Tesla customers cancel Model 3 orders over Musk Flip-Flopping

No fewer than five Tesla customers told BuzzFeed Monday that they’ve canceled plans to purchase the car maker’s highly anticipated Model 3 after Mr. Musk agreed to participate in two White House advisory groups, particularly in light of the president authorizing a broad executive order last week limiting the intake of refugees and restricting immigration.

Despite telling CNBC prior to Election Day that Mr. Trump was “not the right guy” for the White House, the 45-year-old South African-born entrepreneur has since accepted roles on the president’s economic advisory group and manufacturing council.

Read More.

Elon Musk pushed for a carbon tax at meeting with Trump

Elon Musk is reportedly using his access to President Donald Trump to push for a carbon tax.

The Tesla and SpaceX CEO said the Trump administration should consider a carbon tax at a White House meeting he attended Monday morning, a senior official at the White House told Bloomberg. The official said the proposal got little to no support from the other executives in attendance.

Tesla declined to comment for this article.

Read More. 

Beware of Elon Musk, Who ‘Didn’t Build That’

The truth is that Musk went rent-seeking with the government by way of his network, got a loan to demonstrate that Tesla was an operational company with real possibilities, and used that fact to go to Wall Street to raise capital. It is a lot easier to raise capital when you have the federal government demonstrating it believes in you.

But hey, it’s not like Musk and Obama are buddies. Then again, they did have dinner in February 2015, Musk donating almost $36,000 to the 2012 Obama Victory Fund, and another 30 grand to the Democratic National Committee.

This back-scratching feels like it extends to SpaceX.  On Sept. 1, its Falcon 9 rocket exploded on the launch pad during a test run. It took less than four months for the FAA to approve SpaceX’s explanation for the explosion and to schedule a new flight.

Four months?

Remember how NASA flipped out after any mishap involving the space shuttle, and would ban flights for years until they figured out what was wrong? As of now, SpaceX is privately funded. Yet the obvious capital injection by the government seems inevitable. After all, the government can outsource any of its orbital needs to SpaceX, which would naturally mean offering it a massive loan in order to hasten that process. With this week’s successful launch, get ready for more government money for Musk.

Read More.

What Did Elon Musk Promise?

Musk is a crony-capitalist of the worst ilk. He plays both side of the aisle and wraps it all up in fanciful oratory about colonizing Mars. American’s literally eat it up. Musk is so popular you would think he was the real Tony Stark. His latest dazzling promise was to send colonists to Mars by 2024 (for $200K a one-way ticket). No guarantees you will make it alive, and no, Musk won’t be joining you on the trip. Have fun being the first Martians.

The lofty interstellar goal of living on Mars is inspired by Star Wars and Star Trek dreams and comes with an out of this world price tag…about $10 billion. Rockets are expensive and Musk has plans to blow up a few more of them as he pretends to be colonizes the red planet. The last rocket that blew, the Falcon 9, cost several hundred million in lost cargo alone. Musk actually blames that on real Martian sabotage, but that’s another story.

Read More

SpaceX Attempted Monopoly

The most bitterly contested issue in Senate floor debate of the National Defense Authorization Act this year was whether the Department of Defense would be allowed to continue using Russian rocket engines to lift national-security satellites into orbit.  The engines, called RD-180s, provide first-stage thrust for Atlas launch vehicles built by United Launch Alliance, a joint venture of Boeing and Lockheed Martin.

United Launch Alliance, or ULA, had a monopoly on Pentagon launches until last year, when the Air Force certified Elon Musk’s SpaceX as a competing provider of launch services to the military.  By that time, though, the whole issue of how national-security payloads reach orbit had gotten caught up in the reaction to Moscow’s annexation of Crimea. The annexation and continuous military provocations that followed convinced many legislators that Russian engines needed to be jettisoned from the military space program as soon as possible.

That set the stage for an aggressive lobbying campaign by SpaceX to assure itself of a sizable market share in military launches by securing passage of a ban on using the Russian engines after 2019.  That’s when the Pentagon’s current multiyear contract for launch services will be completed.  If Russian engines were banned, then ULA would be unable to use Atlas for military launches.  Its other launch vehicle, Delta, costs about 35% more than Atlas and has no hope of beating SpaceX’s Falcon 9 launch vehicle in a price-based competition.

(Disclosure: Boeing and Lockheed Martin both contribute to my think tank, and Lockheed is also a consulting client – which is why I know some of the details that follow.)

