Tesla Posts Record Loss – and Stock Price Goes up!

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Elon Musk’s crony capitalist con operation just posted its biggest loss to date – $430 million in three months – but Tesla stock prices climbed 10 percent after the announcement.

What to make of this?

It’s like being in a nursing home, beside the bed of your blind, dementia-addled 94-year-old grandmother and the doctor just told you she probably hasn’t got much time left – but you decide to go out and buy her a new car.

With the difference being that you’re buying grandma the car.

In Tesla’s case, it’s taxpayers who are buying the cars – for the affluent virtue-signalers who “buy” them at massively subsidized but massively high prices.

Even so, Elon still can’t make a buck on these things.

Not that it matters.

The conga line of suckers seems endless. In part because of Elon’s Rasputin-like ability to bedazzle the media, which reports every promise with the gush of a 16-year-old girl effusing over her prom date and never reports that her date raped her after the prom.

Mum is always the word when it comes to Elon.

For example – and most recently – the media gushed over the arrival (sort of) of the “affordable” Model 3, sticker price only $35,000! Which is only $15,000 more than a well-equipped Honda Civic sedan, which does the job of getting from A to B vastly better, if the metrics are cheaper and easier and more conveniently.

But the media has not told you that the “affordable” $35,000 Model 3 isn’t available.

Only the $40,000 Model 3 currently is.

And it’s only twice as expensive as a well-equipped Honda Civic.

But what’s $20,000 between friends, eh?

Keep in mind, too, that both the $35,000 Model 3 and the $40,000 Model 3 are really more like $50,000 Model 3s – if you take away the subsidies and price them such as to account for their true cost to manufacture and sell at a profit – as opposed to giving each away at a loss, as Elon has been doing for the past 15 years.

Another thing the media hasn’t been telling you is that there are ghost fleets of brand-new Teslas sitting idle in parking depots – much like the excommunicated VW diesels, but with a difference.

People wanted the diesels – and bought them, too. VW was forced to buy them back – often from reluctant-to-give-them-up owners – and force-retired them over picayune and pedantic “cheating” on government emissions certification tests.

But the idled Teslas are sitting because of quality control problems that make them unready for presentation to marks (whoops, buyers). These are problems which would result in the implosion of any other car company once word got out but word doesn’t get out because Elon’s cars are electric and so The Future; the deficits are simply not discussed for fear of alarming the marks (er, buyers) who might have second thoughts.

Some of whom already are having them, regardless.

These are the people who’ve asked for their money back – the deposits they made on cars not yet received – and it’s not a few of them. Thousands of them have been getting uneasy over the serial promising and never delivering.

Elon promises – again – that Tesla will make money by the fall. Well, fall is about two months away, bucko – and things do not look good.

“The projection of profitability in the second half of the year is admirable, but is based on selling a far more expensive version of the Model 3 then many consumers had expected,” says Rebecca Lindland, the executive analyst at Kelley Blue Book, publishers of the car value guides. “Can they sustain profitability if and when they start selling the more affordable $35K version? Insights into the quality and quantity of the reservation pipeline, while boring, would provide investors with confidence with profitability projections.”

This is exceedingly gentle analysis. More giving the benefit of every doubt to this latter-day P.T. Barnum – who is proving old P.T.’s observation about suckers being born every minute to have been the understatement of the century.

Tesla recently laid off about 9% of its staff – so the posted losses would have been even higher and in fact, are higher. They have just been flim-flam’d around.

But the fundamental problem with Tesla isn’t that its cars are electric. It is that they are electric high-performance luxury sports sedans. The idiocy – the effrontery – of this ought to be self-evident but like the Emperor’s new clothes, no one wants to talk about it.

Elon can’t tout the economy of his cars – because he touts performance, luxury and style and gadgets. In order to appeal to the guilt-addled virtue signalers who are his audience and want to preen green but not in a Prius. They want something like the Mercedes S-Class they gave up because of its politically incorrect V8 engine. But they’re not giving up the the performance and gadgets and the snob appeal.

