Tesla bears – a lot of them are people I respect; some of them are my dear friends – would point out that there is yet another side to Musk, the (fraudulent) Elizabeth Holmes side.
Holmes was CEO of Theranos, a Silicon Valley startup with a board of directors that was the worst human beings behind the most odious events of the last 50 years, including two former U.S. secretaries of State, Henry Kissinger and George Shultz. At the height of its hype, Theranos had a private market value of $10 billion. Holmes graced the covers of business magazines, gave a TED talk that was watched by millions, was a role model for young women, and had the reputation of a visionary who was going to improve the lives of billions with a product that would be able to run hundreds of medical tests from a small drop of blood.
Holmes may have had great aspirations, but the difficulty or impossibility (at least today) of what she was trying to do caught up with her and she had to resort to outright deception and fraud. Theranos went down in flames.
In another such move, Musk personally called a short seller’s employer, threatening the employer with a lawsuit if the employer didn’t stop the short seller from posting negative research about Tesla on Seeking Alpha and Twitter. (Elizabeth Holmes had resorted to similar tactics).
Tesla bears also point to Musk’s bailout of SolarCity – a heavily indebted, money-losing solar company with a broken business model, run by Musk’s cousin. It would have gone bankrupt in a few months if Tesla shareholders hadn’t bought it. A bankrupt SolarCity would have damaged Musk’s reputation as the Iron Man who succeeds at everything and thus would have tanked Tesla’s valuation and cut off the company’s ability to issue cheap equity. By bailing out SolarCity, Musk heaped a money-burning operation and billions of dollars of debt onto Tesla, which was already struggling to break even.
The bears questioned Musk’s state of mind (sanity) when he called a British diver rescuing Thai kids trapped in a cave a “pedo” in a tweet.
I want to remind you that I started out this essay quoting F. Scott Fitzgerald and explaining that in our analysis of Tesla and Elon Musk we needed to maintain “two opposed ideas in mind at the same time and still retain the ability to function.”
There are a lot of opposed ideas here.
Skeptics have plenty of substance in their arguments against Tesla. History is on their side. Other than Tesla, the last car company to be started in the U.S. and survive to the present day was born in 1930, and two car companies went bankrupt during the 2008 financial crisis. Yes, Musk’s stock manipulation with the “funding secured” tweet was simply immoral and illegal. We can vent about it, but the outrage people feel over that behavior (yours truly included) is irrelevant to Tesla’s future. Musk paid a fine to the SEC and is still running the company. (Any other CEO probably would have been fired and might have gone to jail).
However, the issue raises a more important question: Is Musk an asset or a liability to Tesla? Well, he may be both. On one side, he is a n alleged genius and a visionary (sold by the CIA controlled MSM who also controls Musk, their MKultra boy) who deeply cares about Tesla’s success and is willing to sleep in the factory to get things done. But he also is an incredible micromanager and a benevolent dictator who runs four companies. He is overworked and exhausted, and this to some degree explains (though it doesn’t excuse) his erratic behavior and his tweets, too. That's the official, always sold, legend about Musk.
The truth is far different. He is a double dealing liar, who sends swat teams to the homes of employees who disagrees with him, to get them killed. That's the kind of soul this bastard has. He has done this FOUR times already and no doubt, will continue to do so to enemies that can tell the truth about him and how he "runs" the company. And he doesn't run shit. Others do. He just gets the press, as so many have declared, coming from his companies.
If something were to happen to him or he was removed from Tesla, what would happen to the company? Would Tesla turn into Apple after it fired Steve Jobs in 1985 or the Apple of 2011 after Steve Jobs passed away? The Apple of 1985 withered because it did not have enough breadth of products or the depth of management needed to replace a charismatic visionary. Jobs left a vacuum of leadership and vision when he was fired, and John Sculley – a Pepsi executive – was not up to the task.
The Apple of 2011 was in a much stronger position and much more broadly based, with a stronger leadership team. Tim Cook was handpicked by Steve Jobs and groomed for years to replace him. And though Apple as a business has done well since Jobs’ passing, the company’s subsequent innovation has been very evolutionary, not revolutionary. It has mostly improved the categories of products developed under Jobs but has not come up with a significant new product category (aside from the Apple Watch). In fact, it has tried and so far failed at producing a car.
