MarketWatch reports Tesla again ‘on the brink’ of failure, says Einhorn’s Greenlight hedge fund.
Tesla Inc.’s “wheels are falling off,” sometimes literally, and the Silicon Valley car maker appears to “again be on the brink” of failure, David Einhorn’s Greenlight Capital told investors Friday.
Hedge-fund titan Einhorn is a frequent Tesla critic who has called Chief Executive Elon Musk “erratic and desperate” and last year compared Tesla’s path to the path of doomed investment bank Lehman Brothers.
While Musk may promise Model 3 worldwide demand of around 500,000 to 700,000, “the reality is quite different,” as demand from the fan base has already been satisfied, Greenlight said.
“If Q1 is any indication, total annual global demand for the Model 3 is 200,000 vehicles,” it said. “We believe that (Tesla’s) poor reputation for quality and service and diminishing tax incentives are limiting broader demand.”
“We believe that right here, right now, the company appears to again be on the brink,” Greenlight said.
“The signs are everywhere, from the lack of demand, desperate price cutting, layoffs, closing-and-then-not-closing stores, closing service centers, cutting capex, rushed product announcements and a new effort to distract investors from the demand problem with hyperbole over (Tesla’s) autonomous driving capabilities,” it said.
Tesla Won’t Survive
I side with Einhorn on one point: Tesla will not survive. The company has too much debt and its product is poor.
Timing is another matter. Story stocks survive much longer than anyone thinks, then collapse all of a sudden.
When? I don’t know.
Mike “Mish” Shedlock
These are similar negative comments I remember seeing for Jeff Bezos in 1999, but I agree that they were justified. It was easy to make the argument that Amazon was a poor investment at the time. But I have learned to trust the person behind the company … Bezos had a vision … Steve Jobs had a vision for Apple. I see a similar drive in Elon Musk for Tesla.
My high school son (and his friends who are into cars) rave about the Tesla. It has the same mystic and cult following as Apple products. I tried the iphone and iMac (twice in fact) and didnt like either one, but I never bet against Apple.
When I hear Musk in interviews, he reminds me so much of Jobs and Bezos back in the day. I simply think the odds of Tesla going under is similar to Apple and Amazon when they were first getting going … it may seem that the company has a better chance of folding than succeeding, but I have learned not to bet against someone with drive and ambition.
Not even the best analyst knows … and of course this is only one person’s opinion. But I think I remember Warren Buffet saying he wasnt investing in Amazon for whatever reason, so take that for what it is.
There is no doubt that many “orders” for Tesla 3 were tax games — buy a Tesla, get the tax credit and sell the car at a premium…However, there are a few interesting facts (1) There are issues with batteries — and Tesla is not getting enough, (2) Tesla is “profitable” at least not bleeding money anymore. (3) those who purchased Tesla “knew” they were buying something revolutionary — and that there are certain risks with such purchases.
Now, Tesla is modifying its vehicle offering, even offering leasing! That shows its a maturing company. Now, Tesla may not survive, there is no doubt that the company has a lot of debt, but I think it’s a little early to assume that the company will die very soon. Tesla’s ultimate risk is the possibility that it will not be able to refinance its debt. Ok, I buy that, still, the vehicle proves hugely popular and have wide profit margins.
On the tech side the new motors have even fewer moving parts than the old ones, Tesla is saying that its cars are good for 1 million miles and that the batteries should last half that. If the cars are resistant to rust with few moving parts, and that the “maintenance” issues are resolved — Tesla may be seen as the Japanese cars in the 1980s: they lasted far longer than their American counterparts, they were cheap to repair and cheap to operate.
Don’t bet against the guy who makes a long lasting simple and elegant product
Hello Cocoapuffs,, No I don’t have a picture, no need the internet has it….and I don’t dream about hyperloops or fruitloops…I just enjoy driving my Tesla m3….:)
IMO, a big issue with switching to electric cars for the masses is the batteries require rare earth elements. Which, by definition, are in very short supply. I don’t think electric vehicles can account for say >10% of the market unless and until new battery technologies are developed that don’t use rare earth elements.
If your name isn’t Apple, Amazon, Microsoft you are on the brink.
