Friday, August 31, 2012

Can Tesla Produce 500 Cars This Quarter?

On August 22nd it was reported that Tesla had produced their 100th Model S Sedan. Remember on August 6th it was reported they had produced their 50th Model S Sedan. In 16 days Tesla produced 50 vehicles or about 3 a day. There are 39 days between August 22nd and September 30th when the quarter ends and Tesla must produce 400 vehicles in that time to meet their target of 500 vehicles for the quarter. This means they have to produce on average slightly more than 10 vehicles a day.

It will be a nail biter to see if Elon can pull the 400 vehicles out of the hat. Maybe he has already produced a whole bunch more vehicles and he just wants to keep the suspense at fever pitch? Or maybe he is out of cash and not capable of producing the vehicles he has already taken deposits for from customers? I think the latter is the case.

Elon has floated a trial balloon to form a Holding Company for his two wunderkinds of SpaceX and Tesla.

Why would Elon do this? The Green Machine is no Wall Street guru, but the Green Machine is brilliant at smelling rats. The Green Machine believes young Elon has tried without success to raise cash for Tesla at its current share price of $28.50. Probably prospective investors have told Elon they will buy in at $10 to $15 a share. Elon needs mucho dinero for Tesla. Probably he needs between half and three quarters of a billion dollars else the company will simply run out of the dinero. This money is not needed to pay back the half billion dollars of DOE loans but for working capital to keep production going for the cars he has already accepted deposits for from the wane be green gringos with dinero. If you add the DOE loans that Elon promised to start paying back in December he needs over a billion dollars of new equity capital injected in Tesla and would have to issue as much as another 100million shares. This quantity of shares is about equal to the present number of outstanding shares.

Elon has one rising star in his portfolio and that is SpaceX that has contracts from Uncle Sam to launch space bound payloads for the US government. Yeah our country cannot even launch our own space payloads now that the space shuttles have been retired so we rely on a Musketeer to do this for us. Pathetic but true. OK Elon has some value in SpaceX and Tesla is a pretend auto company with a fake share price due to manipulation and hype, therefore he has to blend the companies via a holding company to continue the fake out of his $100,000 electric car that he promised would sell to the masses for $50,000. Remember the mad scientist in charge of the Department of Entropy and the thermodynamic neophyte of a President whole heartedly supported the $50,000 Model S EV we will never see.

Today Tesla is where A 123 was five months ago and has to embark on a death spiral to finance production of something that sells for less than it costs to produce. Just like A 123 Tesla is incapable of lowering production costs. Just like A 123 Tesla is running out of cash. Unlike A 123, Tesla has a Musketeer at the helm that has a Spaceship in his other hand. But as soon as the musketeer brings out his Sunbeam Mix Master and blends the two, he will infect the Spaceship with the bacteria laden death cells that are everywhere in his car company. By the way A 123 is trading for 25 cents a share.

A vivid analogy for the joint holding company is that SpaceX will be left holding the trash bag of the soon to drop Tesla. Elon should rather admit to the utter failure of his still born wunderkind Tesla and let his other prodigious child soar into space carrying payloads for his Uncle Sam rather than making them conjoined twins. But wait Elon needs Uncle Sam as a customer for SpaceX and if Tesla fails he will be red faced with the Uncle’s DOE loan guarantees.

Uncle Sam should just hang his head in shame that the year our hero Neil Armstrong died, our uncle is so poor that he has to rely of Elon for the uplift. But Uncle Sam can be revived, the November election is just around the corner and Clint Eastwood has released his new empty seated movie “Dirty Barry”.

Do you all think Sleepy Joe has a chance of beating a vibrant 42 year old in a debate? Do you think that Bain Capital could save Tesla? Do you think Clint Eastwood was stoned? Or was Clint brilliant with the metaphor of an empty chair? Do you think Steven Chu has a clue how to invest money? Welcome to America and have a nice day! Actually in the end it will be we the people that are left holding the bag, and it is not a Louis Vuitton, it’s a Hefty.

Saturday, August 25, 2012

What did Steven Chu Build?

The President made a bit of a faux pas a few weeks back when he talked about how the government spending on roads and other infrastructure helped those who built businesses.  His wording was wrong in saying “if you've got a business - you did not build that.”  But his speech was essentially correct that all business big and small relies on public infrastructure such as roads, bridges, the internet, fire departments, and police departments to conduct their business.

