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Tesla Electric Cars: Revved Up, but Far to Go



July 27, 2010 – Comments (5) | RELATED TICKERS: TSLA

I came across a great NYT article yesterday on Tesla and its founder Elon Musk.  The article is a must-read for anyone who is invested in, or is considering investing in the fledgling automaker.

I realize that anyone who is famous and as gregarious as Mr. Musk is going to have his detractors, but still quotes like these from the article would personally give me significant pause before investing any money in a company being run by this man:

Others see a darker side to the endless roadshow that is Mr. Musk’s life. People who know him describe him as so confident that he can achieve his goals that he sometimes speaks as if he already has.

“He’s done amazing things, but at the same time, he’s not a straight-shooter,” says Darryl Siry, Tesla’s former senior vice president for sales and marketing. “It’s a reality distortion field and it’s a powerful one. He gives the facts to fit the narrative he wants out there.” 


“Elon Musk put on a dazzling roadshow, deflecting the fact that they’re hemorrhaging cash,” says Mr. Sweet of Tesla’s recent public offering. “But going back to reality, people didn’t want a stock that has a sketchy future.” 


Although Tesla has never had a profitable quarter, in February 2009, Mr. Musk sent a message to Tesla customers titled, “Tesla to Be Profitable by Mid Year.” He wrote that “it appears highly likely that Tesla will meet the goal promised to those investors of becoming profitable by mid year.”

And Mr. Musk defends his prediction. “I actually never said that Tesla would have a profitable quarter,” he says. And while most investors track profitability figures on a quarterly basis, he said his e-mail was technically correct because Tesla was indeed profitable in a single month in the middle of last year: July. 


Mr. Musk has never run afoul of federal regulators, but he has had a long history of friction with the news media. Some reporters who cover the company closely say Mr. Musk’s hyperbole sometimes crosses the line into what they regard as distortions.

“I don’t believe him,” says Ray Wert, editor in chief of Jalopnik, a blog about the auto industry. “He’s made so many prognostications in the past that just have been so completely wrong. I don’t think he’s lying. I actually believe that he believes what he’s saying. But I just think it’s nowhere near what the reality is. It never has been.” 

Despite the company's recent deal with Toyota to jointly produce electric RAV4s, I stand by my current CAPS short of TSLA.  The main risk to shorting this company is that its technology is successful and it is acquired by another larger automaker.  It will never be able to make it on its own long-term.

Tesla Electric Cars: Revved Up, but Far to Go 


5 Comments – Post Your Own

#1) On July 27, 2010 at 6:39 AM, ragedmaximus (< 20) wrote:

i want a tesla s

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#2) On July 27, 2010 at 8:07 AM, drgroup (66.44) wrote:

Are you sure this isn't al gore?

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#3) On July 27, 2010 at 8:45 AM, bigcat1969 (81.12) wrote:

I've worked for guys like this and what is amazing is they do not lie, they just believe everything they say is true and have no ability to believe they have ever been wrong.  This tends to happen in smaller companies and niche markets as these folks don't last long under a boss or board that demands results.  Tesla will crash once they are forced to actually create value.

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#4) On July 27, 2010 at 10:12 AM, USNHR (29.86) wrote:

That Tesla S does wet the appetite doesn't it.

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#5) On August 16, 2010 at 9:32 PM, BrandonPaulChevy (< 20) wrote:

far to go. lots of things to work on their auto parts

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