Advertisement

Is Stock Market Betting On Tough Times To Come For Tesla?

 
1,371 views Feb 29, 2012
Follow John

2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

HI-RES GALLERY: 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011
  • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011
  • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011
  • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011
  • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011
  • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011
  • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011
  • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011
  • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011
  • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

Related Photo Galleries


See more photos »

Only two major plug-in car startups have made it to the point of building and selling cars globally, and lately, Fisker is the one that's been in the news.

But Fisker's not the only company whose long-term survival may be at issue.


As Bloomberg pointed out a couple of weeks ago, Tesla Motors [NSDQ:TSLA] is the second most-shorted stock in the Russell 1000.

Short-selling a stock means an investor sells shares he doesn't own in anticipation that he'll be able to buy them later at a lower price to complete the transaction at a profit.

The more shares of a company that have been sold short, the less confident the market appears to be that the company's stock will maintain its current price level.

Since Bloomberg published that report on February 16, Tesla's stock has remained in a range of $33 to $35 per share--including the intra-day dip due to worries about battery life, or 'bricking.'

The price fell briefly last Wednesday as news reports appeared in the media about what was called battery 'bricking," prompted by claims by a customer that Tesla should provide him a new, $40,000 lithium-ion battery pack for his Tesla Roadster.

Tesla Motors [NSDQ:TSLA] stock price, Feb 29, 2012, via Google Finance

Tesla Motors [NSDQ:TSLA] stock price, Feb 29, 2012, via Google Finance

Enlarge Photo

The customer, Max Drucker, admitted he left the car unplugged for more than two months--an action that voided his warranty--but claimed that he had been unaware of the degree of damage that could cause.

Tesla responded to the original claims, which were reported on the Understatement blog, with a post of its own entitled "Plug It In". Then, yesterday, Understatement author Michael Dagusta fired back with his latest anti-Tesla post.

It's possible this back-and-forth may continue for quite some time.

2012 Fisker Karma during road test, Los Angeles, Feb 2012

2012 Fisker Karma during road test, Los Angeles, Feb 2012

Enlarge Photo

Meanwhile, Tesla is quietly working at full speed to bring its 2012 Model S electric sedan to market this summer.

The company says it's now assembling test vehicles on mostly production tooling in the Fremont, California, factory it acquired from Toyota.

Still, most industry analysts believe Tesla cannot remain independent, even if CEO Elon Musk says it will.

As we wrote a few days ago regarding questions about Fisker's future: "We always answer the questions with a query of our own."

"What's the last auto company founded from scratch in the U.S. by entrepreneurs whose brand is still with us today?"

"The answer is Chrysler. And that was 88 years ago."

"No one's managed to do it since. Many have tried--Preston Tucker, Henry J. Kaiser, Malcolm Bricklin, John Delorean, and more--but none have succeeded."

So do you think that Tesla will survive as an independent carmaker? And how about Fisker?

Leave us your own thoughts in the Comments below.

+++++++++++

Follow GreenCarReports on Facebook and Twitter.





Tags:
Posted in:
 
Contribute
Send us a tip Comment Contact the editor
Follow Us

 

Have an opinion?

  • Posting indicates you have read this site's Privacy Policy and Terms of Use
  • Notify me when there are more comments
Comments (22)

  1. CDspeed avatar CDspeed . Posted: 2/29/2012 7:34am PST

    Super car makers seem to popup and do ok, Koenigsegg and Pagani seem established. Though I'm not sure of Fisker's long term forecast, I do know that Tesla wants to succeed and become mainstream and I think they can do it. Both of them have to overcome new tech skepticism which is hard most of the time but with gas on the rise again, they will have an easier opportunity this year. And Tesla could be facing a lucky coincidence, gas is high now and prices rise in the summer and the Model S is supposed to arrive this summer. If the Model S makes it out on time that would be good, but if gas prices reach record highs at the same time it will be huge.
     
    Post Reply
    Vote
    Bad stuff?