What the President had hoped for in the energy arena was that his Stevie Wonder Physicist Extraordinaire Secretary of Energy would actually build green energy businesses with the billions of dollars of loan  guarantees or outright grants the Obama administration handed to myriad companies who all claimed to have a better green mousetrap.  The President cannot equate these loans and grants to special interests with the government’s role in building the Hoover Dam, the Golden Gate Bridge, the Interstate Highway System, or the small narrow paved roads that run through much of Main Street America.

Backing Solyndra, A 123, Ener 1, Fisker, Tesla and the myriad other companies that were simply gangrene and not green was just plain stupid use of the money we the tax payers gave to our government for our collective welfare.  The President was spot on in his bungled speech that there are needs for collective efforts in certain sectors of the economy to uplift us all.  In the extrapolation of this ideal toward the support of companies that friends and supporters of the President stood to make a bundle, the President certainly overstepped the line and he should be held accountable.

Of course the President has never spent one minute studying thermodynamics and relied 100% on the advice of the low temperature physicist  and Nobel Prize winner to make the selection of those who were to receive many billions of dollars of Federal money in total.  It is therefore honest to argue that Steven Chu Built Solyndra, that Steven Chu Built A 123, that Steven Chu Built Fisker, that Steven Chu built Ener1, etc. etc..    However in the end all that Steven Chu Built was a pure waste of our collective money.

Romney will argue that Obama Built Solyndra.  The logic is correct by the chain of responsibility as the Bucks Never Stopped being spent by the Oval Office.  I do not care whether the politics of the Building of Solyndra will become the lightning rod of the election, what I do care is that Steven Chu take responsibility for his complete incompetence in formulating an energy policy and his utter waste of billions of dollars on junk science.  There are no excuses for him! 
A 123 is now trading at 34 cents a share and the grants given to the company will likely benefit the Chinese company that will pick up the pieces of this company that simply had Betamax technology that emanated from MIT.  Note Obama cannot say MIT is short for MITT and that it is all MITT’s fault.  I do hold MIT responsible for a significant amount of the junk science based companies that got big bucks from Uncle Sam.  Just because MIT says a technology is wonderful does not mean it is worth funding.  MIT did not bring us the Hoover Dam or the Golden Gate Bridge.  They brought us A 123, Evergreen Solar, and a few other flops.

The lesson we should all learn including Mr. Romney is that one cannot simply wish for silver bullet solutions to lay our energy  golden eggs, but that energy policy will need to be based on the realities of the laws of motion and the laws of physics.  Even a Superman type person like Steven Chu has to obey the “laws of physics” or else just like in the photo above they will be given a citation.  Chevrolet made a compact car in the 1980s called the Citation that replaced the Nova.  It was a piece of junk and was no Super Nova.   Perhaps after November Steven Chu should go teach at MIT?

Wednesday, August 22, 2012

Crime and Yet No Punishment

Al Gore’s auto company has determined the cause of fires in the flaming Fisker. Their Karma model has had two auto ignitions. One in Huston Texas and one in Woodside California. Fisker has now determined that the cause of the fires is not the lithium ion battery pack but rather a cooling fan that was improperly designed and is subject to causing fires in their Dogma Mobile.

Fisker will recall each and every of the some 2,400 cars they delivered or have in inventory, and will install a new and different fan that is not a fire hazard. I am glad that Leonardo De Craprio and Just Born Bieber will now have cars that the tax payers subsidized that do not end up as ashes.

Talking of cooling fans, I spent a couple of days in Houston, Texas and that place is one sweltering location in late August. Being from the San Francisco bay area I had forgotten the misery of extreme heat and humidity. Even in Houston gasoline prices are now much higher. I filled the rental car with regular grade gasoline for $3.69 a gallon. Cheap by my local standards where mid-grade costs me $4.35 a gallon.

There is some news that the president wants to release some the strategic petroleum reserves to counter high prices. Of course this has nothing to do with the election that will be held in less than three months and is purely a move to unshackle the American motorist from high gasoline prices that are still a problem the president inherited from GW.

On the plane to Houston from Oakland I sat next to a young woman who was entering her senior year in high school. Nothing has changed for poor high school seniors they are still forced to read long novel during the summer break as required reading. Her required book that should be used as a door stop was Crime and Punishment. This long winded book from Russia hardly contributes to the real education of a 17 year old but it is required to tame the young and the restless.

