Tesla hasn’t historically been bad at capital discipline; over the course of a year, it has a fraction of what a GM or Ford or Toyota might spend in a quarter, so it has to watch every penny. But CEO Elon Musk and his team are now in triple-secret double-down mode — I know that doesn’t make any sense, but Tesla future investment requirement are almost comically ambitious — and from the perspective of leadership, it would be dumb to let the stock slip before heading back to the markets to raise money. Musk wants to produce 500,000 vehicles annually by 2018, and getting there ain’t gonna be cheap.
The bottom line is that Tesla sees its stock price as a means to an end. The company’s own investment thesis, such as it is, asks investors to take a long-term view: Tesla will be a major player in the future of transportation. Whatever happens with the stock price day-to-day is a distraction. All that matters is that Tesla shares be considered valuable when it’s time to create a new cash pile.
Tesla is right on the edge of crossing a river when it comes to how it spends money. As it gets bigger and has to manage more lines of business, capital efficiency will become vastly more important. But for now, Tesla’s capital exists to be spent, and that’s clearly freaking out the analysts who cover the company.
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Der Spiegel says the Transport Ministry called the feature a “considerable traffic hazard.”
The Autopilot function on Tesla’s Model S car represents a “considerable traffic hazard,” according to an internal report for Germany’s Transport Ministry seen by magazineDer Spiegel.
Experts in the Federal Highway Research Institute carried out tests on the electric car and criticized it on a number of points, the magazine reported on Friday.
For example, drivers are not alerted by the Autopilot system when the vehicle gets into a situation that the computer cannot solve, Spiegel cited the report as saying.
In addition, the car’s sensors do not detect far back enough during an overtaking maneuver, while the emergency brake also performs inadequately, according to the report.
Spiegel said Transport Minister Alexander Dobrindt was aware of the report but did not want to take the model out of service.
The ministry told Reuters a final evaluation had not yet been taken and further tests were being conducted.
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Tesla CEO Elon Musk is probably trying to figure out what he has do to get on Wall Street’s good side.
After Tesla reported an impressive third-quarter for vehicle deliveries — 24,500 vehicles, with another 5,500 in transit — on Sunday, shares moved higher.
At one point, $215 was in sight.
But by Friday’s market close, the stock had dived around 9% from earlier trading-day peaks, finishing up at $196.61.
The slide was intensified when Goldman Sachs downgraded Tesla and dropped its target price to $185 from $240.
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Tesla Motors’ steep third quarter discounts for Model S vehicles have apparently resulted in a 70 percent rise in the company’s deliveries.
The California-based electric automaker said Sunday that it delivered nearly 24,500 cars in the quarter, including 15,800 of Tesla’s Model S and 8,700 of the Model X, a sports utility vehicle. The increase in deliveries, of course, comes after Tesla offered an “aggressive” secretive discount program as a ploy to drive delivery numbers.
The ploy was used to dramatically reduce the luxury vehicle’s pricey cost, which usually retails at around $100,000. The delivery count, because of the reduction in cost of inventoried vehicles, rose 37 percent from the previous quarter.
Brad Erickson, an analyst with Pacific Crest Securities, said on Sept. 29 that he “detected aggressive Model S discounting at U.S. sales centers to maximize third-quarter deliveries.”
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The high demand for the lithium ion batteries that power electric vehicles like those produced by Tesla Motors could potentially do more harm than good to the environment, according to a report Sunday from The Washington Post.
The electric vehicle automaker uses Panasonic batteries, which, according to the report, uses graphite derived from mines in China. The mines are raining graphite particles down on the residents of several villages in northeastern in the country.
Tesla told reporters its batteries do not include graphite from the Chinese company BTR, yet declined to identify its graphite source. Nearly 75 percent of the world’s graphite comes from the northeastern section of the China. The company’s refusal to explain where its graphite is produced could raise questions about the environmental soundness of its vehicles.
Panasonic, one of the largest manufacturers of Tesla’s lithium ion batteries, is forking over $1.6 billion to the cost of Tesla’s “gigafactory,” a massive factory meant to build the company’s lithium ion batteries. Tesla believes the Nevada-based plant will produce about 500,000 electric-car batteries annually.
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While many commentators have expressed disbelief that a CEO is not aware of the Company’s discounting practices, let’s give Mr. Musk the benefit of doubt. It is not that difficult to see that this unfocussed CEO does not know what is going on in his Company. Life is too busy contemplating life on Mars and trying to force the wrongheaded acquisition of SolarCity (NASDAQ:SCTY).
However, if Mr. Musk did not know the sales practices at Tesla, it brings forth a whole different set of questions:
- How can a competent CEO not know the sales practices at his Company? If the argument is that Mr. Musk does not have the time, then we suggest that the Company’s board is once again asleep at the wheel.
- What was Mr. Musk expecting that his sales teams would do when he sent a company-wide email to push hard to get strong Q3 results ahead of capital raise?
- Does Mr. Musk not discuss sales and promotional strategies with his sales and finance teams?
- Is Mr. Musk not aware that Tesla builds spec cars (also called “inventory”) which are not build-to-suit?
Read more "Musk’s Tweet Fails To Recognize That Tesla Has Crossed The Rubicon With The Inventory Model"
California regulators, it turns out, take a dim view of Tesla Motors’ Autopilot — not the self-steering system itself, but the name.
In draft regulations released late Friday, the state Department of Motor Vehicles said car companies should not use the terms “self-driving,” “automated” or “auto-pilot” in advertising unless their cars are capable of driving themselves without human passengers paying attention.
For Palo Alto’s Tesla, that could pose a problem.
The company’s Autopilot system, available in both the Model S electric sedan and Model X SUV, can steer on its own and change lanes. But the human driver is supposed to remain ready to take the wheel whenever needed.
The fatal crash in May of a Tesla driver who appeared to be watching a Harry Potter video while Autopilot drove his car made the need for that requirement clear.
Read more "California to Tesla: Don’t call it ‘Autopilot’"