Elon Musk – Page 2 – Really Right

Elon Musk now Peddles Car Insurance

By Chief

We had an editorial board meeting here at Really Right last week when the news was dropping about Tesla rolling out their in-house auto insurance department. We agreed to let Aaron Park take the first crack at this one, since you know, he’s an insurance agent and all. Aaron didn’t act, so we feel we must report so the people can decide.

It was announce that Tesla has formed its own insurance company, drum roll please……….. Tesla Insurance. Oh, the millions I’m sure that were burned on that one. The consulting firm that came up with that name is one of pure genius. This new division offers insurance, but only to Tesla drivers in California, which is strange, this being, well… California. You see, California has the most diverse rating factors of all the states in the union outside of Michigan. This is very puzzling.

Tesla’s insurance license with the state of California lists the automaker as a property-broker agent and a casualty-broker agent. The documents show the license has been active since August 2017.

Like the auto industry, insurance is a low-margin business, as increased competition has made the costs of acquiring customers more expensive, Krzysztof Kujawa, the chief product officer at the insurance-shopping website Gabi, said. That means Tesla Insurance may not drive profits for a company that has posted losses in all but four quarters since going public in 2010.
Tesla’s new insurance program prompted some early questions amid a bumpy rollout

Correct, Tesla is now: a dealer, a financer, and an insurance company all in one. Sounds like Elon is trying to mimic the Oracle of Omaha with this take on vertical marketing.

Berkshire Hathaway’s (NYSE: BRK-B) (NYSE: BRK-A) Warren Buffett argued in the company’s annual shareholder meeting earlier this year that Tesla’s decision to get into the insurance business could be a mistake. “It’s not an easy business,” he said. Buffett knows a thing or two about insurance. Not only is GEICO a Berkshire subsidiary, but Berkshire owns insurance companies that insure other insurance companies. “Our [insurance business] has been the engine propelling Berkshire’s growth since 1967,” Buffett wrote…
Tesla Is Getting Into the Insurance Business

However, this arrangement raises a set of questions that Elon will never be able to answer, and even better I spoke to the California Department of Insurance and they couldn’t answer either. First off, Tesla has a unique reputation of blaming the driver, not the car for anything that goes wrong. They use their vehicle’s telemetry logs and recordings to back this up; as far as insuring the vehicle goes, do the claim reps have access to this or does an independent third party? Well, it won’t be a third party…so scratch that. That is disturbing. Is this a backdoor way to limit product liability? But like the Ronco Knife sales guy on QVC says…but wait there is more!

Tesla is making a bold claim that customers will save 20% over their current carrier but savings can be up to 30%!

“Starting today, we’re launching Tesla Insurance, a competitively priced insurance offering designed to provide Tesla owners with up to 20% lower rates, and in some cases as much as 30%,” the company said in a blog post.

“Tesla Insurance offers comprehensive coverage and claims management to support our customers in California, and it will expand to additional U.S. states in the future.”
Tesla says its insurance is now available in California

I am not sure this is a great promise to put out there, as with most commercials you see on TV from other insurance carriers, such statements are heavily disclaimed at the bottom of the ad. It is a very bold claim to say you can reap that kind of savings from a company who only insures Tesla’s over larger carriers with far more exposures to mitigate their risk. This creates bad will with your vehicle owners not to mention distrust. In addition, how can you be so sure your price is that much better…. most companies offer a bundled discount with home and additional vehicles. I hope they did their research on this one, yet something tells me they didn’t.

Tesla’s capitalization structure should be called into question as well. For example, at my company: Auto/home/life/health/bank/mutual fund businesses are all separate and must have separate capital to prove solvency. This capital must be held in separate reserve accounts, and in the case of Tesla, the California Department of Insurance (CDI) will look at their books every year to prove compliance. Just to point out that pretty much every pundit in the field has major questions about Tesla’s finances. Given that the company is burning through cash, issuing additional stock, taking out high risk loans, and their only real source of income is selling climate credits, I think you have to ask the obvious question….

How will Tesla pay out claims? Remember, Tesla may have extensive info on their own cars, but what about the car their driver hits? What about injury accidents? Will Tesla only allow the vehicles to be repaired in-house, even though this violates CA insurance laws? Will they even fix claimant cars, or will they be like AAA and just say fix it yourself and send us the bill? Too many questions here for me.

Tesla owners have dealt with high insurance costs due in part to the relative difficulty of finding replacement parts and qualified body shops. AAA raised insurance rates for Tesla vehicles in 2017, though Tesla argued that AAA’s decision was “severely flawed” because it compared Tesla’s Model S sedan and Model X SUV against dissimilar competitors.

Tesla’s have long been a question mark for insurance companies, Business Insider Intelligence analysts say, due to their built-in sensors and Autopilot software. In 2017, AAA said that Tesla owners should pay more than traditional vehicles due to “abnormally high claim frequencies,” Automotive News reported in 2017.
Tesla says its insurance is now available in California

I called the CDI about Tesla Insurance and they too were short on answers, like how they are capitalized, and their company structure (claims/underwriting/service/sales/special investigations etc.). Actually, more disappointing, a contact I have in this regulatory agency suggested Elon may have been able to put one by Ricardo Lara (the elected commissioner) because they are a “green friendly” company. Or maybe Lara owed Elon a favor after getting elected? Lara, like Aaron Park, has a policy of contributing to him first if you want an endorsement.