  2. RdeArriz avatar Raul De Arriz Posted: 2/29/2012 8:13am PST

    Its is clear from the all important 1 PAGE disclosure that the customer HAS to sign that LEAVING THE CART UNPLUGGED OR THE BATTERY RUN DOWN can damage the battery in a non-warranty covered state.

    It says it as the main text of disclosures
    it says it FIRST THING IN RED in the battery info
    It says it clearly through the manual.

    It is covered with all clients when they pick the car up, since you have to sign off on it!
    This customer is the not uncommon exec who expects to be "served hand and foot" and is NEVER responsible for their actions, and ALWAYS threaten because that is how they CONDUCT business.

    Tesla should balance out the PR versus the precedent and create mandatory classes on battery use as part of vehicle pickup
     
    Post Reply
    Vote
    Bad stuff?

     

  3. RdeArriz avatar Raul De Arriz Posted: 2/29/2012 8:15am PST

    Said classes would also emphasize the importance of battery management for less detail oriented customers - those who don't listen unless you repeat it many times in Loud Bold kindergarten like statements!
     
    Post Reply
    Vote
    Bad stuff?

     

  4. Steve Bruns avatar Steve Bruns Posted: 2/29/2012 9:57am PST

    Elon Musk, let's see...SpaceX. Tesla Motors. Here's a guy who went into two totally different arenas, private rockets and electric cars, facing enormous technical, financial and cultural challenges. And, he's succeeding at both. Simultaneously. Do you think it's a smart move to bet against this guy?
     
    Post Reply
    +3
    Bad stuff?

     

  5. robok2 avatar robok2 Posted: 2/29/2012 12:09pm PST

    @Steve... Yes, I would say it is indeed smart to bet against Mr. Musk. The existing players for SpaceX and Tesla are completely different; Was he competing with established companies with far superior resources with SpaceX?

    Tesla hasn't had to spend money to create a dealer market, to train employees or just to fight that first major lawsuit that will be coming. There's also no guarantee that Tesla will have a technical lead in 3-5 years, much less 10-15.

    To be a volume player takes far more money than Tesla will have access to once shareholders have had 2-3 more years without overall profitability. Loans dry up, customers look elsewhere, and being the new "Flavor of the Month" doesn't contribute to the bottom line. Bet against Tesla.
     
    Post Reply
    Vote
    Bad stuff?

     

  6. Steve Bruns avatar Steve Bruns Posted: 3/1/2012 7:47am PST

    "The existing players for SpaceX and Tesla are completely different; Was he competing with established companies with far superior resources with SpaceX?"

    Um...YES. SpaceX competes directly with the members of the United Space Alliance: Thiokol/Alliant Techsystems, Lockheed Martin/Martin Marietta, Boeing/Rockwell. It also represents a major shift away from government-funded, pork-barrel, go-nowhere space, so I'd add NASA and the entire US government to the list of folks who bet against Mr. Musk.
    Vote
    Bad stuff?

  7. fb_1001015277 avatar John Briggs Posted: 2/29/2012 9:40am PST

    Interesting that you leave out the possibility of Tesla finding a technical solution to the problem and leave it all down to education and training.
     
    Post Reply
    Vote
    Bad stuff?

     

  8. RdeArriz avatar Raul De Arriz Posted: 2/29/2012 10:56am PST

    Batteries are chemical reaction containers - if for some reason the reactions cannot be restarted - spent- there is no tech fix.
    Still you would think they would be looking at options to avoid potential downside.
    In ethe meantiem education is mandatory to avoid the NOW challenges
     
    Post Reply
    Vote
    Bad stuff?

     

  9. RdeArriz avatar Raul De Arriz Posted: 2/29/2012 10:58am PST

    Sorry about typos!
     
    Post Reply
    Vote
    Bad stuff?