If SpaceX’s lobbying campaign had succeeded, Musk’s company would have ended up with a monopoly on pretty much any military payload it was capable of lifting into orbit.  However, the campaign failed — on June 13 the Senate approved an amendment to the authorization bill that would allow use of up to 18 more RD-180 engines through the end of 2022.  Since the House had already voted a bill that would allow further use of the Russian engines, it appears the great engine debate is over, and ULA won.

The question is why it won. Reporting by Politico points to the heavy lobbying muscle that ULA owners Boeing and Lockheed Martin deployed in support of their joint venture — which certainly is a big part of the explanation.  But that doesn’t give credit to Senators for the deliberative process by which they weighed the arguments of both sides in a very emotional debate.  The real reason ULA won was that its backers told a more convincing story than the SpaceX side did, and legislators responded to the merits of their case.

Because the space launch industry is concentrated in a handful of states, most of the Senators were not voting on the basis of constituent interests.  It being an election year, though, they were all mindful of how voters might view sending money to Russia for rocket engines.  Vladimir Putin’s government is despised on both sides of the aisle, and SpaceX backers hammered away at the theme that every engine purchase was lining the pockets of Putin’s corrupt inner circle.

It was a potent theme.  In fact, the whole idea of relying on Russian engines to get missile warning and intelligence gathering satellites into orbit sounded a little crazy, given the threatening moves Moscow was making.  But SpaceX wasn’t capable of lifting these heavy satellites into high orbits, and Atlas was the cheapest option available that could get the job done.  In fact, if Delta was grounded for any reason, it was the only option.

The main goal of the Boeing-Lockheed-ULA lobbying campaign was to get this message out to Senators, many of whom had not followed the engine debate closely.  That approach was a bit like the strategy that Boeing followed in making the case for reauthorization of the Export-Import Bank.  Although there was strong opposition to the bank, it was almost entirely based on emotion rather than analysis.  Boeing and other Ex-Im backers spent years educating legislators to the facts, and in the end won a resounding bipartisan victory.

The biggest challenge in implementing such a fact-based strategy is fielding enough talent to reach legislators and their staffs.  In previous years, ULA had sustained a relatively sparse presence on Capitol Hill, failing to grasp the threat that SpaceX posed to its business.  With co-owners Boeing and Lockheed Martin leaving ULA to fend for itself most of the time, SpaceX was able to win many converts to its side.  ULA managed to dodge the bullet of an outright ban on the engines last year through a last-minute change to must-pass spending legislation, but it was too close for comfort.

With Senate Armed Services Committee chairman John McCain leading the charge for SpaceX and furious at last year’s 11th hour reversal of a ban, ULA’s prospects for prevailing in the 2017 budget cycle looked uncertain.  So CEO Tory Bruno assembled a much bigger lobbying team, and that was heavily supplemented by Boeing and Lockheed.  Reports that SpaceX and ULA spent similar amounts on lobbying in the first quarter don’t count all the additional muscle that Boeing and Lockheed deployed.

Protecting their space-launch franchise wasn’t the only reason Boeing and Lockheed got engaged in a big way.  The rhetoric employed by SpaceX backers was so strident and emotional that the companies could not let it go unanswered.  Senator McCain’s remarks in floor debate described a greedy “military-industrial-congressional complex” that was subverting the nation’s interests to keep using Russian engines, in the process rewarding Putin’s “corrupt cronies” and helping fund Russian aggression in Syria.

This overheated language gave the companies additional incentive to get their story out on Capitol Hill.  They were aided in that effort by Senator Bill Nelson of Florida, a senior member of the Armed Services Committee who brokered a compromise that McCain was willing to sign on to because it included a specific date after which RD-180s could no longer be used for military launches.  That date gave ULA sufficient time to field a successor to Atlas powered by American engines, meaning SpaceX would not be able to fashion a launch monopoly.

Nelson pointed out in floor debate on the amendment that he and Senator Cory Gardner of Colorado sponsored that Russian engines represented less than one-third of one percent of the value of U.S. imports from Russia, hardly enough to enrich anybody in Moscow.  He also noted ULA’s record of over a hundred successful launches with no failures since its inception, and explained why it would take until 2022 for a new launch vehicle to be available so that military access to space and competition for launch services could be guaranteed.

