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.


  1. What do you think of the new MPG rules?

  2. DS I am all for improved MPGs by all vehicles and think that efficiency is our best tool for lowering carbon emissions. What I want though is that the EPA be honest about the method to calculated the MPG equivalent for electric vehicles. It is pure hog wash that the EPA uses 100% as the efficiency for electric power generation and therefore skews the figures in favor of junk like the Tesla or the Fisker or the Leaf or the Volt. Perhaps the best was to set vehicle standards is by grams of CO2 per mile. And the electric vehicles will be charged the grams of CO2 per kwh of power taken from the grid. For example of the Tesla it needs 0.45 kwh of AC grid power per mile and each kwh in the US grid now has about 660 grams of CO2 so the Tesla emits 297 grams of CO2 per mile. The Chev Cruze gets 30 mpg and each gallon of gas emits 8,720 grams of CO2. So the Cruze emits 290 grams of CO2 per mile or approximately the same as the Tesla. Very simple way to be honest and fair. Of course some will argue that extracting, transporting and refining oil emits CO2 and this is true but so does mining coal for power generation or extracting and compressing natural gas for power generation, etc. etc. My method is simple and unbiased. After all Obama and Chu want to reduce CO2 with the increased fleet efficiency, right? Or do they want to favor some of their favorite things like Tesla, Fisker, the Leaf , and the Volt?