Final thought here, and likely the most disturbing, by the way. Look at the exposure Tesla has (there are not many) but look where their customers are all located (mostly coastal areas). What if a wildfire strikes that is similar to the magnitude of the one in Napa a few years ago? (Or the Oakland Hills fire many years ago) Such losses to a small company could be enough to wipe them out, and let’s not kid ourselves, Tesla’s are not cheap cars as referenced by their price.

Chief

This Just In: Walmart sues Tesla

If Elon Musk had a dollar for every dream he has inspired in utopian Liberals, this might be a fair fight. Wally World is suing Tesla in New York State for causing rooftop fires due to defective solar panels. This looks to be a fun scrap. This is doubly juicy because Tesla in making solar panels in New York State with taxpayer subsidies.

Walmart Inc. sued Tesla Inc.’s energy operations, formerly known as SolarCity, for breach of contract, claiming it failed to live up to industry standards in the installation of solar panels on top of hundreds of stores, resulting in multiple fires across the country.

The retailer said it had leased or licensed roof space on top of more than 240 stores to Tesla for the installation and operation of solar systems. But as of November 2018, fires broke out at no fewer than seven of the stores, forcing the disconnection of all the solar panel systems for the safety of the public.

In a complaint filed in New York state court Tuesday, Walmart said its inspectors found that Tesla “had engaged in widespread, systemic negligence and had failed to abide by prudent industry practices in installing, operating and maintaining its solar systems.”

Many of the panels had defects that could be seen by the naked eye or were easily identifiable with proper equipment, Walmart said, indicating that Tesla had deficient inspection procedures or hadn’t been inspecting the sites at all. The retailer’s inspectors saw dangerous connections, including loose and hanging wires at several locations.

“Many of the problems stemmed from a rushed, negligent approach to the systems’ installation,” Walmart said. “Tesla’s predecessor-in-interest — SolarCity — had adopted an ill-considered business model that required it to install solar panel systems haphazardly and as quickly as possible in order to turn a profit.”

Tesla didn’t immediately address the retailer’s complaint.
Walmart sues Tesla over fires linked to rooftop solar panel systems

Oh, speaking of Tesla and product liability, I’ve been sitting on this one for a while.

Tesla sued for homicide…again.

A Tesla car, running on Autopilot, skidded 1,600 feet after sliding under a semitruck at 68 mph, shearing off its top and killing its driver, according to a lawyer who is suing the carmaker.

The crash in west Delray Beach happened four months ago when a tractor-trailer pulled out in front of a bright red Tesla Model 3 driven by 50-year-old Jeremy Banner.

The Autopilot system failed, according to a lawsuit Banner’s family filed Thursday in Palm Beach County. The system should have braked or swerved to avoid the semitruck, Trey Lytal, the family’s attorney, said at a news conference.

About 10 seconds before the crash, Banner engaged the Autopilot system, according to a preliminary report from the National Transportation Safety Board.
Autopilot failed to keep Tesla from sliding under semitruck at 68 mph, lawsuit claims

Elon, welcome to the big leagues. Claiming your product has “Autopilot” when it’s not, doesn’t make me a believer in self-driving cars.

Selling products without making a profit doesn’t pay the bills for very long; especially, when you cut corners to maintain cash flow.

The Recycling Myth Debunked

By: Chief

This blog and commentary is the result of current events over the last year exposing CalRecycle as a farce and nothing more than a government mandated “feel good” program. This mostly came to a head with the shut down and bankruptcy of RePlanet, a large recycling conglomerate, on Tuesday of this week.

Citing the increased costs of processing recycled items, RePlanet, California’s largest operator of recycling redemption centers has closed, leaving 750 employees out of jobs.

The Ontario, California-based company has closed all 284 of its centers, according to the San Jose Mercury News.

Company President David Lawrence told the newspaper the decision to close was due to increased business costs and falling prices of recycled aluminum and polyethylene terephthalate, or PET, plastic.
California’s largest recycling redemption center operator RePlanet closes

Recycling was essentially mandated in California in 1989 and on its surface it actually was a good idea. The premise was that we should try to divert as much waste as possible from our landfills. The program introduced recycling and green waste composting programs to help toward a goal of diverting 50% of all waste over a period of 30 years. In Sacramento County, we had just a garbage cart, then we got a green waste cart for all yard waste, and got 3 small bins for recycling. We had to separate the recycling into a separate bin for paper, glass, and plastics and aluminum. As a result, instead of 1 truck picking up said waste now a 2nd truck was required since the yard waste and recycling is collected on alternate weeks. In some parts of California such as the Bay Area, recycling is picked-up on a weekly basis.

As with any government program, an entire new department was created “The California Integrated Waste Management Board” to oversee this program as well as the California Redemption Value Program (CRV). This CRV is what you pay to the State of California on most plastic, glass, and aluminum products when they are bought at the grocery or liquor store. Prior to this, glass recycling was done at a local level by the private sector. Buy a Coke or Pepsi product at the grocery store and return the bottle and you got a nickel from the store. Government was not involved or mandating this program, it was purely a function of the private sector. Now, what the store collects is remitted to the State. I will now discuss the demise and issues with this system.

