Tesla Whiffed on Production Goal

Tesla said after markets closed Tuesday that it delivered about 22,200 vehicles in the fourth quarter and 76,230 for the year, missing already-trimmed full-year estimates. The automaker delivered 12,700 Model S and 9,500 Model X sedans. It said it also had about 6,450 vehicles in transit to customers at the end of the quarter, which will count as first-quarter 2017 deliveries.

Tesla shares declined nearly 3% to $212.35 in premarket trading Wednesday after rising 1.5% on Tuesday.

“Because of short-term production challenges starting at the end of October and lasting through early December,” production was weighted towards late in the quarter, conceded Tesla. The company said that the delay stemmed from its transition to new Autopilot hardware.

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Elon Musk’s Grand Ambition Is Boring

Master Plans, electric vehicles, artificial intelligence, solar roofs, hyperloops, and space rockets that land on ships…is there anything Elon Musk won’t attempt? Apparently not: it’s time to add tunnel boring to the list.

No, I’m not joking. Saturday morning Musk sent out a series of tweets describing his intent to create a tunnel boring company because “Traffic is driving me nuts.” He then added the following to his Twitter bio: “Tunnels (yes, tunnels).”

There are only two explanations: either A) Musk is joking, or B) Musk is serious. Both scenarios should unsettle Tesla (NASDAQ:TSLA) investors and Musk supporters.

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Business ‘Savant’ Andrew Ross Sorkin Gets Elon Musk Very, Very Wrong

Actually, Elon Musk isn’t the Tony Stark of anything.  And the only person behind Tesla and Solar City is a government bureaucrat – writing Musk yet another government check.

So far, Musk has received FIVE BILLION DOLLARS in government money – mostly for his “green energy” business fallacies.  He is arguably the world’s largest welfare recipient.

And Musk’s ridiculous solar panel and electric car companies only serve as just two more totally unnecessary reminders that “green energy” is actually neither green nor energy.

Solar panels cost a ton of (government) money – and produce almost no energy for that money.  You’ll never get back the up-front coin in lifetime energy savings.  And the panels, once spent, have to be disposed of as if they are nuclear waste.

Electric cars also cost a ton of (government) money – and also cost way more up front than you’ll ever make up in energy savings over the life of the car.  Unless you drive the car roughly two thousand years.  And the energy it burns – is electricity.  Which is produced mostly by…coal – an energy source from which the Green Machine is supposedly trying to escape.

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Tesla Hunting For Spare Change In The Supercharger Sofa Cushions

It came out in the news that not only will Tesla (NASDAQ:TSLA) be charging people in the future to use their superchargers, but now you could be incurring fees for leaving your car parked on a supercharger for five minutes longer than it is supposed to. How did we get here from “free supercharger field trips across the nation”?

Like so many things with the Tesla story, one more too good to be true aspect seems to be coming to an end. We have long been skeptics of Tesla and we have long argued that when reality sets in, the stock and Tesla shareholders will be in for a bit of a reality check of their own. We happen to think that Tesla’s share price in and of itself is a little bit of a too good to be true story, and perhaps the supercharger fallacy coming to an end does well to signify what the future may hold for Tesla shareholders.

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Tesla’s Subsidy Shuffle: Big Public Costs With No Public Benefit

In mid-November, the stockholders of Tesla Motors (NASDAQ:TSLA) and SolarCity approved a plan to merge SolarCity into Tesla, thereby creating “the world’s first vertically integrated, end-to-end sustainable energy company.” It was almost enough to warm the cockles of this skeptic’s heart. Then I started compiling a list of the Federal and State subsidies and interventions the merged companies will enjoy as they pursue a sustainable future. It was a fascinating exercise.

Before digging into the surprisingly large subsidy numbers, I’ll start by describing the model integrated sustainable energy system I’ve use for this article, a system that combines rooftop solar, energy storage and an EV. To keep the analysis simple, my model system only has enough power generation and storage to support an EV. The numbers will be significantly higher if a consumer wants to serve part of his non-transport energy needs with a Tesla solution.

For a recent article, I calculated that the 170,000 Teslas on the road worldwide have averaged 33.4 miles per vehicle day. While the battery-to-wheels power consumption of a Model S is 3.5 miles per kWh, there’s about a 10% round-trip efficiency loss between total charge energy and total discharge energy. So if a consumer plans to collect energy from a solar panel, store it in a Powerwall and subsequently use it to charge an EV, the total round-trip efficiency loss will be about 19%. To get 33.4 miles of range out of an EV, he will need to start by storing about 12 kWh in a Powerwall.

