has likely reached its peak interest and is starting down the other side. Musk would be wise to sell TSLA to a big name tech company and focus on SpaceX. He may be too stubborn. If so, look for him to fall in a burst of dramatic flame.

  2. It seems for now the agreement Musk and Tesla have made with the SEC will delay and postpone their demise. The article below delves deeper into this travesty of justice.

  3. It's not difficult to make an electric car. Tesla has no propriertary IP - they do NOT make the batteries (Panasonic does).

    So why would the likes of Porsche --- or any other manufacturer - but out Tesla? Like Chanos says it is worth ZERO.

    And it is ... worth ZERO (just wait awhile)