  10. fb_100001444034909 avatar Richard Marks Posted: 2/29/2012 12:14pm PST

    I do not think that either Tesla or Fisker will survive. By Fisker bringing in Tom LaSorda, they have improved their chances since strong auto OEM knowledge is key to being successful, but just having that knowledge in their CEO, may not be enough and may be too late. Tesla's Elon Musk has too big an ego and will never realise he is in trouble. Fisker did and he made an important change. OEM automotive is a very complicated business and if done in a high capital intensive way, the way both Tesla and Fisker are doing it, is very difficult to pull off. There is simply too much these guys Musk and Fisker do not know, they do not know. These when they pop up are usually too late and to recover is very hard.
     
    Post Reply
    -1
    Bad stuff?

     

  11. CDspeed avatar CDspeed . Posted: 2/29/2012 5:57pm PST

    I couldn't disagree more.
     
    Post Reply
    +1
    Bad stuff?

  12. Chris O avatar Chris O Posted: 2/29/2012 12:17pm PST

    I'm no longer surprised to find John Voelcker's name above yet another piece on this blog that's very skeptical about Tesla's future. Clearly it's not just the stockmarket that is betting against Tesla. Frankly John, I can already imagine the title of your story on Tesla's demise should it ever occur: "I Told You So!" and sure enough, so you did.

    And I'm not saying all skepticism is completely unwarranted, clearly Tesla is playing a high risk game. Still I would expect a bit more optimism on a blog like this about the company that really pushes the envelope when it comes to EV development and is probably the main reason there are any developments at all in the field of electric motoring.
     
    Post Reply
    Vote
    Bad stuff?

     

  13. john_v avatar John Voelcker Posted: 2/29/2012 12:38pm PST

    @Chris: I enjoy your comments (I read every comment on GCR), but am disappointed by this one. Go check; we've published articles both pro AND con on Tesla.

    It's not our job to be cheerleaders or advocates. It's our job to report on news + vehicles in a slice of the current + future car market. Plenty of advocacy groups will give you only happy news, but IMHO, that's neither a reflection of the world nor good ammunition for those people who choose to be advocates themselves.

    In this case, I'm reporting on Bloomberg's analysis of stock market data. To me, it says something interesting about Tesla I'd not seen before.

    I'm curious: Would you rather have had GCR *not* do the piece?
     
    Post Reply
    Vote
    Bad stuff?

     

  14. Chris O avatar Chris O Posted: 2/29/2012 1:44pm PST

    I enjoy reading this blog but I'm a bit disappointed too lately about the increasingly skeptic tone about Tesla. It's one thing to be a cheerleader it's another to pile up some of unrelated news items in one post that only have in common that they reflect badly on Tesla to construct a case for it's immanent demise.

    And yes: I would rather have had GCR not do this piece that gives Michael Dagusta's increasingly sour, deceitful, hypocritical, petty and whining anti Tesla FUD campaign again the attention it needs to succeed.
     
    Post Reply
    Vote
    Bad stuff?

     

  15. john_v avatar John Voelcker Posted: 2/29/2012 2:45pm PST

    @Chris: We did THREE articles on l'affaire Dagusta the day it broke nationally, so I hardly think a handful of links in the 7th paragraph of this piece will make a lot of difference!

    I'd also point out that GCR was widely criticized in other outlets for not regurgitating Drucker's complaints verbatim (as others did), but instead adding context--including scans of Tesla documents that require the battery to be kept charged.

    If you find grounds to disagree with GCR's approach, have at it. But in our collective judgment, the fact that TSLA is the second-most shorted stock among *1,000* is news.

    And if it's news about green cars, we report it here.
     
    Post Reply
    Vote
    Bad stuff?

     

  16. Chris O avatar Chris O Posted: 2/29/2012 3:11pm PST

    Agreed, the fact that TSLA is the second-most shorted stock is news but I wonder if it was necessary to drag Dagusta's anti-Tesla crusade into it. It all builds up to creating a negative atmosphere around Tesla that is unwarranted at this point I think, but maybe that's just me being a bit sensitive about all things Tesla.
    Maybe a sentence about the large number of pre-orders Tesla has for it's vehicles could have created some more balance.

