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Tesla, Inc (Formerly Tesla Motors, Inc.) Official name: Tesla, Inc (formerly Tesla Motors, Inc.). Brands: Tesla, SolarCity, Grohmann Automation, Maxwell Tech- nologies, DeepScale, Hibar Systems, SilLion. Owned by: Institutional investors (48.2%), Elon Musk (20.7%) Susquehanna Securities (6.5%), Capital World Investors (5.6%) Kimbal Musk (0.07%), Zachary Kirkhorn (0.01%), Jerome M. Guil- len (0.01%) and others. Current situation: Tesla has lost money on every car that it has ever sold. Tesla has never made a profit selling cars. Ever. Tesla lost money for its first 18 years of operation and then made a slight profit selling zero-emission vehicle (ZEV) credits to other carmak- ers. Based on its current business model, there is no way Tesla can ever make money. This is especially true given that there’s nothing Tesla is doing that other carmakers can’t do better and cheaper. The only thing Tesla has going for it its name and image as a cool, green carmaker. Like most of the other claims about Tesla, this positive image is mostly bullshit. Chances of survival: faint to moderate. For the first time, Tesla is now facing serious competition from other carmakers. Given that Tesla has lost money on every single car it has produced, its long term chances of competing against the likes of Hyundai and Volkswagen are basically zero. Tesla will probably stumble on for a few more years, thanks to joint ventures with companies like Toyota and multiple government handouts. But these deals will simply postpone the inevitable. Aside from full bankruptcy, the mostly likely scenario is that Tesla will be bought by another carmaker • 1 All content © The Dog & Lemon Guide MMXXI • All rights reserved EGARDLESS OF THE GOOD intentions Rbehind the original launch of Telsa motors, the current company is effectively a Ponzi scheme, a confidence trick that requires new suckers to pay off the ones whose money has already been spent. Like most sharemarket bubbles, Tesla requires hordes of fans who are high on enthusiasm and low on actual knowledge. 2 All content © The Dog & Lemon Guide MMXXI • All rights reserved The three big lies that Tesla fans believe are true 1) Fans believe that Tesla is a wildly sucessful com- pany. 2) Fans believe that Tesla is a world leader in tech- nology, especially battery technology. 3) Fans believe that Tesla isn’t scared of competion because it’s already decades ahead of everyone else. They also believe that Tesla is about become even more successful. And pigs might fly. 1) In fact, Tesla has lost money on every car it has ever built. Tesla has never made a profit selling cars. Ever. + 3 All content © The Dog & Lemon Guide MMXXI • All rights reserved Tesla lost money for its first 18 years of operation and then made a slight profit selling zero-emission vehicle (ZEV) credits to other carmakers. FYI, the Californian government fines companies that make fossil fuel-powered cars and rewards com- panies that produce zero-emission vehicles. These rewards are called ZEV credits. Tesla ends up with many, many ZEV credits. Tesla then turns around and sells these credits to companies that produce fossil fuel-powered cars so the compa- nies that produce fossil fuel-powered don’t get fined. Nice work if you can get it. So, when Tesla announced a modest profit in 2019, this profit wasn’t from making cars. This profit was made from selling off ZEV credits to other carmak- ers. No company can survive this way into the longer term. Tesla’s only path to survival is building cars profitably. But Tesla doesn’t know how to build cars profitably. Even during the golden years when Tesla was the world’s only major manufacturer of electric cars, it still lost billions. And Tesla is now competing against every major car company on the planet for the same small market. 4 All content © The Dog & Lemon Guide MMXXI • All rights reserved 2) Tesla is not a world leader in battery technol- ogy, and does not produce batteries. In fact, Tesla has never produced a single com- mercially-viable battery. Not one, ever. Most so- called Tesla batteries are simply rebranded Panasonic batteries. Tesla and Panasonic already own a joint battery factory in Nevada, USA. The confusion over Tesla batteries arose because Tesla cars have an ingenious, innovative, battery man- agement system that carefully nurtures the hundreds of batteries that powered the car. But Tesla never built these batteries, sorry; just the system that cooled and controlled the batteries. 