Will Elon Musk’s SpaceX Crash Land On Planet Trump?

In the case of Tesla, the Los Angeles Times calculated last year the upstart automaker had received $2.4 billion in taxpayer-funded subsidies, mainly from California (where it is headquartered), Nevada (where it is building the biggest lithium-ion battery factory in the world), and the federal government. SolarCity, the Times calculated, had received $2.5 billion in subsidies — mainly in federal assistance for solar installations and New York state support for building the biggest solar-panel plant in the Western Hemisphere in Buffalo.

And then there is SpaceX, a supplier of launch services to NASA, the military and various commercial customers. SpaceX has not received much in the way of subsidies, but its survival depends very much on government contracts — over $6 billion in awards for resupplying the International Space Station, launching military satellites, and supporting various other missions. If all goes according to plan, SpaceX will begin lofting U.S. astronauts into orbit before the end of the decade, displacing Russian rockets that have been doing that since the Space Shuttle retired.

However, there is good reason to believe that all will not go according to plan — not just for SpaceX, but for the rest of Musk’s empire. In the case of Tesla and SolarCity, the fact that President-elect Trump has appointed a climate-change skeptic to lead his transition team at the Environmental Protection Agency speaks volumes about how federal priorities are likely to change on the energy front. Trump has pledged to cut off money for United Nations climate-change programs and lift regulations limiting exploration for fossil fuels.

With SolarCity already facing financial troubles, the disappearance of federal subsidies could prove fatal. Musk has moved to preempt a crisis by folding the solar-services provider into Tesla, but Tesla could soon be facing its own problems. So the second explosion of a SpaceX rocket in less than two years just as the general-election campaign was moving into high gear couldn’t have come at a worse time. SpaceX’s main U.S. competitor in the launch business, United Launch Alliance, hasn’t lost a single rocket since it was founded over ten years ago.

Boeing and Lockheed Martin, the co-owners of United Launch Alliance, both contribute to my think tank (Lockheed is a consulting client), so I’ve been getting an earful for the last few years about the risks of relying on low-cost launch providers to get into space. Those risks will become a lot more politically potent if SpaceX is allowed to begin lofting astronauts using a proposed fueling technique that would require the crew to be sitting on the rocket while the fuel is loaded. The spectacular explosion of a SpaceX rocket on September 1 occurred while the vehicle was being fueled.

Tesla-SolarCity merger: How risky is all that debt?

Billions need to be raised

Musk said earlier this month that he expects SolarCity to generate $500 million in cash for Tesla over the next three years. He predicted that SolarCity would add more than $1 billion to Tesla’s revenues next year.

Analysts at proxy advisory firm Institutional Shareholder Services, which recommends that investors approve the merger, estimate that, after the deal closes, Tesla will need to raise between $2.5 billion and $3.5 billion during each of the next two years.

If Tesla can’t raise all the money it needs, some of its ambitious plans could be delayed – or derailed. In one hypothetical scenario that SolarCity management spelled out in an August regulatory filing, if the solar installer struggled to raise new capital it might be forced to cut off funding for the Buffalo solar panel factory to reduce its cash needs by more than $400 million through the end of 2018.

State and company executives have said that’s a worst-case scenario meant to meet legal requirements that regulatory filings warn investors about all potential risks. But it also underscores the importance of raising capital to the companies.

“The issue,” the Institutional Shareholder Services analysts said, “is whether Tesla can handle these needs.”

Tesla’s stock has had a rough 3 months — and it doesn’t look like things will get better

Tesla shares have declined almost 20% in the last three months, even as the automaker reported a surprisingly profitable third quarter and signaled to Wall Street that it has curtailed its cash burn and could finish 2016 with more money in the bank then expected.

The immediate problem for Tesla is political.

A Trump administration is unlikely to be friendly to electric cars — certainly not as friendly as the Obama administration. Obama was in the White House for almost the entirety of Tesla ascent as both a carmaker and a stock, with Tesla’s IPO taking place in 2010 and the Model S sedan hitting the streets in 2012.

Fortunately, Tesla is far more well established than it was when Obama took office in 2009. CEO Elon Musk’s company will sell a record-number of electric cars in 2016 — probably about 80,000 — and has a market cap of around $30 billion. It can hold on for a while, even if federal policies turn against it. And don’t forget the nearly 400,000 per-orders Tesla has for its forthcoming Model 3 mass-market vehicle.

The worry for the automaker now is that the end of the year and beginning of the next haven’t been happy financial times for the company, historically. Tesla shares have a pattern of sliding through the fourth quarter and continuing their decline into the first, only recovering once it establishes guidance for deliveries for the next year.

Europe’s Inmarsat is “looking at alternatives.”

On Friday, SpaceX CEO Elon Musk appeared on CNBCand seemed to confirm that the company had found the cause of the September 1^st explosion of a Falcon 9 rocket during a test firing.