Google, FB, VMWare, Intel, Qualcom, Samsung, …
Exxon, Chevron, …
I could have named a few more, point is, majority of Balance Sheets are toast.
Thanks for noting. “its product is poor”! With so much new competition heading it way I also contend it is only a matter of time.
Gonna be had on the cheap by Apple or ? next recession at the latest. Smart money sells it now if possible.
The truth is that after all the smoke settles Tesla is not really worth much. the auto sector is a very competitive industry with far to much production capacity.
Like most of you here and Mish, I am a sceptic of Tesla, and of electric cars in general. I personally do not like them. However, my brother, who is an electric car fan (almost a fanatic) bought a Tesla 3 which he has had for nearly a year and loves it. He has had no quality issues, and especially loves the self driving which he has found amazing, and he uses it nearly all the time (he is not stupid and keeps his eyes on the road and his hands on the wheel). My brother, and I are both climate sceptic, so this is not the reason he likes his Tesla. He likes the idea of electric cars because of their simplicity (he is an engineer, I am not), and feels they ultimately should be cheaper than internal combustion. He is also much more optimistic than I am that batteries will continue to incrementally improve. So my position is mainly that it is a very interesting saga to watch. But I am fairly sure that the market cap of Tesla is not sustainable even if Tesla survives.
You have to think that after the next major leap in battery technology electric cars will dominate the auto industry. Like we saw with large flat screen TVs, it doesn’t take long before prices drop dramatically with scale. I would not be shocked if half of all new auto sales are electric by 2025. Tesla is thought of too highly to disappear, but whether their fortune will be closer to AOL or Apple remains to be seen.
Thought of too highly? By who investors or consumers? Because it seems rather apparent consumers are not in demand for an electric car. Yet investors love the idea of consumers wanting an electric car…
Not sure why would be a skeptic of electric cars as the concept has been around since the dawn of the automobile. There is a lot to like about electric for propulsion. A lot less moving parts and no oil changes etc required. Most maintenance will involve tire and wiper replacement (though suspension should wear out like a ICE auto). The performance of these cars can be extreme or even damned dangerous. The 0 – 60 in Teslas can be faster then even many supercars.
I think Einhorn is blowing smoke about quality issues.
The market cap has been and is very high for what they currently do.
I think Musk has succeeded in his primary goal showing the world that electric cars can replace the ICE (internal combustion engine).
Yes electric cars have been around a long time. But they have so far failed to replace the internal combustion engine in spite of their obvious advantages. The sticking points have been range, speed of re-charging batteries, cost of batteries, overall lifetime of batteries, and disposal of batteries. Although many of these issues have been improved I would not say that they have been solved. My brother would certainly agree with you about quality, and having driven with him many times in his Tesla 3, as a passenger the car reads as having been built with very high attention to detail and excellent quality. Skeptic simply means that I don’t think the impending dominance of electric cars is at all a certainty– at least not yet.
I would also add, about the Tesla Organization in general, that in my opinion an organization that frequently and quickly changes policies and direction is an organization that is healthy. Kodak, AOL, Sears & many other now gone iconic names rode their failed systems and methods right to the grave. Any organization must remain dynamic and nimble to survive. Tesla has demonstrated this ability in spades. In fact their quick response to problems have been criticized as being too quick.
Musk should have stuck with the upmarket models and then licenses out his technology to “real automotive manufacturers”.
IMHO as a electrical engineering and company director
License out his technology? That isn’t his model. He has opened up his patents to anyone. His goal was to replace the internal combustion engine with electric as a way of combating global warming.
My own impression is that Tesla faces an uphill battle. The stock is ridiculous, there is no basis other than speculation for it being that high, a story stock. I give Musk credit for trying but I feel he is becoming desperate to keep the company alive. I do feel bad for him. I just don’t see a business case for EV’s at this point but I believe at some point in the future technology will advance to make it practical and economic. I hope the company survives but hope isn’t a good business strategy.
The “Mish Editor” spamming the comments has got to be Wagner. Only he would be obsessed enough with Tesla to pull a stunt like this.