Enter Elon.

But if the cars are not economical, then why are they being subsidized? Put more finely, why are taxpayers being mulcted to subsidize the purchase of high-performance luxury-sport sedans, whether electric or otherwise?

The high-end luxury car market is an inherently small market – and more to the point, it’s a market defined by indulgence. Why is indulgence being subsidized by the government? It is not very  . . . progressive.

Nor very green, for that matter.

If Elon had focused on that as the main design criteria, his cars would be less flashy, less quick but much more  .  . .  economical. They might even be cost-competitive with $20,000 Honda Civics and people might actually buy them not to virtue signal but because they made economic sense.

But then, the high-end virtue signalers would not have been interested. So the bonfire of cash waxes, grows brighter.

It’s just a shame it’s not Elon’s cash that’s fueling the fire.

Got a question about cars – or anything else? Click on the “ask Eric” link and send ’em in!

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39 COMMENTS

  1. “Even so, Elon still can’t make a buck on these things.“
    I think Elon is doing just fine money-wise. It is the investors and shareholders who are exposed to the consequences.

  2. Had a Muskboy tell me they’d met a production target just last month. Turns out it was a target from 6 months ago.

  3. This is proof I have somehow slid into a parallel dimension … Bizarro World. How can I get back to the normal Earth???

    Most people slave for their measley dollars, and then there’s this. Always plenty of money for endless scams, but the congrease always tells us there’s “just not enough money” for social security / elderly / disabled people to have 1 cent more than bare survival.

  4. My brother drives a Tesla Model S P90D. It is expensive and WILDLY impractical. For example: he recently completed a trip to Chicago and planned to head up to Wisconsin on the way home to visit friends. He drove out of Chicago, and stopped at the only supercharger for 100 miles on the way up to a remote part of WI. When he arrived, he plugged in and nothing happened. Nada, zilch. No juice flowing.

    So he called Tesla and they assured him it was NOT his car, it was their supercharger station. The Tesla phone support told him that while the supercharger was operating nominally, the actual power was supplied by local utility subcontractors and they had the right to PULL POWER from the station when load was high elsewhere. Well, this being a 95+ degree day, the A/C units were using a lot of power and the local utility completely pulled power from the supercharger that my poor brother was sitting at.

    Furious, my poor brother limped the car in “extreme range mode” (no A/C, no console, etc…) all the way to his friends house and plugged in…the wall 120V socket. He had only planned to stay 2 days, but had to stay 3 days just to get enough range to make it back to a supercharger on the way home.

    So long story short: imagine spending $50-100K on a luxury car only to find that you must carefully plan every trip that is not a local trip, and then when you arrive at your supercharger, there is a random, non-zero chance that it won’t have power. Would a buyer of a gas-powered car ever put up with such nonsense? What a scam.

    • Rural WI is not electric car friendly. There are still gas pumps from the 1970s out there. But at least they still move gasoline into the car’s tank.

    • Thanks for the input, Mike!

      I also do not get it. A Mercedes S may only get 12 MPG, but you can refill it in 5 minutes, anywhere. Why would anyone spend six figures to own a car like the Tesla, which is tied to such a short leash? Ownership of which entails so many hassles? What is the upside?

      Oh. I almost forgot…

      Virtue signaling. I am green!

      • Hi Eric:
        And the weird thing is my bro is not really a virtue signaling type of guy. He’s actually a Ron Paul libertarian at heart. But he’s an MD and there is some pressure to live that lifestyle among MDs. They all check out each other’s rides in the parking lot.

        I think he was also seduced by all the “gee whiz” tech on the car and of course, the car media’s fawning adoration of the Model S when it first appeared (one well known mag reported that it scored above 100% on their tests, if I recall).

        But lately he has soured on the car somewhat. A big factor is that someone driving a 2012 Model S and someone driving a 2018 Model S are largely indistinguishable. Similarly, you could drive a 55 Model S or a P100D (top of the range) and nobody can tell the difference. It’s annoying for people like him who shelled out big bucks for a P90D (when that was the best model) and he doesn’t get any kudos for it.