Her book got me thinking of my next book I will soon write. My book will be titled “Crime and yet no punishment.” The plot could easily be about Wall Street but actually my plot will deal with the Venture Capitalist and their crony politician friends who are responsible for the likes of Fisker, Solyndra, BrightSource, Tesla, Bloom, A 123 and the myriad other Betamax green technology companies the department of entropy funded and the VCs promoted. The crime of wasting public money is unpunished. The VCs who funded Kior, Amyris, Gevo, Codexis, Solarzyme, A 123, Tesla, and several other startups that went through a public offering of their stocks did cash out and the new investors are left holding the Betamax Bag. But the US DOE was left holding an empty burlap sack.

The mainstream media is not full of the call for investigation into these startups that went public. The one that got some bad press was Solyndra, but the initial financier behind Solyndra also lost a bundle of dough together with the DOE. I do not thinking funding Solyndra was a bright idea (get the pun on solar) but at least the investor in the company also suffered some hurt in its demise.

In Fyodor Dostoyevsky’s Crime and Punishment the crime is the murder of a pawn broker that yields the thief very little fortune yet gives the murderer much anguish and eventual penal servitude in Siberia for the crime. In the case of Crime Yet No Punishment there is no anguish in the minds of the real pawn brokers, the VCs, and of course no penal servitude for the guys who live on the most crooked street in the world Sand Hill Road.

Now that Green Tech is Gangrene, they will concoct the next About Face and Book Profits and simply pocket many more billions of dollars selling hope and expectation that the next perfect Apple has been created. I doubt Mr. Obama will ever sit down to dinner again in John Doerr’s house with Mark the Zukker seated next to him and let official White House photographs be taken.

Saturday, August 11, 2012

Romney and Ryan

Mitt Romney announced Paul Ryan as his running mate.  The race for the White House is on and no doubt the campaign will be about as dirty as it can get.  Ryan is interesting as he is a fiscal conservative but not a total ideologue.  He voted with Obama for the Federal government to save the auto companies.  You all remember Romney thought this was a bad idea.  Ryan voted for legislation to prevent discrimination against gays in the workplace.  He has put his neck out left and right and certainly has done something over the past 14 years since he was elected to Congress.  I have to say Romney and Ryan look like father and son.   Obama and Biden look like father and grandfather.

I wish I could say my Congresswoman did much but alas she did nothing and certainly did not use her position as the ranking democrat on the house committee for science, space, and technology to get my opinions based on thermodynamic fact heard in formulating energy policy.  Instead she blindly followed Nancy as a puppy dog of the liberal left.  I am thankful she is retiring and that new blood will be brought to the House to represent my Congressional district.   She has been in Congress since 1993 and she is leaving not a moment too soon.

Enough about the two parties that are in collusion to do nothing while pretending to fight for your rights.  What happened in thermodynamics this week? 
Actually a bunch happened with a large Chinese auto parts company (Wanxiang) making a bid for my favorite dog of a company A 123.

A California PV company called MiaSole is laying off 200 workers in production and operations.  Mama Mia Sole was funded by the VC firm Kleiner Perkins of Bloom Energy and Fisker fame.  John Show Me the Doerr the host to President Obama’s dinner with Silicon Valley hot shots last year is on the board of directors of Mama Mia.  Even with all his political connections John could not compete with Chinese produced PV cells.

Mama Mia drifted from silicon and went with CIGS and flexible substrate.  A dumb idea I have often written about.  In announcing the layoff of the entire production department, Mama Mia was quick to point out they did not receive tax payers’ money and only blew $500 million of private investors’ funding. 

Good job John you lost the money that state pension funds gave you to invest and you call this private investors’ money.    It is actually quite sickening to see how many of the States in our United States actually invest money with VCs.  The VC’s then give political donations to state official’s campaign funds.

John Doerr and family members gave money for the campaigns of Jack Markell back when he was running to be the treasurer of Delaware.  They also gave donations a couple of years later for Mr. Markell’s successful run to become governor of Delaware.  I have written extensively of the Bloom Energy project in Delaware.  Did these contributions pave the way for the Bloom project, or was John Doerr really interested in the political campaign for treasurer of one of the smallest states? 

Actually another John Doerr company Fisker has received over $400,000 of state funds in Delaware to pay for the electricity to keep the empty Fisker plant ready in case Fisker ever comes to town.  The reasoning is that the power must be kept on to keep the expensive paint booths from degrading.   Well Mr. Markell I got news for you the $400,000 of wasted electricity was about 4 million kilowatt hours of power and had approximately 5 million pounds of CO2 emissions. 

