Streetwise Professor

April 24, 2019

Elon the Stakhanovite

Filed under: Economics,Energy,Tesla — cpirrong @ 7:02 pm

Our Elon is all about exceeding expectations. Analysts predicted a $1.30/share loss in Q1. Elon scoffed. Piddling! He showed ’em–the actual loss was $2.90.

Overexceeding norms by 123 percent! Stakhanov would be proud.

Joking aside, the Q1 numbers were a bloodbath. A loss of over $700 million. In a quarter, mind. Cash flow was negative $920 million. The company said this is an improvement! A year ago it was -$1.05 billion!

Well, the cash flow numbers would have been worse–and worse than last year–had Tesla spent the anticipated $509 million in capex, instead of the actual $279 million.

Remember what I said about Tesla bleeds cash like a Game of Thrones battle scene hemorrhages blood? That hasn’t changed.

Tell me again why Tesla is a growth company. What other growth company is, or has ever been, on a capex starvation diet? Especially one that claims to have all sorts of new products just on the verge of production.

Revenues also cratered–$4.5 billion v. estimated $5.2 billion, and down from $7.2 billion a mere quarter ago.

A few days before the Q1 earnings release, Tesla held “Autonomy Investors Day” in which attempted to distract attention from its dismal present with Futurama visions of a magical future, with zillions of autonomous robotaxis prowling the world’s thoroughfares. Yeah. Robotaxis. That’s the ticket!

This is just the Musk MO–always try to keep the suckers focused on a brilliant future. The next big thing is around the corner. The problem is, it is always around the corner, and the autonomous vehicles–and Tesla the company–haven’t learned how to turn the corner.

Elon also claimed (based on highly dubious assertions that NVIDIA hotly disputes) that Tesla would create a better chip than one of the world’s leading, and most innovative, chipmakers. Sure! And the problem with production is with the world’s leading battery manufacturer, not the car manufacturing tyro. Sure!

It appears, however, that Elon’s con is less convincing than it used to be. People are figuring it out. Finally. The Autonomy Day was widely panned, and his claims regarding chips widely mocked.

Elon also said “The only criticism and it’s a fair one, sometimes I’m not on time. But I get it done and the Tesla team gets it done.” Sometimes? Try always. And gets it done? Like the rooftop panels? The factory in Buffalo? The $35K Model 3 that is virtually impossible to actually, you know, buy? The innovative vertically integrated clean energy company that would result from the merger of SolarCity and Tesla? (Tesla is basically winding up SolarCity. It is disappearing like the Cheshire Cat. Except there won’t be a smile left when it’s done.)

I will just note in passing that a SpaceX test capsule had an “anomaly” on testing. Pictures show smoke billowing from the test area. I guess “anomaly” is how you spell “fire” now.

Remember that Elon promised no new capital raises. Given that losses are anticipated again in Q2, and that promises of profit in Q3 are dubious given Elon’s track record, how this is possible is beyond me. And again, how that promise can be squared with his promises regarding autonomous vehicles and the Model Y and the semi etc., etc., etc. is even more fantastical.

As I have been saying for a while, this will not end well. And it is looking like that bad end is nigh.

Print Friendly, PDF & Email


  1. It’s fascinating what rubbish people will fall for. Though I doubt if Elcon Busk will last as long as Goebbels Warming has.

    Comment by dearieme — April 25, 2019 @ 8:12 am

  2. “The latest Muskian nightmare roiling this industry emerged at a press event yesterday in Palo Alto, California, when Elon Musk declared that: 1. Newly-developed Tesla autonomous technology will put a fleet of robotaxis on the road by the middle of 2020.

    2. Up to one million Tesla vehicles will be configured to take advantage of this technology and become part of the shared robotaxi network, with no humans required. And

    3. “The fundamental message that consumers should be taking today is that it’s financially insane to buy anything other than a Tesla. It will be like owning a horse in three years,” according to Musk.

    That’s from the Autoextremist, evidently we’re all fools for not buying his vanity car

    Comment by The Pilot — April 25, 2019 @ 8:30 am

  3. Musk promotes the idea that he is a ‘visionary’. He did not found Tesla, and he did not foresee the many problems that Tesla has had just in the last 18 months, almost all of which were problems he created. A ‘visionary’ has foresight, and Musk does not have that characteristic. But he knows misdirection, and when the analysts assemble he trots out a semi or tunnel or trip to Mars or now a robotaxi. These have all been the “Look! Over there!” distractions that he has needed when faced with reality.
    His customers took advantage of government subsidies to display their virtue. When Tesla declares 11 or 7, there should be no mercy for Tesla owners. No refunds of deposits; no government support for software updates or repair services; no financial help in disposing of the depleted batteries.

    Comment by Richard Whitney — April 25, 2019 @ 9:25 am

  4. Bank you for this headline: I await the announcement that thanks to Tesla`s advanced self driving technology o Dr 250k tonnes of coal was dug out by two men with a toothpick!

    Comment by Sotos — April 25, 2019 @ 10:24 am

  5. been a tough stock too short. Cults are always hard to short.

    Comment by pointsnfigures — April 25, 2019 @ 2:46 pm

  6. You forgot Tesla Insurance®!!! It will be out next month! I’m sure the CFO and accounting CAN’T WAIT for regulators running a fine tooth comb over Tesla’s books. Insurance is kinda regulated right? Kinda? No matter, at least you don’t have to have a lot of cash on hand to do insurance.

    Also, everyone at that “autonomy investors day” looked nervous and worried. Even a noticeably engorged Elon looked uncomfortable and said some weird stuff. Weird for him weird.

    Outside of the broken promise stuff those numbers are devastating. Any business, regardless of who is running it, would be in dire straits with numbers like that.

    Comment by Daniel Rust — April 25, 2019 @ 8:06 pm

  7. […] other friend Professor Craig Pirrong has a great take on Tesla here.  Again, he is an economics professor.  He understands that pesky math and how subsidies work, […]

    Pingback by Not Green, Smug | Points and Figures — April 26, 2019 @ 4:35 am

RSS feed for comments on this post. TrackBack URI

Leave a comment

Powered by WordPress