    And again the question to the readers about the chances of survival for Tesla/Fisker. Reminds me a bit of the infamous death watches the notorious TTAC site used to run about car companies, though even they pulled the plug on the Tesla deathwatch at some point because they felt it was unwarranted.
    Vote
    Bad stuff?

  17. CDspeed avatar CDspeed . Posted: 2/29/2012 6:11pm PST

    @ John, I've noticed a lack of optimism for Tesla in your articles as well. I don't expect cheer leading, but I do expect a little more faith in green cars from a green car website. And please don't think I'm being critical, I'm just saying I've noticed a gloom and doom undertone to recent Tesla articles.
     
    Post Reply
    Vote
    Bad stuff?

     

  18. john_v avatar John Voelcker Posted: 2/29/2012 7:47pm PST

    @CDspeed: Hmmmmmm. I'm not aware of it (obvs). Note: I would distinguish between a lack of optimism that TSLA will survive *as an independent entity* and optimism that the brand and the cars will survive. I don't believe I'm pessimistic about the latter, just the former.

    Talk to ANY auto-industry analyst and s/he will say the same thing: It is highly, highly unlikely Tesla will be independent 10 years hence. Absent a government treasury behind you willing to commit tens of billions of dollars, the laws of scale and the cost structure of the industry weigh against it--especially given Tesla's stated goal of becoming a volume carmaker.
     
    Post Reply
    Vote
    Bad stuff?

     

  19. CDspeed avatar CDspeed . Posted: 3/1/2012 5:43am PST

    No one can predict the future so who can really say. Tesla could be the next BMW, or they could be the next Packard. Porsche was independent for a long time, and then not that long ago screwed up so bad they had to merge in with VW. If analysts could really tell you with certainty what the future holds wouldn't they have seen the financial crisis coming and taken steps to prevent it. GM is an automotive giant, yet they came close to collapse. And look at Morgan a little company who has handcrafted sports cars since 1910, they are still family owned and operated. And each Morgan model has an average waiting list of one to two years.
     
    Post Reply
    Vote
    Bad stuff?

  20. fb_100001444034909 avatar Richard Marks Posted: 2/29/2012 12:22pm PST

    Relative to Tesla's "bricking" their battery packs? Why has not Tesla come forward and said how many replacement packs have been sold and replaced? Or would you not believe them to tell you the truth....?
    This whole issue is one that I was concerned about from the very beginning of Tesla. 6,831 laptop batteries in an automoile battery pack is sure craziness. The battery chemistry is wrong along with all the pecul1ar behaviors of these types of cells.
     
    Post Reply
    -2
    Bad stuff?

     

  21. CDspeed avatar CDspeed . Posted: 3/1/2012 9:18am PST

    Do you have a Tesla Roadster?
     
    Post Reply
    Vote
    Bad stuff?

  22. jeffhre avatar Jeff Hre Posted: 3/1/2012 10:39am PST

    There is actually only one independent automaker. Even they were struggling badly to keep up. In world awash with hyper-competition and oversupply they mortgaged everything including the blue oval to raise as much money as possible. Just in time to ride out the worst recession to hit the capital intensive car industry since WWII.

    If Tesla is not inadvertently flush with cash (like Ford luckily found themselves) at the start of the next great downturn, I don't see the government willing to bail them of their automakers-dilemma-cash-crunch. Not yet anyway.
     
    Post Reply
    Vote
    Bad stuff?

 

Have an opinion?Join the conversation!

Advertisement
Advertisement

Find Green Cars

Go!

Advertisement

More from High Gear Media

 
 
Green Car Reports
  • Follow Us
  • Twiiter
  • Facebook
 
 
© 2013 Green Car Reports. All Rights Reserved. Green Car Reports is published by High Gear Media. Send us feedback. Stock photography by Homestar, LLC.