One could not make up these stories.  Fact is often stranger than fiction when the money hungry VC’s and power hungry politicians are involved.  I hope that Paul Ryan is not all about saving Private Ryan but is really about saving America as the pork in the barrel is overflowing and is chest high and soon we all drown in our collective debt. 

As a post script it is quite amazing Stevie Wonder Chu Chu train still has his job at the department of entropy.  I bet next year he will not be secretary of energy but will be running a think tank on how to solve the world’s energy crisis.  Arnie the governator just gave a bunch of money to USC to head his own think tank.  My question is how a guy without a brain can head a think tank?  It just takes a $20 million donation is the answer.

Tuesday, August 7, 2012

Why Did Elon Go To Vegas?

I just got news that Elon Musk is in Las Vegas and is meeting with Harry Reid, Ken Salazar, and Bill Clinton. Harry Reid but Not Ever Right was happy to post on his official government web site that Elon was one of the “visionaries” that would come to Vegas to attend Harry’s Clean Energy Summit.

I quote from Dr. Reid’s link.

“Las Vegas, NV — On Tuesday, August 7, 2012, “National Clean Energy Summit 5.0: The Power of Choice” returns to Las Vegas at Bellagio Hotel & Resort for the nation’s foremost conversation about clean energy options. As a passionate advocate for energy alternatives, Former President Bill Clinton will give a keynote address during the summit about the importance of taking action and utilizing the power of choice when it comes to clean energy.

The annual conference is hosted by Senate Majority Leader Harry Reid (D-NV), MGM Resorts International, theClean Energy Project, Center for American Progress and the University of Nevada, Las Vegas. Visionaries like Tesla CEO Elon Musk come together with policy experts like Jon Wellinghoff, chairman of the Federal Energy Regulatory Commission, to discuss how smart clean energy choices made by individuals, governments, and businesses can save consumers money, grow the economy, and improve our overall quality of life.

“The summit attracts clean energy leaders, public officials, business executives, energy policy experts, entrepreneurs, investors, citizens, students, and the media to discuss how to empower the public with the tools to promote clean energy, increase energy independence, and create jobs.

“Since 2008 these dynamic summits have become one of the country’s most visible and influential gatherings of leaders and creative policymakers who are helping to bring about the transformation to a clean energy economy,” said Lydia Ball, executive director of the Clean Energy Project. “The annual summits foster the most productive dialogues on one of the most pressing issues of our time.”

WHO: “National Clean Energy Summit 5.0: The Power of Choice” confirmed speakers include:

• Former President of the United States of America Bill Clinton

• Sen. Harry Reid (D-NV), Senate Majority Leader

• John Podesta, Chair and Counselor, Center for American Progress

• Jim Murren, Chairman and CEO, MGM Resorts International

• Leo Gerard, President, United Steelworkers International

• Elon Musk, President and CEO, Tesla

• Jon Wellinghoff, Chairman, Federal Energy Regulatory Commission

• Denise Bode, CEO, American Wind Energy Association”

OK! Harry has his reasons for the summit. He wants to Green Up America and save the world. My local paper had this to report on the summit.

“Reid declined to comment Tuesday about Arctic drilling, saying he wanted to keep the focus of his conference on renewable energy projects. But in his opening comments to the conference, called the National Clean Energy Summit 5.0, Reid derided those who deny that the burning of fossil fuels has contributed to global climate change.

"Those people aren't just on the other side of the debate," he said, "they're on the other side of reality."

From my position of thermodynamic reality I wondered why Elon was on the other side of the table from Harry Reid and Ken Salazar? Then I read the following blog from a financial guy who closely follows Tesla Motors’ stock.

Per the analysts blog Tesla is basically out of money. I quote from the blog

“At June 30th, Tesla had $30.6 million in working capital and $62.2 million in equity. Based on their second quarter results, the estimated balance sheet values at July 31st were a modest working capital deficit and $30 million in equity. By the end of September, both values will be deeply in the red. Despite its abysmal financial condition, Tesla's market capitalization was $2.98 billion, or roughly 100 times its estimated book value, at yesterday's close.