Senator Nelson’s arguments were so sensible that in the end his amendment passed on a voice vote.  In other words, it wasn’t close.  There’s no denying that lobbying by Boeing, Lockheed Martin and ULA contributed to the defeat of the engine ban that SpaceX so fervently sought.  But the arguments lobbyists laid out to anyone who would listen were so compelling that even some members of the Tea Party signed on.  SpaceX lost because its position potentially endangered U.S. access to space and undermined competition.

Continue reading “SpaceX Attempted Monopoly”

Tesla Did Not Disclose Autopilot Death Before $2 Billion Stock Sale

Joshua Brown fatally crashed into a tractor trailer turning in front of his Tesla Model S on autopilot almost exactly two months ago, but we only found out about it on Thursday evening. That’s when Tesla first told the public about the crash, nearly two months after they sold $2 billion in stock.

What’s surprising, for people who aren’t well-versed in financial matters, is this is probably not illegal. Mostly because Securities and Exchange Commission regulations are so fraught with loopholes, the definitions of what is “material information” and when it needs to be distributed to all investors at which times is incredibly vague.

What we’re discovering now is that how the information about the crash spread is more than a little questionable.

In its official statement from last week, Tesla stated that it informed the National Highway Safety Administration “immediately” after the crash, which means that NHTSA sat on the information until trickling it out to the press the Thursday before July 4th weekend. Coming from NHTSA, one of America’s most bumbling government divisions, that’s not exactly shocking.

But it is a shock that Tesla sold $2 billion in stock without breathing a word about their fatal crash to the press, the public, or their investors, as Fortune points out in a contentious story today.

On May 18th, Tesla and Elon Musk himself sold $2 billion worth of Tesla at $215 a share without mentioning anything about the fatal autopilot crash, which Fortune notes sure seems like a “very material fact,” something that any company would be legally required to disclose in relation to such a sale.

But Tesla, in an act of extreme boldness, argued that this is incorrect and told Fortune to shut up, in so many words.

While you or I might think that, obviously, a fatal crash in a Model S cruising on Autopilot, Tesla’s vaunted semi-autonomous system considered a major selling point of the company’s flagship vehicle, would be relevant information to any potential investor, Tesla argued that the market backs up their opinion that it isn’t. Tesla’s stock actually went up by the end of the trading day on Friday, though it had dipped in the morning as Thursday night’s news break hit the market.

And that’s what a Tesla spokesperson pointed out to Fortune yesterday, arguing that the stock price backs up their position that the crash was not legally-required material information. But then Elon Musk himself chimed in to call Fortune misleading, as Fortune reports, emphasis mine:

Then Elon Musk himself suddenly entered the email conversation. He first thought, mistakenly, that Fortune was criticizing the price at which Tesla and he had sold stock. This writer replied that was not the case and that the issue was the non-disclosure of a material fact. That, Musk replied in a second e-mail, “is not material to the value of Tesla.”

He continued, “Indeed, if anyone bothered to do the math (obviously, you did not) they would realize that of the over 1M auto deaths per year worldwide, approximately half a million people would have been saved if the Tesla autopilot was universally available. Please, take 5 mins and do the bloody math before you write an article that misleads the public.”

Indeed, Tesla’s autopilot system is statistically safer that a human driver. But the crash may show that there could be a deadly blind spot in Tesla’s sensor array. Tesla itself acknowledged that the system could not “see” the truck that killed Joshua Brown, and we may be looking at a specific technical flaw at fault for this crash.


But it’s also possible that Brown was simply recklessly over-relying on Tesla’s autopilot system. Hell, he might have been watching Harry Potter at the time of the crash. This kind of behavior could well be common among Tesla owners, and questions like this would certainly have come up in relation to Tesla’s big stock sale in May had Tesla released all of its information as it had it.

Fortune notes that it may end up a question for the courts if Tesla withholding information about the crash before its stock sale was illegal.

Even if it’s legal, it’s not a good look for Tesla. It’s an infuriating and baffling omission even for those of us without a financial stake in the company.

Continue reading “Tesla Did Not Disclose Autopilot Death Before $2 Billion Stock Sale”

Tesla: Musk’s Credibility Has Eroded


  • Tesla’s key asset is Elon Musk’s credibility, as Ed Niedermeyer noted on Bloomberg West Tuesday, and that asset has taken a beating recently.
  • The crashes of Tesla cars on autopilot and Tesla’s lowered guidance share a disconnect: Neither Tesla’s technology nor its operations have lived up to Musk’s hype.
  • The recent spate of negative news may have also impacted Tesla’s hedging costs, which have risen. We elaborate and discuss why investors should consider this indicator.

