People Will Soon Be Asking, Who ‘Killed Tesla’?

People Will Soon Be Asking, Who ‘Killed Tesla’?

People Will Soon Be Asking, Who ‘Killed Tesla’?

$TSLA

Former General Motors (NYSE:GM) Vice Chairman Bob Lutz says he thinks Tesla“is headed for the graveyard.”

He pointed to a handful of Tesla’s problems in a TV interview Tuesday.

The totality of the fledgling EV maker’s financial, administrative, manufacturing, and legal problems, Mr. Lutz suggested, mean that Tesla’s (NASDAQ:TSLA) days are numbered.

The remarks come at a challenging time for Tesla and its CEO, Elon Musk, as US authorities investigate his claim that he had “funding secured” for the ‘420’ transaction to take his company private.

Tesla is also working overtime to crank out as many of its mass-market M3 sedans as it can, but…”They will never make money on the Model 3 because the cost is way too high,” Mr. Lutz said Tuesday. “He’s got 9,000 people in that assembly plant producing less than 150,000 cars per year,” he said, referring to Mr. Musk. “The whole thing just does not compute.”

Mr. Lutz quipped that the company would be the subject of a “Who killed Tesla?” movie “in another year or 2.”

As I have said often in this column, Tesla really does have some daunting challenges ahead, including a massive amount of debt, including $920-M in convertible bonds that will come due on 1 March 2019, depending on where Tesla’s share price is at the time.

The company also faces a growing number of competitors that are moving into the EV space in earnest.

New examples from Mercedes-Benz, Porsche, and Audi have emerged.

Lower-end competitors like the Chevy Bolt, which have the benefit of General Motors’ massive manufacturing outfit, made it to market a full year before the M3. And the Nissan Leaf became the best-selling electric car in the world in 2017, with 300,000 sold since its introduction in Y 2010.

On the sales front, there could still be some promising news in store for Tesla. In Q-2 of Y 2018 alone, Tesla produced 28,578 M3 sedans, exceeding production of both the MS and MX, combined.

 

 

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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