“I think we’ve gotten to the bottom of the problem,” Musk said, describing the issue as one that had “never been encountered before in the history of rocketry.” Musk didn’t give a detailed explanation, only saying that the failure involved a combination of liquid helium, the rocket’s carbon-fiber materials, and supercooled solid oxygen.

At press time, the company had not published an official statement finalizing the investigation, but Musk’s statements were in line with preliminary findings.

Musk concluded by saying that, with the mystery solved, SpaceX launches would likely resume by mid-December.

But that might not be fast enough for some customers. The Wall Street Journal reported on Thursday that the European satellite company Inmarsat was, in the words of its CEO Rupert Pearce, “actively looking at alternatives” to SpaceX for at least one upcoming satellite launch.

Inmarsat officials seem to be less worried about the reliability of future SpaceX launches than about scheduling problems caused by the halt in launches following the accident. Inmarsat has an early launch slot for its next Global Xpress satellite, part of a plan to provide global wireless broadband, and says it will still launch that craft with SpaceX.

Letter raises questions about SpaceX fueling plans and committee roles

“Independent advisory groups provide input on commercial crew safety considerations, among which the Aerospace Safety Advisory Panel is the primary independent adviser for commercial crew activity,” the agency said. “The ISS Advisory Committee focuses on the International Space Station and international systems.”

The charter of the ISS Advisory Committee, approved and signed by NASA Administrator Charles Bolden in September, states that the committee’s objective is to “provide advice and recommendations to NASA on all ISS aspects related to safety and operational readiness, utilization, and exploration.”

The description of duties for the ISS Advisory Committee, also stated in the charter, do not explicitly mention commercial crew systems. The charter does mention “program and project management, including spaceflight safety and mission assurance strategies” as part of its scope, but the only crew vehicle mentioned is the Soyuz.

The Aerospace Safety Advisory Panel (ASAP) does regularly review commercial crew vehicle development, and has included its assessment in its annual reports in the last several years. Minutes of the last five ASAP meetings, from December 2015 to October 2016, do not mention any discussion of the SpaceX fueling issue.

NASA, though, indicated in its statement that it would still address the ISS Advisory Committee’s letter despite it being beyond the strict scope of its activities. “Other groups, such as the ISS Advisory Committee, also seek information, and we treat all inquiries seriously,” it said.

Another Tesla Crash, What It Teaches Us

Tesla crashed on a test drive while AutoPilot engaged. Nobody got hurt. But the minor incident gives us a plenty to think about.

Earlier this week, I came across a report about a Tesla’s AutoPilot crash. It appeared on Tesla Motors Club’s site, posted by a Tesla fan planning to purchase a car.

The user’s post on the web site’s forum read:

I was on the last day of my 7-day deposit period. I was really excited about the car. So I took my friend to a local Tesla store and we went for a drive. AP [AutoPilot] was engaged. As we went up a hill, the car was NOT slowing down approaching a red light at 50 mph. The salesperson suggested that my friend not brake, letting the system do the work. It didn’t. The car in front of us had come to a complete stop. The salesperson then said, “brake!” Full braking didn’t stop the car in time and we rear-ended the car in front of us HARD. All airbags deployed. The car was totaled. I have heard from a number of AP owners that there are limitations to the system (of course) but, wow! The purpose of this post isn’t to assign blame, but I mention this for the obvious reason that AP isn’t autonomous and it makes sense to have new drivers use this system in very restricted circumstances before activating it in a busy urban area.

Thankfully, nobody got hurt. This post got no traction in the media. No reporter appears to be following it up (except for this publication). This could have been easily filed under the rubric, “minor accidents,” the sort of news we all ignore.

Tesla shares downshift into uncertainty after Republican sweep

Tesla stock is falling in the wake of Tuesday’s Republican victories.

Since their Election Day close, the electric carmaker’s shares had fallen as much as 7.5 percent by Thursday morning. They were trading just shy of $195 on Tuesday, but opened just below $187 on Wednesday morning.

Tesla shares ended the regular session on Thursday down about 2.5 percent.

Tesla CEO Elon Musk told CNBC last Friday he did not expect the outcome of the election to affect Tesla’s business much; analysts aren’t yet sure how the election results will impact the company.

In a research note sent Wednesday, Oppenheimer analyst Colin Rusch and his colleagues said they “would not be surprised to see a Trump administration attempt to block federal support for for [electric vehicle] buyers, but could provide support for companies such as TSLA that are creating U.S. manufacturing jobs.”

Tesla is also trying to acquire a solar power company, and that industry could face new political headwinds in the years ahead.

Rusch, who didn’t mention SolarCity by name in his note, said “residential solar plays will see lower volumes on more challenging regulations/slower demand due to extended coal facility lifetimes.”

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