Who is this Mish impersonator? Whoever it is really has a lot of free time and no facts or reason to try an intellectual challenge to Mish’s article. Those types would typically try to go find Mish in person and yell at him. Only McDonalds doesn’t usually allow its fry cooks to take two weeks off, so he wouldn’t have time to drive the 500 miles in his mother’s Tesla. So spoofing Mish is all he can do…
His whole scheme may have hinged on The Paris Climate -Accord-, I mean Agenda ( better description) becoming a world wide thing. Oh my, it seems to be the center of protests, such a pity. Hearing gasoline at $1.62 per liter ($6.12/gallon) in British Columbia is very popular either.
The BIG point EVERYONE is missing is Elon LIES! He is scrambling and changing things SO RAPIDLY, because the company is drowning and gasping for air. How do you people NOT see this? I am NOT a hate of Tesla. I think the idea of EV’s, to help save the environment, is an GREAT idea! I, however, am NOT a fan of liars! Elon promises and doesn’t deliver! He sits on money, that has been given for reservations, but then doesn’t come through! He can NOT be trusted! Just because someone may be very smart, it doesn’t make them a good candidate, to run a company. He got LUCKY with the “pay pal”/Zip2 deal. Zip2 was only around 4 years, before it was sold! The average length of time, for a business to “make it or break it” is 7 years. If Musk held on to Zip2, for the entire 7 years, would it had been a success? One will never know, He sold to a company who made it more successful, as we know “Pay Pal now. The Model 3 (standard) was suppose to be the BOOST of the company, the high light! They are NOT even existing. When ANY company scrambles, so much, in weeks, changes things, changes things back, takes away a product, adds it back in, etc, you have to KNOW they are hurting financially, and pretty badly! They are on their way out! Tesla would be SO much better off, without Elon, and I HOPE and PRAY, if the SEC case goes back to the Judge, because of no deal, that the Judge bans him from being the CEO. AGAIN: EV’s GOOD – Elon, BAD. Go buy an EV from a promising and a long existing company! AND, DON’T invest in Tesla! Your investment(s) will be worth pennies! Best of luck to all of you!
It must be hard knowing that Tesla stock is going to pennies and then betting on shorts and then waiting … and waiting … and then the short runs out and you lose money.
If you want to short Tesla, then you have to have inside information as to “when” the stock might fall otherwise it is too much of a gamble. If you think it is going to “pennies” then obviously you just shouldn’t buy the stock. But I don’t think you should make negative comments on Tesla, especially comments with CAPITALIZED LETTERS and other signs of hatred/anger for the company.
If someone thinks Tesla is a great stock to own, then they obviously love your comments because if it lowers the stock price then they can buy on the dip.
My advice to you, Val012, is if you want people to hear your advice then try not to show so much anger in the comments. I think I am like most people in that I tend to ignore comments that I feel are anger-based.
Friends in CA just bought a new Tesla (for reasons surpassing understanding). They are constantly doing the math in their head about remaining distance on the battery charge, thinking about where to recharge and whether to pay $22 for a quick charge.
Your friends will be fine. That is completely normal when someone buys a tech that works completely differently. They should try to charge at home or work. Or use Tesla Navigation system that does all the planning on roadtrips.
Government subsidy has kept heat under the BOW, (Battery on Wheels) auto segment for years now. Subsidy expirations are finally turning up the light and revealing the same physics that defeated Edison more than a century ago:
Nukes will work; BOWs won’t…still.
No, you got it other way. Government subsidy for oil has kept that impractical Internal Combustion Engine tech alive for so long.
I don’t doubt that modern civilization will eventually be driven to energy sources other than fossil fuels, but wind, solar, geothermal and hydro-electric combined won’t come close to meeting the needs.
A 5 gallon bucket of av gas blasts a 737 a mile at 30,000 feet. The energy density of all alternatives except nuclear are laughably puny by comparison, yet society lapses into screeching fits at the very mention of nuclear energy.
I could buy a future scenario with LFTR nukes powering those energy-sucking chargers and powering hydrogen generators, but not more of the same Elon Musks selling BOWs without prime energy sources to charge them…on anything other than more fossil fuels.
It is energy conversion efficiency that matters. Not density alone.
This is first warning for you. If you will repeat this nonsense then prepare to be blocked.
Being a genius in a highly competitive arenas is quite different than a new tech business. Elons constant reshuffling the agenda and sales strategy are definite signs he’s struggling. Any profits he’s made are from C02 credit swaps etc.