First the city and county administered programs: I cannot blame them entirely since when the state mandates it, you either do it or face a daily fine until you comply. After a few years, the 3 separate bin system with replaced with an additional cart, for mixed recycling. This was due largely to more material being eligible to be recycled, but I have a feeling worker comp payouts mounted due to a person having to physically lift and dump these bins into a contraption that loaded into the truck.

I am in favor of collecting more recycling and diverting it from the landfill, but this was a case that backfired. There was never a system or check in place in regard to contamination….this is how the program was destroyed. You see the bin is collected, and the contents of the truck are compacted and smashed repeatedly until the truck unloads at a sorting facility. There workers manually separate, combine and package the recyclables to be sold to China or another broker who does the physical recycling. Up until a couple of years ago, China took everything and asked no questions. Recently, they have tightened up their contamination standards and as a result quite a bit of “recyclable product” has been diverted to the landfill. Please note that China’s change of heart on taking our trash to be recycled predates any controversy related to President Trump’s trade policies.

Yep, we aint recycling the contents of your recycle bin, just burying it in the ground like everything else…but hey…you still get to feel good about saving the environment and the planet (at least until you read this blog).

Let’s take look at how lucrative this program has been to Sac City residents….according to their website “recycling sales” or product sold to China/broker etc. totals .79% of the revenue….OUCH!

City of Sacramento recycling revenue proposal

The reserves have been depleted to a point the City will be increasing residents monthly trash bills by $12 a month over the next 5 years. Think about that one! Also the City has to start collecting “food waste” by 2021, so an additional cart, added fees, and a new rodent problem anyone? The program is literally bankrupting a local municipality.

Now let’s take a look at the downfall of RePlanet. RePlanet is or was a recycling outfit known for their small container sized booths usually located in shopping center parking lots that collected cans and sometimes plastics for recycling and paid you for the product.

On Tuesday, RePlanet closed all of its 284 locations and laid off all 750 employees citing an uncompetitive environment to do business. Digging deeper, the dirty little secret of how this business failed should not surprise anyone, as 40% of all recycling locations have closed in the past 5 years. It was a scam. Did you ever notice that at the register you were charged $.05 or $.10 “deposit” on the product, that is per item, but if you then took the container to a recycler, you were paid a rate “per pound” meaning you collected far less than your deposit. So if you didn’t actually recycle the material yourself, say you put it in your bin, the state kept the money and subsidized these operations taking place all over the state. The state payments did not keep up with inflation/regulation and as a result, these recycling centers have disappeared.

As someone who recycled religiously, I can say firsthand that it started making very little sense to do so a few years ago. The payments became less and less to the point where you questioned even making the trip. Honestly, if you think about it, look at it this way; RePlanet–like any other non-government entity–is in business to make money. They have to rent the space for their booth (this isn’t cheap, and can run about $1000 a month by the way), pay the employee minimum wage (this company had Bay Area locations paying higher than Sac County wages), benefits, workers comp, and had to pay customers for the product. The numbers did not add up at all. Couple that with smugglers bringing product in from over state lines (NV and AZ don’t have a recycling program) so they use ours to their advantage and you have a basically bankrupt CalRecycle program. RePlanet’s demise is a very big hit to a portion of the population that recycles for the cash as a means to make ends meet, and believe me there are quite a few. In years past, you might remember homeless folks scavenging your recycle bin the night before pickup but they haven’t been doing that lately, now you know why.

So here we are, stuck in a nasty catch 22; on one hand, we have a state department of recycling mandating that we divert 50% of our waste (that number is going higher by the way) and on the other hand, we have China is no longer accepting our recyclables. State officials are presiding over a bankrupted system as far as redemptions go, but they are still happily collecting the CRV taxes.

I spoke to a member of my church who was heavily involved in creating the program for the state and he was very contrite with me saying the program had good intentions but has badly missed the mark…he even spoke of regret setting this system up. He said the idea of household recycling was great, except people intentionally contaminated their bin, leading to the load being trashed as opposed to re-used. You encourage people to bag their own recyclables and take to a recycler, but when you are paid only a pittance, what is the point? He also shared that before he retired, for 10 years in a row, more pounds of aluminum cans were recycled through one of these “redemption centers” than were actually sold in California! Try that one on! Especially when he said participation among residents could not have been higher than 20%. In addition, the cost to recycle items in this state far outweighs keeping them out of the landfill…his words not mine.

Final Thoughts: It should surprise no one this is ending badly; whenever the government gets involved, the outcome is less than ideal. A new department was created, hundreds or thousands were hired, and here we are trying to pick up the pieces and do an autopsy on the recycling program while the CRV program is charging full speed ahead on autopilot. It started as a great idea and it remains a good idea, which may upset some readers of this blog, but keeping things out of our landfill where they can leach into our water supply is paramount to our existence. The problem is when the program is taken advantage of by scammers or intentionally contaminated by people not caring. As a result everyone is losing, we pay more for garbage service, can no longer reap a benefit of recycling, and now have reusable bags and containers foisted upon us constantly.

I think the answer is something of a hybrid, I think the recycling system for residents should be optional… but you pay a higher price if you opt out. This stops people who don’t care or intentionally are contaminating. Opting in, gives the local hauler or municipality the right to inspect your container to make sure it isn’t contaminated…you’re getting a substantial discount so you give up privacy, sorry. The centers that collect products should be more readily available and maybe this is a collaboration of business and government where a detailed business plan and rate of return can be achieved. Ok maybe not the greatest answer to a problem, but once again a crisis has come out of something we thought was an easily solvable “green” answer.