While I’ve rounded some numbers to keep the analysis simple, 2 kW of rooftop solar panels should be able to provide an average of 12 kWh per day under optimal conditions. Likewise, a 14 kWh Powerwall should provide adequate storage capacity for the first couple years. That being said, a second Powerwall will probably be needed as the storage capacity of the first one degrades. I can’t accurately predict the capacity degradation of a “Powerwall 2,” but Tesla’s January 22, 2016, Powerwall Manufacturer s Warranty Certificate (Germany) used the following graph to summarize the expected capacity degradation for a “Powerwall 1” used in a daily cycling regime.

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Cut off Elon Musk’s Government Subsidy Gravy Train

Wednesday, Leonardo DiCaprio made a visit to Trump Tower. The reason? Selling the incoming administration on the creation of “millions of green jobs.” He wants the government to put its thumb on the scale to favor his pet industries. This nonsense must stop, and President Trump’s first one hundred day agenda would benefit from a plan for ending the out-of-control crony capitalism that has made this kind of activity commonplace.

DiCaprio is easy to criticize: a movie star who addresses the UN. He hectors the government to spend money on things that voters do not prioritize as highly as he does…because, you know, he knows best. But this does more than just infuriate voters. It is regulatory capture but on a grand, political scale. It warps capital markets, warps entire sectors of our economy and diverts entrepreneurs from market-driven pursuits.

It is not a theoretical point. Take the case of Elon Musk, who has become one of the more successful entrepreneurs chasing government dollars. In a sense, Musk is a tragic story of how one of the world’s most talented entrepreneurs has become sidetracked by crony capitalism.

We are all aware of President Obama’s obsession with electric vehicles (EVs), for example. In 2011, he pledged that the United States would have one million new generation electric cars on the road by 2015 and pledged billions to do it. He and a bipartisan consensus in Congress wasted gobs of money and warped markets to miss that absurd goal by a yawning margin. Likewise, he threw billions at solar energy with direct and indirect subsidies. Solar power is still not cost competitive.

From that, Musk made billions.

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NYT reporter swoons over Elon Musk

Moreover, Mr. Musk caused a net loss of manufacturing jobs. Suppose the $4.9 billion he wrested from the government had instead been distributed to the private business community through lower taxes. The annual average cost of a manufacturing job in the United States, including pay and benefits, approximates $81,300. That means private businesses would have created approximately 60,000 manufacturing jobs if they had received the same financial support government showered on Mr. Musk. His three lavishly subsidized businesses have thus caused a net loss of 25,000 manufacturing jobs. Sorkin’s effusive praise of Musk as “a prime example of everything we want our business leaders to be” is nonsense on stilts.

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Tesla Could Lose Lead in Electric Cars to Big Automakers

Similarly, the race to produce the world’s first affordable electric car was arguably won six years ago when Nissan launched its Leaf. It remains the best-selling electric car model over its history, but sales have undershot initial expectations, probably because the car’s limited battery life gave consumers so-called “range anxiety.”

Could the Model 3 be the product that finally shifts the gear? Possibly. Mr. Musk enjoys an Apple-like marketing halo that will give the Model 3 an advantage over rival products from Detroit and beyond. Consumers also seem to love Tesla’s design, which rejects the modest environmentalism of the Leaf in favor of sleek futurism.

But there are crucial differences between cars and phones. People replace cars less frequently than they buy new phones, giving competitors more time to react to innovation. And car crashes matter more than phone crashes, so practicality can win out over style. Above all, phones are far cheaper to make. Apple could pitch its iPhone as a luxury product, with luxurious margins, that was nonetheless affordable. Tesla can’t make an underlying profit selling cars for upwards of $70,000. The Model 3 is evidence it knows it needs to halve the price to stay in the game.

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SPACEX CREW DRAGON TEST FLIGHTS DELAYED (AS USUAL)

In a revised schedule released by NASA on Dec. 12, 2016, it was revealed that SpaceX has delayed test flights for its Crew Dragon spacecraft by a number of months. According to Space News, this is, in part, due to the Sept. 1 Falcon 9 pad explosion.

The NASA statement gave no reason for the delays other than it reflected a “fourth quarter update” from both SpaceX as well as the Boeing dates that were revised in October 2016.

Before the release, SpaceX was still targeting a May 2017 uncrewed test flight and a crewed flight in August 2017. However, that has been pushed to November 2017 and May 2018, respectively.

SpaceX is still investigating the exact cause of the Sept. 1 explosion. The company was hoping to return to flight as early as this week; however, last week, it was revealed the company needed more time to finalize their findings. Currently, the first flight is scheduled for early January 2017. That flight is expected to send 10 Iridium NEXT satellites into orbit from Vandenberg Air Force Base in California.

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