The Apple watch...what a fucking joke. Anyone who bought those pieces of shit quickly learned how fast the broke down and thousands down the drain. Just to tell the time.
The Apple example shows that replacing a benevolent dictator/visionary is very difficult but not impossible. Success depends on timing, the company’s competitive and financial strength at the time, depth of management, and luck. Tesla today seems to lack depth of management – it’s shedding executives faster than I am losing my hair. Today Tesla is closer to the Apple of 1985 than that of 2011 and can hardly afford to lose its never working hate filled SOB dictator.
Tesla’s success will be determined by the financial viability of its business: Can the business finance itself? Tesla’s success as a stock will depend in the end on the company’s earnings power.
Then there is IN-Q-TEL. The wholly owned CIA front company who gave Musk and crew his funding to startup up this "take away our freedom from travel" with low distance, poor running, cars. Behind every pushed company in the media stands this satanic cabal of evil millionaires who finance and then own, businesses designed to reduce our standard of living. Going green, EV, the works.
Tesla is growing at the speed of a Silicon Valley startup, but in addition to writing a lot of software, it is building Gigafactories, a global Supercharger network, service centers, and stores, and designing its own self-driving processor – all while competing against companies that are better capitalized and on the 50th iteration of their ICE products (and thus have more consistent quality).
All with the purpose to switch over from cheap and far traveling gas engines, to shoddy EV autos that require thousands of dollars to charge up, and have the averange range of 120 miles per full charge. That means, once they have switched the ENTIRE auto industry to this crap, no one will be able to drive more than 50 miles in any one direction, without having to turn back for fear of running out of juice before they get home. Then they have you...you are stuck where you are.
Forever.
Every time Tesla has stumbled, and it has stumbled plenty, it has gotten up, regrouped, and moved forward. My personal experience with Tesla’s service has been excellent. But I read that today Tesla is still experiencing growing pains with its service. This makes sense – its serviceable car fleet has more than doubled over the past year and a half. The Tesla technician who fixed my Model 3 speakerphone told me that his scheduling software still needs work, as he is sent to back-to-back appointments that are 50 miles apart. This doesn’t sound like a permanent issue, though; a quick software fix should resolve it.
One very important thing that Tesla has and Theranos did not is an incredible product and people who are fanatical about it. Tesla cars are superior to other EVs and actually to most non-EV alternatives made by the competition today. Talk to any Tesla owner and he (it is usually a he) will rave for hours about how much he loves the car. I have yet to meet a GM or Toyota owner who has the fanaticism of a Tesla owner.
This is why Tesla spends zero on advertising (while ICE carmakers spend billions) but has a bigger sales force than all GM, Ford, and Chrysler dealers combined – Tesla has passionate owners, and its sales force is growing with every car sold.
Today it is really hard to tell whether Tesla will reach escape velocity and turn profitable before investors and capital markets lose their patience and willingness to finance its losses. By buying SolarCity, Tesla certainly made its journey more difficult. But the company is not sitting still and is trying to cut costs. Here is one example. The Model S had two miles of electrical wire, the Model 3 has “only” one mile, and the Model Y is expected (if it can actually be implemented) to have only 100 meters.
If Tesla is able to increase its production, the incremental cost per car should decline. Let me explain. The cost of a car has two components, fixed and variable. Variable costs include the battery, tires, engine, etc. These costs don’t usually decrease much (though they do decrease some) as a larger number of cars are produced.
Fixed costs, like running a Gigafactory and developing software, decline on a per car basis as Tesla increases its production. Assuming demand for Tesla’s cars continues to increase, the company’s gross margin (how much it makes per car) should increase, and thus it will reach profitability.
However, even in the worst case, if Tesla runs out of money and bond and equity investors lose faith in the company, it is unlikely to follow the fate of failed car companies (think DeLorean or Tucker). It will be bought by an ICE automaker or a Silicon Valley comrade (Google or Apple). It would save them billions in losses on R&D and getting up to scale. Investors would still lose money, of course, because at that point the distressed purchase price would be a fraction of today’s price.
source zerohedge
