Never a viable business model beyond a niche/exclusive product.
If EV catshes on they cannot compete with existing players on scale of production it price...
As an exclusive status symbol can charge premium and keep margins to be viable.. at scale, but players will always be able to win.
It takes a real genius to bankrupt a company with high priced and high demand products.
But I would rather my Ford Explorer 2010's body panels fell off rather than have my defective transmission, like hundreds of thousands of others which Ford refuses to acknowledge or recall, costing consumers tens of millions in damages for "Exploder" trannies. I despise Ford for their outright fraud. I wish Musk luck in saving his innovative company.
Tesla STOCK (not the cars) has been a study in investor psychology. Tulip bulbs come to mind.
For a company that has never once made a profit to have such a large market value is insane.
I wouldn’t touch it...even to short it, because it makes absolutely no sense to me.
I have never understood why anyone would Own a Tesla.
The battery is only good for 8 to 10 years and then it has to be replaced because it won’t hold a charge. The replacement cost is at least $10K.
I won’t buy a car if upfront I know that in 8 years I will have to replace a part that will cost $10K regardless of how well I maintain the car.
Maybe leasing the car makes sense but not buying.
Elon Musk raised billions of dollars to research, develop the technology, build the infrastructure and manufacture electric vehicles. The man has well known and documented personal and business deficiencies. However the fact that doomed Tesla was that there simply is not a profitable market for electric vehicles in the United States. Most consumers want the reliability and convenience of the internal combustion engine. Unless coerced they tend to shun electric vehicles.
There is little doubt that Tesla will eventually go bankrupt. However the market forces that doomed Tesla are already hurting big auto manufacturers such as Ford, GM and VW. These companies like Tesla have made huge investments in EV research, technology, infrastructure and manufacture. They have had virtually no return on those huge investments. The money is dead and squandered. These companies are suffering as evidenced by the recent contractions at Ford. IMHO the auto industry made a very bad investment, are being dragged by debt and will be suffering mightily.
If he’s banking on autopilot to save him, he’s in big trouble. Autopilot has to be pretty much perfect, no testing on your user base. CR just slammed it yesterday. Pretty much called it RetardoPilot. No chance of 2020 introduction.
Musk’s lies like a Tesla will earn you $100k in income as a cab just sink is credibility.
Borrowing money to buy stocks is a really bad idea. Black Tuesday comes to mind. It appears that Musk is at October 28, 1929 and the clock is ticking.
My sister and her husband owns a Tesla 3. They live in eastern Iowa and have to drive to Chicago to have it serviced. Plus a two day wait. But they are diehard fans and consider this a minor inconvenience.
I suspect that before they go bankrupt, another major car company (GM, Toyota, Honda) will be buying the company on the cheap for it’s technology pattons and will be in a much better position to make these cars profitable.
There’s a market out there I believe for these vehicles if the economies of scale can make it less expensive. Only one of the bigger auto manufacturers can pull this off.
And, if a stock is really getting beat up, they will make “margin calls” intra-day.
In other words, brokers have the legal authority to sell your stock at any time - if the stock is crashing and you bought it with margin debt.
I would be a little surprised if Musk actually bought Tesla stock shares - it is much easier to control your costs, and buy a very large position, if you buy put or call options, which you cannot buy on margin.
By the way - "short interest" in Tesla is almost 22%. The market average is around 3%, so 22% is a very dangerous signal to the downside.