        I’ve been encouraging him to trade it for an ICE car, like a nice BMW 6 series or even a Kia Stinger or something. We’ll see how that goes.

    • Growing up and being a car person, always did have a fascination with electric cars (as im sure many here have had). The issue with with the current crop of electric car is that they are completely idiotic and impractical, thanks to nonsensical government regulation, taxation, and then crony capitalist like Musk who take advantage of the whole situation.

      Making a 3 ton beast the size of an S class, or an SUV wider than a Range Rover with a 300 mile range costing over 100k is absolutely useless if you ask me. 300 miles is overkill for a city run and you are using too many rare elements (destroying parts of the world a hipster millennial in SF has never even heard of) and lugging around too much weight all the time you dont actually need it. But its not near enough for an out of town / cross country run. At 100k, its too much to keep as a second car for the city. And the size – wider than my current SUV makes it tough for my wife to do the school run, or for me if i take it into the city to find a parking slot big enough every time. I really dont get the point.

      Having lived in or around mega cities for the last 20+ years, genuinely see a place for electric cars. Small, quick, light weight, cheap city runaround cars. Say a closed golf cart, with a bit more range and power, an AC / heat (the knob kind, without a screen). And yes a respectable sound system (or even an amp with speakers, everyone can use their phone). Around the 10k mark ideally. Maybe not totally “green”, but they will help keep very air in very congested areas relatively cleaner. And as much as I love the ICE, if a sensible one is made I will definitely consider it and im sure others will too….. But again, referring to my previous comment here – thats not the world in which Tesla was conceived….

      • The really sad thing is New York State acts like they don’t know what happened to half of the $750 million spent on the factory. Several developers are either in prison or going to prison for bid rigging and most of the lost money is probably sitting in King Cuomo’s war chest. I don’t agree with government involvement in business but, this money could have done wonders for the Western New York Region if it was spread around a lot more. Instead they just pissed it away on a building that will probably be sitting vacant in the next two years. There are no consequences when dealing with other peoples money.

  5. Nasir paints a good picture of how Tesla was conceived. In a film titled “Be Cool” made from an Elmore Leonard novel, the hero has to settle for a Prius type rental while his Deville is being repaired. He turns it to his advantage when one of the movie stars he hangs out with comments on the tiny car by saying, “Yes, it’s slow, but if you’re important, people will wait for you.”

    This is a story that has had me laughing:
    https://jalopnik.com/tesla-is-paying-back-german-ev-subsidy-after-it-alleged-1827686028

  6. We’ll never know but I wonder who are the big investors in Tesla? A quick look at the stock on Yahoo finance shows no data on the “holders” tab. My guess is there are a lot of people on Sand Hill Rd and Wall St who are trying to keep the plate spinning long enough to get some of their investment back.

    Most silicon valley companies see gross margins of 90% or more once the R&D are done. That’s the kind of returns they like to see. Intel typically will spend m/billions developing the next chip, but then once they get it into production the cost per unit is pennies. And they can then design lessor chips (like peripheral interfaces) that use the old production process. If Musk convinced a bunch of the Sand Hill Rd boys to invest based on being able to produce vehicles for a fraction of the cost of what Detroit can do, well, guess what? GM had been in the automated factory business for 20 years and still can’t get it right. What made them think Musk, who’s only prior success was Pay Pal, was somehow able to produce an automated factory is beyond comprehension. My guess is that someone was looking for the next Steve Jobs and bet on the wrong horse. But instead of cutting their losses they’re doubling down, all the while trying to do anything to get the business to succeed. Certainly they let their emotions get in the way of prudent thinking. But years ago I remember a high flier called @home corporation who could do no wrong. They pissed away billions on Excite, a search web page that was competing with Yahoo, Alta-vista and a startup called Google. When the bubble popped they disappeared. A quick look at their web page looks like something from 1998, almost like going to the old mall that is hanging on by the one or two stores still operating.