Elon Musk’s Declining Credibility

That quote from Goldman Sachs’s business principles came to mind while watching the discussion of Tesla (NASDAQ:TSLA) on Tuesday’s edition of Bloomberg West. Before getting to that I should note that the guest host of the show on Tuesday was Bloomberg Technology Editor Cory Johnson, who has been a longtime skeptic of Tesla. Musk, in turn, doesn’t seem to be a fan of Johnson, judging by Musk’s response to this tweet of mine a few years back.

Screen capture via Twitter.

That said, the most damning criticism of Musk and Tesla came not from Johnson, but from his guests, Bloomberg View columnist Ed Niedermeyer, and Bloomberg Gadfly columnist Liam Denning. I’ve transcribed the most pertinent parts of their discussion below. It begins with Niedermeyer responding to a question about the crashes, including the fatal one, suffered by Tesla enthusiast Joshua Brown, and the one newly disclosed by the Detroit Free Press. Cory Johnson pointed out that Brown had posted videos of his Tesla while it ran on autopilot, and that Musk had even linked to one of those videos in the past.


Continue reading “Tesla: Musk’s Credibility Has Eroded”

Musk’s Snarky Remarks to the Tesla Crash

Concerns about the pace of vehicle production at Tesla Motors hit the automaker’s shares as questions swirled about the ramifications of a Tesla Model S owner who died while using the car’s autopilot.

As investors struggle to assess the implications of the crash for self-driving cars, Fortune magazine published a story in which Tesla CEO Elon Musk defended the company’s decision not to disclose the May 7 crash to shareholders until Thursday, a day after auto-safety regulators told the company they had begun an investigation.

“Seems pretty material to me,” Fortune editor Alan Murray tweeted Tuesday morning, with a link to the magazine’s online article in which Musk is quoted saying in an email that the matter was “not material” to Tesla shareholders.

Mr Musk retorted to Mr Murray on Twitter: “Yes, it was material to you – BS article increased your advertising revenue. Just wasn’t material to TSLA, as shown by market.”

A Tesla Model S, the car model involved in the crash.
A Tesla Model S, the car model involved in the crash. AP

Skittish investors drove down the price of Tesla stock 1.2 per cent Tuesday to close at $US213.98 on the first day of trading after the Silicon Valley automaker said Sunday that it had missed production forecasts for the second quarter. Earlier in the session the stock traded as low as $US208.

The Palo Alto, California-based company delivered 14,370 vehicles during the second quarter, including 9,745 Model S sedans and 4,625 of Model X crossovers. That was about 15 per cent fewer than the 17,000 vehicles it predicted in May.

Tesla is under pressure to demonstrate that it can ramp up production quickly to meet its own goal of making 500,000 vehicles in 2018, approximately 10 times its 2015 full-year output. That’s when the company will be manufacturing the Model 3 sedan, its first mass-market electric vehicle.

Crash fallout

Meanwhile, the automaker is also grappling with the fallout of last week’s revelation that a Model S owner who had activated the vehicle’s automated highway steering system was killed when his vehicle slammed into a truck.

Perhaps of more concern to investors is that Tesla is halting manufacturing. The automaker’s “up time” for production of the all-new Model X crossover – a figure used to gauge how often the assembly line was running – is as low as 50 per cent, Deutsche Bank analyst Rod Lache said in a research note.

“Suppliers continue to suggest Tesla has had difficulty maintaining steady production of Model X,” Mr Lache said. “This is highly unusual for an automaker, considering this model was launched in” the third quarter.

Given Tesla’s mass-market ambitions, that pace will need to quicken. The company is currently aiming to produce 2,400 vehicles per week in the fourth quarter, up from 2,000 per week at the end of the second quarter.

At that rate, Tesla will make 79,000 vehicles in 2016, missing its forecast of 80,000 to 90,000, according to Deutsche Bank. Even that pace will have to increase six-fold to meet its 2018 targets.

S&P Global Market Intelligence analyst Efraim Levy lauded the company for pushing the limits but said the consequence is occasional misses.

“I didn’t and I still don’t expect them to meet all their targets for Model 3 production,” Mr Levy said. “Their track record is too much over-promise and under-deliver in terms of specific targets.”

Continue reading “Musk’s Snarky Remarks to the Tesla Crash”