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Tesla should stop accepting subsidies says WSJ
ecomento.com ^ | February 25, 2015 | STEVE HANLEY

Posted on 03/01/2015 6:40:39 PM PST by thackney

The European edition of The Wall Street Journal has said in an editorial that Tesla Motors should stop accepting federal and state subsidies. “Last year Tesla made a roughly $150 million killing from selling ZEV credits. That’s up from $130 million in 2013, $32 million in 2012, and $3 million in 2011. All told in 2014 Tesla sold about $216 million in credits,” the newspaper said. It goes on to say,

Capitalism needs visionaries, but its reputation suffers when companies worth billions soak middle-class taxpayers for profits. Turn off the taxpayer tap, Mr Musk. It would earn you more friends for the long haul.

This seems a strange position for the Wall Street Journal to take. It never said a peep about the billions GM and Chrysler got after the global economic meltdown in 2008. Even though most of that money was eventually repaid, where was the Journal’s concern for the “taxpayer tap” then?

And it’s not like Musk and Tesla did anything to create these taxpayer financed schemes. The state and local governments laid out the rules and Tesla found a way to make a lot of money by playing according to those rules. The governments involved set out a lovely pie of money and said, “Oh, won’t someone come and gobble up our lovely pie?” Tesla did. Get over it. Move on.

Many stock analysts have frankly been stunned by Elon Musk’s assertions in a conference call with investors last week that Tesla would grow by 50% a year for the next 10 years and be worth as much as Apple in 20 years. Several wonder if Musk has gone off the deep end.

Gadfly Morgan Stanley analyst Adam Jonas has written an article entitled “Tesla Pushes The ‘Insane’ Button.” He writes, “Seems Tesla is preparing to be a much larger company than we have forecasted, leaving us with nervous excitement.” Jonas says Tesla is targeting capital spending of $1.5 billion in 2015 – nearly double his expectation and up 50 per cent year to year. He says this level of spending reflects a company with ambitions to achieve sales of at least 500,000 by 2020, not the 295,000 he’d expected:

The assumptions in our earnings model seem to be at great philosophical odds with Tesla’s much more ambitious growth aspirations. When thinking about the share price development, the key question we are left with is whether investor appetite can keep up with Tesla’s growth journey and the alignment of forward looking expectations with the capital markets, a balance so important to firms at this early stage of development.

Another brokerage firm sees things differently. Evercore ISI is still positive on Tesla for the future, saying there are 6 reasons for its bullish attitude:

Less exposed to market risk than peers, as global demand will exceed supply.

Protected against industry risk because of its unique business model and vertical integration.

Market leading product with no obvious competition. Substantial brand equity, through product and innovation.

Equity certain to grow as it enters new markets and has new products.

Government CO2 rules a tailwind for it, a headwind for competition.

“The factors in Tesla’s favor are both powerful and unique to Tesla. We see merit in allocating capital to a leader in the technology of the future,” Evercore ISI analyst George Galliers says.

Elon Musk is nothing if not brash. His style and his business practices have discomforted many established leaders in the automotive marketplace. Perhaps it is no wonder that he should do so in the financial markets as well. Whether you decide to double down on Tesla stock or take your gains and get out, there is a stock analyst out there who will applaud your decision.

The one thing to keep in mind with Tesla is that the capital markets are confronted with something quite out of the ordinary here. All anyone can say with certainty is that there will be winners and losers ahead. Invest wisely.


TOPICS: News/Current Events
KEYWORDS: automakers; efv; elonmusk; energy; europeanunion; subsidy; tesla; wallstreetjournal
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1 posted on 03/01/2015 6:40:39 PM PST by thackney
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To: thackney
There's a mall near me that's fairly large,a bit "upscale" and well known in our area.I go there regularly during the winter to walk...along with other old geezers.This mall has a Tesla "dealership" past which I repeatedly walk during my many visits.In all those pass-bys I think I've seen someone in this dealership *twice*.

Just sayin...