The Chief

Editor’s Comments:

I think the State of California needing to ship our waste to another country to run a sustainable recycling program is proof that this recycling scheme was poorly thought out. By the way, California is not the only State shipping waste to other countries. To lift a phrase, what happens in California should stay in California. We should recycle our own waste. While I prefer a private sector solution, this might be something the Prison Industry Authority (PIA) might want to get involved in. How about some welfare to work program opportunities? Folks, as rare as it is for me to say it, this kind of problem is one where Elon Musk might actually be the go to guy. Elon likes to dream stuff up and use taxpayer money to make it happen; plus, he likes a challenge.

Tesla Admits Financial Bleeding

The bad news from Tesla keeps piling up. Yesterday I saw this about their response to declining sales on their Model S & X cars. Free charging for life.

In a turn of events, Tesla has now announced that all new customers of the Model S and Model X can access free unlimited charging at any Tesla supercharging station.
Tesla tries to win back Model S and X customers with free, unlimited charging

My son-in-law (he earned the title yesterday), bought a Tesla a few months back and got free charging for the first six months of ownership. As previously documented, the difference between the Supercharge station and the other two forms of charging is huge—in terms of time.

However, the big news to me in this article was the cost of charging.

A few years ago, Tesla offered free supercharging to customers; until the offer was revoked by Musk for being unsustainable for the company in the long run. With the cost of supercharging in the US being pretty much equal to the cost of gas ($0.28 per kWh), this may have been one of the reasons Tesla customers have been abandoning this part of the product line.

OK, so if the cost of charging your car is the same as gasoline, what exactly is the savings of owning the car?

Please note that the logic of electric vehicle ownership goes off the rails at this juncture. If the cost of charging is the same as gasoline, where is the cost savings when your state—or the federal government or both—introduce the dreaded mileage tax? Filling up my gasoline powered car takes less than five minutes while the Tesla supercharge station gives you only a mostly charged vehicle after 45 minutes. Don’t forget, should you resort to 110 VAC charging, you may be waiting a whole day for a charged battery.

Also, as others have documented, Tesla has made no changes to the Model S & X cars since they were introduced except some software updates. Oh, don’t forget that the designer of said cars also quit working for Tesla so there is that. Elon is selling old tech for premium prices. If Tesla goes under, he might have a future with Apple since they do the same thing.

Tesla Class Action Suit: Hey Elon, Welcome to the Big Leagues

Previously, Elon Musk claimed that the value of his cars would appreciate over time—something heretofore impossible in the history of automobile manufacturing. Tesla does retain its value better than many other cars with 69 percent resale value after three years but there appears to be a catch, Tesla won’t honor their warrant on the car’s battery if you buy one secondhand.

Here’s the details:

Tesla will appreciate in value

Tesla Inc.’s Elon Musk is standing by a claim that the company’s electric cars will be appreciating assets once they’re capable of driving themselves.

Musk, Tesla’s chief executive officer, first made the claim in a podcast interview in April that the company’s vehicles will gain in value because they’ll eventually be capable of fully autonomous driving. He stood by this in a reply to a follower who wrote Tuesday that he was unsure if the CEO was joking or making a “really dumb” statement.

With the exception of collectors’ cars and other rare cases, depreciation has been a fact of life for automakers, dealers and rental-car companies for decades. While Kelley Blue Book has handed Tesla a best resale value award for its Model 3, for example, the car-shopping researcher estimates the sedan retains about 69% of its value after three years.
Musk Stands by His Tesla Appreciation Claim That Was Called ‘Really Dumb’

Tesla battery promises made

Tesla promises to warrant their battery for 8 years

Tesla car battery has an eight-year warranty. With this warranty, repairs and replacements are free. Such repairs may include defects in the workmanship or materials of any of the battery’s parts.

If there are any parts that are malfunctioning or if the battery is defective, Tesla will repair or replace the unit. The warranty will also be covering any damage that may happen to your vehicle in the event of a battery fire, even if this may be because of driver error.
How Much Does Tesla Battery Replacement Cost?

Tesla promises broken

Thanks to the diligent work of our staff, it has been brought to my attention that Tesla won’t uphold their promise to honor the warranty on the car’s battery. Folks this has gotten so bad that Tesla has been hit with a class action lawsuit.

Tesla is facing a class action lawsuit filed by consumers who claim that the car company does not honor battery warranties on pre-owned vehicles.

The plaintiff alleges that after his research, he decided to purchase a 2014 “certified pre-owned” (CPO) Tesla Model S 60.

“All of the marketing materials that Plaintiff saw in the news, be it Tesla.com and/or Teslamotorsclub.com and/or other car-buying and automotive websites indicated that the used CPO vehicles sold by Tesla were given a 270-point inspection and that it was customary for Tesla to take care of repairs and issues with their vehicles,” the Tesla class action lawsuit states.

The plaintiff alleges that he depended on Tesla’s “marketing, advertisements, and representations” that his vehicle would be fully inspected and certified.

After he took the vehicle home and started to charge the battery, he reportedly found out that the battery only lasted 166 miles on a full charge.

The plaintiff claims that he brought the car to a service center and they made a correction to the Battery Management System (BMS), but that didn’t fix the problems with the battery.

