Good afternoon all,
We got a glimpse of the enigma that is Tesla this week.
Last year, Tesla, with no fanfare, opened a repair site in Stanton for a company that may have sold a thousand cars in Delaware. Repairs are by appointment only. After all, electric vehicles do not need oil changes, fuel filters, spark plugs, etc.
Tesla has defied the conventional model for auto dealerships in Delaware. It operates a tiny “gallery” showroom in Christiana Mall and maintenance center that even with hefty rents add up to a fraction of the cost of running a conventional dealership.
The likelihood of lower maintenance costs and long shelf lives, even with battery swap-outs, have led some experts to predict that electric vehicles will one day be a mainstay on U.S. roads, especially for commercial fleets.
Amazon has already an order with another start-up electric vehicle maker to buy 100,000 delivery vans.
GM plans to convert a plant near Detroit that had been slated for closing as an electric vehicle manufacturing. Meanwhile, companies like GM and BMW are filing a flurry of patents on electric vehicles and the next step – driver-assisted features and self-driving systems.
Clearly, Tesla, which is now assembling hundreds of thousands of cars a year, is disrupting the industry, even when its mercurial leader Elon Musk boldly announces wildly optimistic launch dates for new vehicles.
Short sellers of Tesla stock, who have long been predicting the demise of the company, have lost money time and again for their followers as Musk and company find ways to sell cars.
Musk helps the short-sellers’ cause with his tweets, emails, etc. on financial prospects for Tesla that get him in hot water with securities regulators.
He’s also dealing with a shareholder action in Delaware Chancery Court over his controversial role in merging Tesla, with Solar City. The merger of two businesses with few synergies drew fire from shareholders who saw it as an example of Musk forgetting that he heads a company with publicly traded stock.
In the end, the stock market, which lives in the future, decided for now that Tesla will remain a survivor, despite the steep odds that come with building an auto company from scratch.
The short sellers are not going anywhere, given the sky-high stock market value of the company and the belief that Tesla is built on a rickety foundation.
At some point, they could be proven right, but for now, it is time to lick their wounds and come up with new arguments.
Enjoy your weekend. This newsletter returns on Monday. – Doug Rainey, chief content officer.