I believe Tesla's management team has probably been seeking additional financing for several months because it's the only responsible thing to do. I also think they've probably received several term sheets with discounts that were far deeper than management could stomach. I'm convinced it's only a matter of time until there's simply no choice.

Reckoning day will not be pleasant for Tesla's existing stockholders.”

Now we know why Elon the “Visionary” is in Vegas meeting with Ken and Harry. His is there either to bet big on the roulette wheel and bring back dough for his non tail pipe dream or more probably he is there to hit up Harry and Ken to up the ante on the $465 million loan the DOE gave him?

Elon, by the way, there is no number 50 on the roulette wheel. In case Harry and Ken did not know that by last weekend Tesla had produced 50 of their models Ss. Elon, just bet it all on the two green numbers on the roulette wheel. Zero and Double Zero as that is what the taxpayers will get back from you if John Petersen is correct. Note US roulette wheel’s have zero and double zero while the rest of the world simply has a single zero. I guess with Harry Reed and Ken Salazar we the citizens of these United States have doubled our chances of winning by betting on zero. Actually by having two zeros the house increases their odds to win. Wow if the US House needs two zeros, Harry the Senate can add a third the triple zero.

Friday, August 3, 2012

Panic Sonic

A play on the name Panasonic the famous Japanese electronics brand.  Panasonic was also known as Matsushita and as National.  Recently Panasonic bought Sanyo another famous Japanese electronics brand. 

Panasonic is now panicking as a result of the massive losses it has sustained in the flat panel high definition TV business.  Last year the company reported losses approaching $10 billion.  Ten big boys is no small potatoes! 

But I will deal with a $30 million investment Panasonic made in November 2010 here in the San Francisco Bay Area.   Panasonics invested in Tesla to become the preferred vendor of lithium ion batteries for Tesla’s electric vehicles.  Sounds like a great investment back in November 2010. 

This was pre the grossly sad Fukashima earthquake.  Japan had 50 nuclear power stations running and had surplus electricity on their grid during off-peak nighttime hours.  Japan had great plans for having a fleet of millions of electric vehicles that would connect to the grid at night for recharging and the country would save massively on their oil import bill.  The sad event of Fukashima completely eradicated the plans for these millions of electric vehicles in Japan. 

Teaming up with Tesla in November 2010 also seemed like a great idea as Tesla led the world in the high price segment for plug in vehicles using lithium ion batteries.  Tesla had a wonder kid running the company who was a star and who already had Stevie Wonder at the US Department of Energy loaning Tesla money left, right and center starting in mid-2009. 

Also NEC a competitor to Panasonic had already tied up with Renault whose Chairman Carlos Ghosn was even more optimistic than young Elon Musk that EV’s would rule the future of personal transportation.

OK so we have Panasonic making a $30 million investment in Tesla and this is chump change for a company of this size.  Of course the whole symbiotic relationship was based on the cost of batteries coming down with experience increasing along the learning curve of manufacturing batteries.  Panasonic probably knew this was a pipe dream but Elon probably was clueless about the real cost structure of battery manufacturing.   

Per Bloomberg Elon has subsequently stated that “There are few industries with more BS than the battery industry,” Musk said of battery makers, without elaborating. “It’s quite remarkable.”

Of course Elon would know BS as he only speaks pure thermodynamics and has never hyped any of his companies or his accomplishments.

My guess is that by June of 2012 after almost 20 months of the strategic relationship between Panasonic and Tesla Elon was feeling pretty frustrated that the batteries were still as expensive as day one when the relationship was sealed with Elon’s words:
"It is an honor and a powerful endorsement of our technology that Panasonic, the world's leading battery cell manufacturer, would choose to invest in and partner with Tesla. Panasonic offers the highest energy-density cells and industry-leading performance with cutting edge Nickel-type cathode technology. Our partnership with them will enable us to further improve our battery pack while reducing cost."

I can imagine the speech that Elon will make in May of next year when he announces that the company is as dead a doornail, that the costs could not be reduced, the DOE loans cannot be paid back, and that Panic Sonic will write down the $30 million investment in Tesla to precisely zero.  My bet is by the time the doors close again on the Fremont California assembly plant, Tesla will have sold fewer Model Ss than what Delorean sold.   

 The 150 people that remain in the finance department at Panasonic’s empty HQ in Osaka will say sayonara to their investment in Tesla. 

Incidentally the 1957 film Sayonara starring Marlon Brando was filmed at what is now the Osaka International Airport also called the Kansai Airport.