The Tesla class action lawsuit alleges, “Plaintiff was told to report back to the service center after driving around with the car and after ‘cycling’ the battery, which refers to the practice of charging to 100% and discharging the battery to low levels for purposes of recalibrating the battery.”

The plaintiff claims that Tesla informed him that his vehicle suffers from “normal battery degradation.”

“Despite the fact that Tesla warrantied Plaintiff’s vehicle with a 2-year, 100,000 mile limited warranty, and the fact that it provided a 8-year, unlimited mile battery warranty, Tesla has failed its duty to Plaintiff by unlawfully, improperly, and fraudulently denying proper service and repair of Plaintiff’s vehicle,” the Tesla class action lawsuit alleges.

“Tesla focuses its efforts on allaying the fears of what some drivers of electric vehicles call ‘range anxiety’ by representing to consumers nationwide that they can rely on Tesla’s promises to take care of them no matter what happens to the batteries of Tesla’s vehicles. As it turns out for many consumers who were led on to believe Tesla’s promises, the fact is that Tesla never actually meant to keep their promises and follow through on their guarantees,” the plaintiff states.

The Tesla class action lawsuit is alleging violations of the federal Magnuson-Moss Warranty Act, Federal Trade Commission Act, Used Motor Vehicle Trade Regulation Rule, and numerous California laws including the Song-Beverly Consumer Warranty Act, Consumer’s Legal Remedies Act, Unfair Competition Law, and Violation of California’s False Advertising Law.
Tesla Class Action Says Pre-Owned Warranties Aren’t Honored

Elon may regret the decision to manufacture cars in California once he gets to experience firsthand the litigious, antibusiness climate in the once Golden State.

Tesla reputation will fade

Folks this is a big deal because Tesla batteries are in more places than just their cars. Elon’s solar empire—weak as it may be—is also dependent on using Tesla batteries. In some circles, Tesla homes are a thing. The fact is Tesla batteries are just like everybody else’s, it’s just that Elon—like Apple—can charge a premium just by putting their name on something. Oh, and unlike most manufacturers, Tesla’s battery factories are built with taxpayer subsidies.

I know that replacing a battery on a hybrid car is about $3K but a Tesla is much more.

Do you need to replace your car battery? … how much will it cost to replace a Tesla battery.

Answer is between $5,000 to $7,500 and it depends on what model Tesla you drive.
How Much Does Tesla Battery Replacement Cost?

Folks, I expect this to be the beginning of a trend as more Tesla cars hit the road. It’s no secret that quality control issues have plagued these vehicles from the beginning. Elon keeps claiming the future will be better but it’s the past that he should hope never catches up with him.

Tesla Should Fire Elon Musk

Corporate America—especially now that we’re in the 90-day life cycle—has a habit of being ruthless in the pursuit of profit and struggle for survival. When they miss their numbers, there’s hell to pay—usually for those at the lowest pay levels and occasionally in middle management or higher.

This week, Tesla missed their numbers badly even with the market expecting them to report a second quarter loss. Elon not only missed the reported target but the entire side of the barn; hence, all Musk’s recent media stories about dreams of a better future leading up to release of said report. Can you blame him? Who’d want his track record at Tesla?

Tesla plunged 10% in extended trading after posting a larger-than-expected loss on Wednesday in a second quarter earnings update.

Here’s what Tesla reported, versus what analysts expected based on average estimates compiled by Refinitiv:
* Loss per share on an adjusted basis: $1.12 vs. 40 cents expected
* Revenue: $6.35 billion versus $6.41 billion expected
Tesla falls after posting wider-than-expected loss

In the wake of this report, some on Wall Street are saying that Musk needs to step down.

When asked if Tesla was worth buying after an ugly quarter, Paul Schatz, president and chief investment officer at Heritage Capital, told Yahoo Finance, “It has very idiosyncratic behavior, but no, [Musk] is not a future leader.”

“You’re going to have Mercedes and BMW and all the real car companies competing with them in the next five years, and I think they are much more well-positioned financially,” compared to Tesla.

Schatz pointed out that while Tesla may have had a head start out of the gate, the company is not taking full advantage of that position. Management is a major concern – the latest example in a series of departures is the company announcing on its earnings call that Chief Technology Officer JB Straubel was stepping down from his position and transitioning to an advisory role.

Schatz compared Musk to Microsoft founder Bill Gates – or at least suggested the Tesla leader should aspire to be like Gates in one particular way. “All great entrepreneurs eventually, like Bill Gates, all step back and say, ‘I’ve taken my company as far as I can go and need to bring in somebody that has a corporate backbone to it,’” he said. “The wrong guy is running the company.”

As for whether investors should bet on the car maker, “unless you’re a nimble trader, I think it’s lunacy to go near Tesla,” Schatz said, adding that he doesn’t see it “as a sustainable long-term business model.”

“I still think it’s going sub-$100,” Schatz said.
Elon Musk should be like Bill Gates – but not in a good way

Lest you think calls for Musk’s head are unusual, think again. Here are a few examples.

George Zimmer was kicked off the board of the company that he founded, The Men’s Warehouse.

Source: Fired From the Company That Made Him Famous, an Entrepreneur Seeks Payback

Carl Karcher—who founded Carl’s Jr hamburger restaurants was fired from his own company.