    You can’t fight gravity, even when you’re a media darling with some deep-pocket financier backing you up.

    • I suspect that the biggest investors in Tesla are shadowy figures who never expected a direct return on this little fraudulent manufacturer, but are looking at the end game of profiting from the destruction created by the electric car fraud.

        • Yep Ed, an historical doc. I read the headline on this story somewhere else and didn’t bother to read the article.

          I had the thought there was a drug I was unaware of causing some sort of mass dementia. Don’t know if I’d try it. Delusional happiness might be as good as any.

          • 8, I read one of the articles about that and it read as though some German bureaucrats accidentally swallowed some red pills and realized that Tesla was a luxury sports car that didn’t qualify for any subsidies because it was too expensive.

            The one I posted the link to was just one of the ones that came up in a search. From the long list of articles on the subject, I must not have been the only one who got a kick out of it.

              • Oh, HAIL yayuh, 8. Like the guys who sell their golf balls at a 20% loss and they plan to make it up in volume.

                Makes perfect sense as long as you don’t think about it. 😉

                • Like the old Aggie joke about trucking. Two Aggies bought a truck, bought grain on the plains, hauled it down to the coast where they sold it.

                  After a couple months they were behind at the bank, wondering WTF they could do to turn a profit.

                  After a lot of thinking one figured it out. He went to his partner and said “Well, I guess you know what we’re gonna have to do? ” After a few minutes the other one seemed to see the light and replied “yep, we have to buy another truck “.

  7. Teslas aim was never to provide efficient, environmentally friendly, sustainable, and affordable cars to the masses. In the early 2000s, the upper echelons of society in places like Commiforina had a real problem on their hands. They had all heard the CO2 being evil lectures, and all trying to be holier than thou leftie progressive types had to give up their nice, high performance, luxury SUVs and other large cars and move to something else. The problem however was that at the time the only such car available which would be good for virtue signalling was the humble old Prius. Now despite the fact that the Prius may be a good car in its own rite, its no hummer or Escalade or S-class.. And more importantly our overlords deep down inside didnt like being seen in the same car that the rest of us Plebs or even taxi drivers drive…. and there was the problem Elon Musk set out to resolve. He provided a car, that was luxurious (well presented as such), high performance, spacious, and can finally be seen as “green”. And priced appropriately so the masses could never get one. They can have this car, feel good about themselves, virtue signal, and yet stand out from the rest of us….. The only problem is that we all pay for it!!!

    • I had 2 old college friends who both bought a Prius several years ago when everyone was being badgered over their carbon footprint. 3 school teachers out of 2 married couples. It was sickening virtue signalling.

      When I pointed out how ugly they were I was vehemently attacked. The silence from everyone else in the group was deafening.

      I never let up and when one was beaten so badly in a Dallas hailstorm it didn’t even have a window left. I told the owner this was the perfect time to get a long-legged VW diesel to make those 100 plus mile trips to a town of any size on the high plains. He replied he loved his Prius and couldn’t wait to get it back from the body shop.

      Now both guys always share with the group when they make a vehicle purchase. Funny thing, neither one I found out, still have a Prius but I never heard it from either nor what they are currently driving.

  8. Apparently Ms. Lindland was huffing paint thinner before writing that drivel. In order to “sustain profitability” one has to first, in fact, be profitable. Profitability projections do not suffice.