5 All content © The Dog & Lemon Guide MMXXI • All rights reserved Panasonic is no longer Tesla’s exclusive battery sup- plier, but that doesn’t mean Tesla is making its own batteries. Instead, Tesla recently also partnered with South Korea’s LG and China’s CATL. Tesla has certainly announced it intends to design and build its own batteries. But currently, this claim appears to be simply more hype from Elon Musk, one of many meaningless promises Musk has made over the years. + 6 All content © The Dog & Lemon Guide MMXXI • All rights reserved 3) Tesla will struggle to survive in a competitive market. Fans believe Tesla isn’t scared of competion, because Tesla cars are decades ahead of their competi- tors. In fact, there’s nothing Tesla is doing that other carmakers can’t do better. Tesla cars are often poorly built and full of bugs. Nor are Tesla cars capable of fully autonomous driv- ing. It turns out that Elon, like his hoards of eager young followers, were hopelessly optimistic about self-driving cars. And Tesla was forced to admit this to US authorities. 7 All content © The Dog & Lemon Guide MMXXI • All rights reserved None of this bothers Elon Musk’s loyal followers. But it seems to bother buyers. As a MarketWatch op-ed put it in January of 2021: “Norway, the testbed for the future of EV, is [aim- ing to have a zero-emissions car fleet] by 2026, and [over 50% of new car sales are] fully electric vehicles. The No. 1 seller? Not a Tesla. It’s the Audi e-Tron. VW-owned Audi sold 20% more of these e-Trons in Norway in 2020 than Tesla sold Model 3s...In fact, of the total battery electric vehicle market in Norway, the Tesla Model 3 has just a 10% share. ...It is possible that a lot of Tesla investors do not realize the competitive dynamics [of the car indus- try], whether in Norway, or globally.” Tesla’s fans aren’t worried. They believe that Elon Musk will pull off some slick high tech miracle that makes everything okay. And these same fans happily ignore the unpleasant fact that many Tesla vehicles are announced, then never appear. 8 All content © The Dog & Lemon Guide MMXXI • All rights reserved For example, Tesla has announced both a pickup truck and a huge highway semi-truck. Tesla claimed to have hundreds of thousands of advance orders. However, at the time of writing, there was no sign of commercial production of either vehicle. In case you haven’t noticed, Tesla announcements tend to be long on grand promises and short on de- tails. For example, Tesla has never disclosed any of the vital details on exactly how these trucks would work. Many experts who know a great deal more about basic science than Elon Musk, doubt if either of these trucks will ever work. Yes, Tesla or anyone else with lots of money can build a truck. But building a truck that works in the real world and makes a profit is quite another matter. 9 All content © The Dog & Lemon Guide MMXXI • All rights reserved Tesla will never become a profitable company, at least in its present form. Multiple credible experts have crunched Tesla’s numbers and concluded they’re utter bullshit. For example, in early 2021, based on Tesla’s share price, Elon Musk briefly became the world’s richest man. Will Dunn, business editor of New Statesman, then crunched Tesla’s numbers and concluded: “at its current price-to-earnings ratio, it would take Tesla almost 1600 years to make as much money as the stockmarket has invested in it.” There is no obvious way Tesla can ever make money. There’s nothing Tesla is doing that other carmakers can’t do better and cheaper. The only thing Tesla has going for it its name and image as a cool, green carmaker. Like most of the other claims about Tesla, this posi- tive image is mostly bullshit. 10 All content © The Dog & Lemon Guide MMXXI • All rights reserved And it gets worse: one of the things that made Tesla cars so attractive to hip young motorists was their exclusivety. Teslas were luxury cars, powered by electricity. But if Tesla starts producing millions of cheaper electric cars in order to compete with other carmak- ers, the Tesla brand will be damaged. Who wants a Tesla when they’re no longer cool and exclusive? And, there’s no way Tesla can build electric cars as cheap as the Chinese carmakers. And yes, of course, the Chinese have already copied many of Tesla’s models, at a fraction of the price. There’s also no way Tesla can build electric cars as cheap as Volkswagen or Toyota. So, the most likely outcome for Tesla in the near future is a catastrophic share price crash. Inevitably, Tesla must face the dark reality of the car industry: you have to make cars profitably in order to survive. After Tesla crashes, it will inevitably face a major restructuring, which will merely postpone the inevi- table.
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