Source: Karcher’s Fateful Hiring Began His Own Demise: Corporations: Carl’s Jr. founder’s own star started dimming the day he ordered out for a new president

Roy Disney—brother and partner to his more famous brother, Walt, was fired by Disney’s Board of Directors.

Source: Roy Disney forced out, wants Eisner to do the same

While firing Elon, might make sense in a saner world, given his volatility and the turnover of his executive staff, I don’t see that ever happening. Musk is his own worst enemy much of the time. I think it likely that he gets to ride Tesla to the bottom—which many define as a stock value south of $100 per share.

Tesla’s only hope for salvation is periodic infusions of government directed money. With the phasing-out of American tax credits and today’s economic reports about Germany’s manufacturing decline—something that will ripple thru Europe, the future cash expected from the EU and other places may be less than promised which will make Tesla’s finances even more dire. If the economy catches a cold, Tesla will suffer a severe case of pneumonia.

Tesla 2019 Q2 Tomorrow

Elon Musk’s second quarter report card is due tomorrow (07/24/2019). As such, he dropped a few more nuggets for the faithful about what he might be able to do in the future, probably because the present is such a miserable place to be right now.

Future performance not indicated by past results

Elon is touting patents of technology that might become a reality at some future date, whether he’s the one still alive to do it or not is a debatable point. One involves automobile wiring harnesses and the other stamping body panels. Neither is anything other than a concept right now.

Elon Musk doesn’t want past performance to be used as indicator of Tesla’s future

Please note the tone of the opening paragraphs.

Elon Musk believes the way to usher in a new age of EVs is by going back to square one and tackling the fundamental issues with production.

Tesla just designed and patented revolutionary new wiring architecture, which will enable robots to build the upcoming Model Y.

Now another patent has revealed that Tesla is also moving to a new, full body aluminum casting design; rather than a series of stamped steel and aluminum pieces.
Tesla introduces giant casting machine to mass-produce Model Y Compact SUV

Oh, the headline is deceptive because Tesla has no such casting machine, only a patent on a concept for one which is a very different proposition. All that’s missing from the above article is Billy Crystal’s line from City Slickers that “Life is a do over.”

Apparently, Elon is signaling that he blew it with what he’s done at Tesla and needs another paradigm. Translation: give me yet more time. Like a stopped clock, the faithful hope that he eventually will get it right.

Next nugget, Apple hired Tesla’s VP in charge of design.

Apple Inc. has hired Steve MacManus, at least the third Tesla Inc. engineering executive to join the Cupertino, California-based technology giant in the last year.

MacManus, a Tesla vice president in charge of engineering for car interiors and exteriors, left the carmaker recently and has since joined Apple as a senior director, according to his LinkedIn profile. He worked at Tesla from 2015, after stints at Jaguar Land Rover, Bentley Motors and Aston Martin. His interior-design skills may be applicable at Apple beyond the development of a car.
Apple Hires Tesla Engineer With Interior Design Experience

This should fuel even more rumors about the mythical “Apple Car.”

Sales data sliding

The last nugget which is related to the previous one is that Tesla sales are tanking on their high end vehicles.

The luxury sedan that put Tesla Inc. on the map is starting to show its age, with new registrations of the company’s Model S plummeting 54 percent in the second quarter in California, The Wall Street Journal reports.

Similarly, new California registrations of the Tesla Model X fell by about 40 percent in the second quarter, the Journal reports, citing data from the Dominion Cross-Sell Report.

California is Tesla’s single largest market in the U.S., accounting for about 40 percent of Model S sales last year alone.

The Palo Alto-based automaker has shifted its focus to the Model 3, which is half the price of the Model S.

Meanwhile, the company itself says production and sales of the Model S and X have plummeted.

This time last year, Tesla built 24,761 Model S and X cars — a number that fell 41 percent to 14,517 cars in its most recent quarter.

Analysts say that’s partly due to Tesla’s decision not to update either car.
Registration data suggests Tesla Model S and Model X sales are plummeting in California

Conclusion

So the chief car designer for Tesla leaves and goes to Apple and then surprise; a story emerges that Tesla hasn’t updated their higher priced cars since they were introduced and as a result their sales are tanking. Sounds like Elon is lightening the payroll to me.

Maybe those rumors of Apple buying Tesla should be given another look. Tim Cook could do it with his lunch money and still have enough to buy Intel’s mobile chip business.

Tesla Games: It Must be Earnings Report Time

Elon Musk is in the news again with another distraction so it must be about time to report Tesla’s second quarter earning’s reports.

First, the distraction.

Neuralink, the secretive company bankrolled by Elon Musk to develop brain-computer interfaces, will provide its first public update later today in an event streamed over the internet.

“We’re having an event next Tuesday in San Francisco to share a bit about what we’ve been working on the last two years, and we’ve reserved a few seats for the internet.”

This could be the big reveal of what the mysterious company has been up to since Musk announced it two years ago, and hired a pack of leading university neuroscientists to pursue his goal of connecting human brains directly to artificial-intelligence software.
Elon Musk’s brain-interface company is promising big news. Here’s what it could be.

Elon wants to hook your brain to a computer for some unknown reason. MIT—authors of the above article—speculated that Elon would demo a monkey playing a video game. Based on what I know, it doesn’t take much brain power to play video games so Elon will have to do better than that to get my attention on this project.