    And besides, Elon was bragging on twitter back in June how “Given that Tesla has never made an annual profit in the almost 15 years since we have existed, profit is obviously not what motivates us”. If that is the case Elon, why are you promising you’ll be profitable by fall? You know, since you don’t care about profit. You’d think investors would be running as fast as they could in the opposite direction. But no, lets throw more money at this clown. It’s like we’re living in an alternate universe. Sheesh.

    https://tech.co/tesla-hasnt-made-a-profit-in-15-years-and-its-not-alone-2018-06

  9. A Senate Committee on War Profiteering attempted to Crucify Howard Hughes for not completing the Hercules Flying Transport (Spruce Goose) before the war ended. He funded more than 50% of the aircraft’s cost, even though Uncle canceled the contract after the war ended. This shyster, A-hole Musk, has pissed away a billion taxpayers’ dollars on bullshit play-toys, electric cars, rockets to Mars, Electric Cars IN Rockets to Mars……this fucktard is a cdon-man who should be in prison, not on the cover of Forbes, and everywhere else his nasty smirking ass-face has appeared! He’s a Soichiro Honda Wanna-Be but doesn’t even use his own money or even make a halfway-competitive product, he just gets rich bilking our tax-money and his own investors, who are apparently as brain-dead as the media that worship his worthless ass!

    • Preach it, Graves!

      Another aspect to this which is rarely if ever mentioned is that Musk is a finance/computer/tech guy; he was one of the PayPal guys. He is not a mechanical guy. I doubt he understands basic things about cars – or the car business. He just “thinks” electric cars are The Future – and insolently bullies forward on other people’s money.

      I wonder whether the chuck wagon will ever close its kitchen?

      • Eric, this must somehow relate to 320 million people in the country. It’s certainly not because of a good economy……signed I JUST DON’T GET IT IN WEST TX.

        And here Texas is about to become the largest oil producer in the world and these idiots want to poison other people with coal smokestacks.

      • Oh, he’s not even that.

        PayPal was never Musk’s to brag about, though it’s often cited in casual conversation as if it shows he knows anything about anything. Basically, he (with others) had a dotcom, and it got bought/merged with another dotcom because it had effectively stagnated. This second dotcom had made what would- after being bought by eBay- eventually become PayPal. The sale of that asset to eBay afforded Musk (among others) a sizable windfall. So, Musk’s luck is unquestionable, but it’s not an example of the man’s alleged merit, since he had little to nothing to do with the technology, the marketing, the sale, the operation… (Worth noting, in this new company formed by the merger, he ultimately got booted from the board because he couldn’t leave well enough alone and kept interfering with executives, middle management, and IT staff about technical matters- in a dotcom, mind, where it’s often pretty central to the business.)

        The man has a degree in physics, but has at times also said staggeringly stupid things, like that a manned colonization effort to Mars would not necessitate radiation shielding on the spacecraft to make the journey. Engineering? Nope; his notion of the Hyperloop as a large, partial-vacuum chamber with trams/trains/sleds inside it (also an old, turn-of-the-century idea — 19th-to-20th, that is) is idiotic, too. If at any point there is a pressure change from a breach or other fault in the tube or transitory entrances/exits (think airlock-lite)- say, from seismic activity common to California, or wear, or accident, or any number of inevitable-over-a-long-enough-timeline things- the whole damn things turns into the world’s biggest pellet gun, with people and cargo inside as the pellets.

        If he was genuinely skilled or preeminent in some other science or applied science field, and from that people were drawing the errant notion that he is then skilled more generally, I could at least understand the mistaken interest in his proposals. Really, though, Musk is just an overconfident twat who thinks very highly of himself and who leads others to trust in his promises by leading with blind confidence, just like a salesman. (Come to think of it, very much like how Trump typically bulls his way into most technical matters. People generally and foolishly trust obvious confidence correlates to informed acumen.)

        Elon Musk knows exactly enough to sound educated to the uneducated, and enough to get himself and his associates into trouble, but he rarely knows enough to surpass the real problems he encounters along the way, and rarely knows enough to fix the messes he makes. Oh, but he’s very popular.

        • TL;DR
          ELon Musk is far more Thomas Edison than Nikola Tesla, for those who understand the comparison.

          For those more drawn to tech, he’s like the cult-of-personality of Steve Jobs but paired with the management and technical slapstick that was Steve Ballmer’s time as Microsoft’s CEO, but more prone than either to persecutorial delusions and impulsive Twitter libel.

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