Today’s news of a fire at the Fremont CA headquarters of Tesla Motors should be a wake-up call to any bulls left in the building about the situation there.
A pile of cardboard to be recycled caught fire, likely through negligence and is a perfect metaphor for what’s coming next for the company.
And it’s a shame. It didn’t have to be this way. So many good people put years of their lives into this project only to see it crumbling under the weight of Elon Musk’s enormous ego.
Musk should have stepped aside as CEO ages ago. A proper production manager should have been put in charge while Musk remained chairman of the board.
I’ve worked for plenty of small companies that couldn’t scale their production to meet their opportunities or, worse, their commitments. Tesla is a classic example of what happens when the hype outpaces the reality.
Earlier this week Zerohedge ran a story that 4300 out of 5000 Model 3’s produced in Q2 needed some amount of re-work done.
The same report also gives those closely following the Tesla saga additional color what the term “factory gated” could mean. One would guess that Musk can’t put most of these 5,000 vehicles – about 20% of which were built in Tesla’s GA4 assembly tent – on the road, when more than 86% of them need to be reworked. Internal documents revealed that these reworks came during the week of June 23 and that each one took about 37 minutes to complete.
As we noted previously when we discussed Tesla’s 5,000 Model 3 accomplishment, today’s report would confirm that the company sacrificed quality in order to boost quantity. As a result, instead of 5,000 new vehicles out on the streets, most were likely “factory gated”. In other words, they needed to be fixed.
I don’t blame the workers here. They are working their literal asses off. This is the fault of management. Management has not put into place the right controls and processes to scale up production to the levels needed to fill outstanding orders of Model 3s.
And Musk making the claim that the company could do this while knowing he couldn’t, is not just tantamount to fraud it IS FRAUD.
And anyone who still thinks Tesla is on the verge of taking over the car industry needs to have their head examined. The Model S is a 15 year old design. The Model 3 is already a 4 year old design and they can’t even build those.
Car industry sales are dominated by fickle consumers who have such a wealth of choice that they can demand incremental improvements every year while the companies scramble to retain their loyalty.
No matter how much you want to virtue-signal about your commitment to fighting global warming at the end of the day Tesla isn’t immune to this very real market dynamic.
Today’s fire is emblematic not only of Tesla’s future but of its past, it has burned through so much capital and wasted so much time just so we can genuflect at the altar of global freaking warming and a couple of grams of carbon dioxide.
Fire is supposed to destroy the old to allow the new to flourish. And Tesla has plenty of IP and patents it can sell to get shareholders back some small portion of the invested capital.
So, while Elon today is praising the fire department for their quick response to the situation, I honestly was saying, “Don’t do that…. let it burn.”
Anything to put this nightmare holdover of the insanity of the Obama years behind us.
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O really enjoyed the car talk tonight. I’ll probably never buy another new car. I drive an 89 Dodge D350 Dually with a Cummins diesel. No computer at all.
Yeah, that thing is never going to die. V.V. cool.
Elon’s problem is noted in the article: He has the creative vision, but not the production knowledge. He also continues to over-promise and under-deliver, which is a fundamental problem with his psychology.
But, notice how any question of Musk’s competence as CEO quickly morphs into an attack electric cars and renewable energy. Like the world won’t move forward without Elon’s unique elan.
That’s Cult of Personality stuff and I have zero patience for it. Thanks Kevin.
zero hedge and Tesla??? Hahahahahahahhahahahahahahaha…
Hmmm, what was the zero hedge conspiracy consortium saying about AMZN a few years back when it was trading the the $300s?
Shhhh, they’ve also been bearish the S&P since they opened their doors in late January 2009 – but then constantly whine that “It wuz QE” that did them in.
It might “take a village” to give us idiots, but for truly bankrupting trading losses from those who’ve never traded anything before, just consult your nearest alt-right “financial market” blog.
“But, but…Amazon is cash flow negative”…
Just like zero hedge always has been. However, AMZN turned their boat around – zero hedge and Tom “the financial market expert” Luongo haven’t.
Now, who exactly are the “true frauds” – come again?
As if even you on the internet couldn’t figure it out.
These bloggers are hopeless charlatans that have never held down a relevant job.
You have no idea what I think about Amazon. And if you asked me about it I would have told you three years ago that Amazon was a buy because it’s value is in its balance sheet not its earnings.
But, go ahead tar with that big brush, big boy. Sorry you can’t handle the reality of Tesla’s failure. It’s funny, you guys always seem to come in in waves, saying the same thing, like it’s coordinated or something.
How much is Musk paying you? I have to wonder.
Now dear readers, ask yourselves some obvious questions:
1. How much has “the source of all evil” Mr. Soros actually made (and lost!) in the financial markets compared to “true Austrian” experts zero hedge (and their cabal) over the the past 50 years? Who has actually put on some actual positions in currencies, commodities and stocks and actually generated even a few wins? Now consider Mr. Soros’s acolytes/sub-managers (such as Druckenmiller).
2. How is Luongo’s predicted grand “Mideast Peace Plan” between Trump and Putin shaping up?
3. Now ask yourselves who were screaming energy bulls at the high back in 2014 and who was actually short? Who then suddenly turned around and said they were bearish (“mal-investment” don’t ye know?) and assured us (hands down) that Russia wouldn’t join any oil deal in early 2016?
It’s hard to make this stuff up – but it’s still right there on the internet for all to see – if they wish to…
I find it funny that the minute someone goes after Soros hard and gets any wide press in doing so we have a series of people over the course of a few hours all attack me via Zerohedge reprinting my work.
To your points:
1) I’ve made money and lost money in markets. Were you long gold in 2001? I was. Were you long oil and china in 2002-07? I was. Soros making money is not an indication of his rightness or wrongness.
2. The Peace Plan is coming together but it will hit bumps in the road as Trump has to deal with disloyalty and a coup first. But, if you can’t see the Grand Bargain shaping up while Trump puts pressure on the EU over Iran, then you need to spend more time reading this blog rather than commenting on it.
3. Who was a euro bear in 2014? When the Swiss de-pegged? Who’s still a euro-bear? Who’s a dollar bull today? Do you know?
In fact, I don’t know who you’re talking about since I wasn’t writing this blog back in 2016.
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