Meanwhile, several pieces of Tesla news have surfaced in the last few days.

Sales

Tesla has been claiming that sales are up so of course to they announced another price cut. This is contrary to common sense but this is the company fathered by Elon Musk.

Tesla delivered more electric cars in the second quarter than any three-month period in its history, alleviating concerns that demand is waning for its stylish vehicles as tax incentives in its main U.S. market begin to phase out.

Despite the heartening news Tuesday, Tesla still hasn’t proven it can consistently make money despite repeated promises from CEO Elon Musk to reverse the company’s long history of losses.

Musk himself has already acknowledged Tesla will post a loss for the past quarter, but forecast profits after that—something he also did last year, only to be proven wrong. Analysts polled by FactSet are predicting the company will absorb a loss of about $228 million for the second quarter. If those projections hold true, Tesla will have lost nearly $1 billion during the first half of this year.
Tesla’s car deliveries rebound, but challenges still abound

Tesla cuts price of Model 3 and Model S, increases price of full self-driving option

Bricks without straw

Tesla workers have told CNBC that, in order to meet Elon Musk and Tesla’s delivery quota for the second quarter, that they were subjected to unfathomably harsh conditions and took numerous manufacturing shortcuts.

This “bombshell” should come as no surprise anyone who has followed the Tesla story.

However, Tesla operates its manufacturing business in what is called an “open-air tent factory,” and employees told CNBC that they were forced to work through freezing nighttime temperatures, excessively hot daytime temperatures, and even unhealthy air quality brought on by wildfire smoke.

Elon Musk doing his Captain Blith impersonation

Whereas most legitimate automobile manufacturers rely excessively on robots and other automatic means of production to meet delivery estimates, these employees said they themselves had to bypass the robots and put the cars and battery packs together themselves.

This included the use of electrical tape to fix some defects. Great. That should rival being able to trick an autopilot-enabled car with table salt.

The grander point about how Tesla is being run is a referendum on Elon Musk. If these same stories came out of any other legitimate car manufacturer, the entire industry would be in an uproar.

Managers would get fired, senior management would be forced to resign, the stock of that particular company would fall, and government regulators would be all over that company in less time than it takes a BMW to go from 0 to 60.

This isn’t even the first time we’ve heard about worker conditions. It’s been going on for two years.

But because this is Tesla and Elon Musk, everyone seems to turn a blind eye.

Mark my words: If vehicles were delivered in this quarter under the conditions that these employees describe, consumers should worry that they are going to suffer from higher-than-average mechanical and recall problems.
Tesla’s Corner-Cutting ‘Bombshell’ Shouldn’t Surprise You

Autopilot claims scaled way back amidst programmer mutiny

A day after Elon Musk suggested that auto-driving Tesla cars might not be sold to the public and could instead be hawked as robotaxis, a report dropped revealing that in recent weeks nearly a dozen Tesla Autopilot engineers had already hit the eject button.

You can’t make this stuff up.

Tesla Engineers: We’ll Drive Ourselves Home
As many as 11 individuals on Tesla’s software Autopilot team departed the company during the past few months, according to The Information, continuing a purge which began when Elon Musk booted the team’s leader in May.

The significance of these Autopilot departures cannot be overstated. One of the highest profile functions of future Tesla vehicles is its ability to drive itself.

While there are other competitors in this market, for 10% of this division’s workforce to get up and leave means that they do not believe the timeline that Elon Musk has set for the product is in any way realistic.

And that’s not the only problem: There has always been doubt regarding the safety of Tesla’s Autopilot system, not only in its supposed ability to reduce crashes, but also in the numerous crashes in which it has allegedly played a part.
Elon Musk’s Tesla Autopilot Engineers Mash the Eject Button

Cult of Elon Musk

The article above calls followers of Musk a “cult.”

This should tell investors and consumers a lot about company culture. It is a personality cult. The product itself has a cult-like following. Tesla is all about Elon Musk.

Musk certainly has cast a spell on the true believers of his utopian dreams. He has made an irrational and emotional connection with people that willingly follow where he leads. These folks are convinced that Musk is singlehandedly transforming the world and the cosmos. They can’t wait to follow him to Mars.

My problem with Musk is that he doesn’t risk his own money to do anything, he always manages to fund his ventures with tax dollars and gullible investors. He starts much and finishes nothing. He is the 21st Century P.T. Barnum.

Musk claims economic miracle

Oh, if you thought Burger King and Bill Clinton had cornered the market on whoppers try this from Elon:

Tesla Inc.’s Elon Musk is standing by a claim that the company’s electric cars will be appreciating assets once they’re capable of driving themselves.

Musk, Tesla’s chief executive officer, first made the claim in a podcast interview in April that the company’s vehicles will gain in value because they’ll eventually be capable of fully autonomous driving. He stood by this in a reply to a follower who wrote Tuesday that he was unsure if the CEO was joking or making a “really dumb” statement.

Quinn Nelson, the owner of a media company that produces videos about tech products, kept engaging Musk in a debate over the claim, which Nelson said “makes no sense.” The CEO replied that Tesla is bundling full-self driving — or FSD — into all cars the company builds, and that Tesla will be unable to keep up with demand when the vehicles are capable of complete autonomy.

With the exception of collectors’ cars and other rare cases, depreciation has been a fact of life for automakers, dealers and rental-car companies for decades. While Kelley Blue Book has handed Tesla a best resale value award for its Model 3, for example, the car-shopping researcher estimates the sedan retains about 69% of its value after three years.
Musk Stands by His Tesla Appreciation Claim That Was Called ‘Really Dumb’

My take

The wheels are falling off the Tesla dream. Musk would rather be doing other things than running this company and it shows. His attention and passion are elsewhere. He is a butterfly searching for the next colorful flower to pollinate.

Tesla Rejected: Must Pay China’s 25% Tariff

Tesla stock has been slightly up these past two weeks but not because of earning reports or Elon Musk ginning up support on Twitter. Instead Tesla has benefitted from the algorithms that fund managers use to insure they have a sufficiently diversified portfolio. Generally, if the Dow is up, Tesla has been up and vice versa.

However, Tesla has hit another bump in the rode.

Tesla and Uber both had requests for tariff relief rejected by U.S. trade officials, a decision that will force the companies to pay a 25% tariff or seek new suppliers.

Reuters was the first to report the decision by the office of the U.S. Trade Representatives. TechCrunch previously reported on the Trump administration’s refusal to exempt the “brain” of Tesla’s Autopilot technology from punitive import tariffs.

Last year, the Trump administration imposed 25% tariffs on a range of imports, including electronics, to try to reduce the U.S. trade deficit with China. Tesla and Uber are among the U.S. companies that have requested relief on those tariffs.

Tesla warned that higher tariffs on the “brain of the vehicle” could cause economic harm to the company.
Why Tesla and Uber won’t escape 25% tariffs—for now

As stated here before, Musk’s fortunes have been bleak since Trump was elected. Trump has shutoff many of the taxpayer subsidies that Musk needed because he can’t compete in an open and free market. Republicans don’t tend to tamper with the market by subsidizing unproven alternatives to things that work while Democrats have the hubris to pick winners and losers (Solyndra and Tesla) claiming for political and economic reasons that “Green” is good despite any evidence that it is factual.

But there’s even more bad news for Elon and his posse.

One such stock that you may want to consider dropping is Tesla, Inc.

A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen two estimates moving down in the past 30 days, compared with no upward revisions. This trend has caused the consensus estimate to trend lower, going from a loss of $1.14 a share a month ago to its current level of a loss of $1.32.

Also, for the current quarter, Tesla has seen two downward estimate revisions versus no revisions in the opposite direction, dragging the consensus estimate down to a loss of 70 cents a share from a loss of 64 cents over the past 30 days.
Falling Earnings Estimates Signal Weakness Ahead for Tesla

I’m not ready to declare Tesla dead yet but the disconnect between their perceived value and actual value is still way out of line. Barring anything else, look for a significant drop when the 90-day monster makes its appearance in July. The “tell” is when Musk goes on Twitter in mid-July to divert your attention from the impending bad news. So far we have had the flamethrower, leaf blower, underwater submarine car, and pickup truck.

**Elon** has plans for submarine better than the one driven by **James Bond**
Disclaimer: *Playboy model extra, some assembly required*

Can the Tesla motorcycle be far behind?

Oh, wait, Elon had that last year. What will this guy think of next? He wants you to look at the new shiny thing in his hand not dollars and common sense.

Why Tesla Still Lives

When I saw that Tesla stock was up today (which is a rare occurrence), I thought Elon was back on Twitter but alas, I found a different reason. Tesla is getting free money.

As mentioned in a previous installment, Tesla is being subsidized by European automakers so they can make their emission goals thanks to the nonsensical fake environmental “science” of carbon taxes and emission credits. Now Bloomberg has published an article that Tesla is also being subsidized by American automakers GM (Government Motors) and Fiat-Chrysler.

For years, Tesla Inc. has hauled in revenue by selling credits to other carmakers that needed to offset sales of polluting vehicles to U.S. consumers. These sorts of transactions have largely been shrouded in secrecy — until now.

General Motors Co. and Fiat Chrysler Automobiles NV disclosed to the state of Delaware earlier this year that they reached agreements to buy federal greenhouse gas credits from Tesla. While the filings are light on detail, they haven’t been reported on previously. They also represent the first acknowledgments from carmakers that they’re turning to Tesla for help to comply with intensifying U.S. environmental regulations.

The deal with GM will come as a surprise to those who thought years of sales of plug-in hybrid Chevrolet Volts and all-electric Chevy Bolts would leave the largest U.S. automaker in the clear with regard to regulatory compliance.
GM and Fiat Chrysler Unmasked as Tesla’s Secret Source of Cash

Oh, also buried in this article is a nugget about the 2020 election.

And the company wants to bank the credits for future years when emissions rules get tougher — especially if a Democrat beats President Donald Trump in 2020.

“This might not be a bad hedge,” said Mike Taylor, the founder and president of Emission Advisors, a Houston-based environmental credit consultant and broker. “If a Democrat gets elected in 2020, GM may need the credits and prices may go up.”

If you read further into the article …

Tesla has generated almost $2 billion in revenue from selling regulatory credits since 2010.

So between US and European manufacturers, we now know that Tesla has banked at least $4.3 billion dollars just for existing—and producing nothing.

Once again, it is proof positive that in a truly free-market economy, Tesla would not cut it as a viable business. Only because of government interference–direct and indirect–does this company still draw breath.