2 posted on 03/01/2015 6:49:14 PM PST by Gay State Conservative (Obama;A Low Grade Intellect With Lower Morals)
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To: thackney

Solar energy corp.’s same thing


3 posted on 03/01/2015 6:50:34 PM PST by Insigne123 (It is the soldier, not the community organizer, who gives us freedom of the press)
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To: thackney

Musk is a very good businessman, but one of his “best” traits is that he creates a business model that takes advantage of as many tax credits as possible. No, he is not going to give them up.


4 posted on 03/01/2015 6:52:07 PM PST by Vince Ferrer
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To: thackney

Over-priced, liberal, feel-good toys.

It ain’t gonna fly...er...roll.


5 posted on 03/01/2015 6:53:33 PM PST by EagleUSA (Liberalism removes the significance of everything.)
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To: thackney

Obama is for leveling the playing field


6 posted on 03/01/2015 6:53:34 PM PST by Insigne123 (It is the soldier, not the community organizer, who gives us freedom of the press)
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To: thackney
It never said a peep about the billions GM and Chrysler got after the global economic meltdown in 2008. Even though most of that money was eventually repaid, where was the Journal’s concern for the “taxpayer tap” then?

IIRC the Journal editorial page was totally against the Bush/Obama bailout of GM and Chrysler and in favor of the bondholders. I think this statement is absolutely incorrect.

7 posted on 03/01/2015 6:56:02 PM PST by nascarnation (Impeach, convict, deport)
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To: thackney
As the WSJ says: The governments involved set out a lovely pie of money and said, “Oh, won’t someone come and gobble up our lovely pie?”

If Musk didn't gobble it up, someone else would. He has an eye for the good things in life.


8 posted on 03/01/2015 6:57:49 PM PST by Cicero (Marcus Tullius)
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To: thackney

“Government CO2 rules as a tailwind..”
If the Government CO2 fraud is exposed and stopped, these guys are going down hard.

US Government altered Peruvian temperature readings may just do it.


9 posted on 03/01/2015 6:58:17 PM PST by Cold Heart
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To: Gay State Conservative

A lot depends on your location.

They’re nearly as common as Lexus in California.

And pretty rare here in the midwest.


10 posted on 03/01/2015 6:58:35 PM PST by nascarnation (Impeach, convict, deport)
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To: Cicero

Tesla stock: a slam dunk short based on common sense analysis

Betting against regime affiliates: really bad investment strategy


11 posted on 03/01/2015 7:00:45 PM PST by nascarnation (Impeach, convict, deport)
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To: nascarnation

The money being mostly repaid is also incorrect.


12 posted on 03/01/2015 7:01:38 PM PST by jospehm20
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To: nascarnation
They’re nearly as common as Lexus in California.And pretty rare here in the Midwest.

I'm not far from Harvard...MIT...the Kennedy Compound...Martha's Vineyard.

Not California obviously but not Iowa either.

13 posted on 03/01/2015 7:04:11 PM PST by Gay State Conservative (Obama;A Low Grade Intellect With Lower Morals)
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To: jospehm20

78% on GM. 88% on Chrysler
I’ll give him the benefit of the lexicon on that one


14 posted on 03/01/2015 7:07:29 PM PST by nascarnation (Impeach, convict, deport)
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To: Gay State Conservative

Electric cars suck bilgewater in cold weather, at least relative to range. That’s probably more of a factor. NorCal is perfect.


15 posted on 03/01/2015 7:08:56 PM PST by nascarnation (Impeach, convict, deport)
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To: Cicero
He has an eye for the good things in life.

So does every other welfare bum in the country.
16 posted on 03/01/2015 7:13:07 PM PST by cripplecreek ("For by wise guidance you can wage your war")
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To: cripplecreek

True. But we wouldn’t have welfare bums if we didn’t have welfare.


17 posted on 03/01/2015 7:14:40 PM PST by Cicero (Marcus Tullius)
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To: Gay State Conservative

Teslas are pretty common here in SoCal.

The Tesla business model is built on generating green credits which they sell to other companies. The cars themselves are sold at a large loss.


18 posted on 03/01/2015 7:17:52 PM PST by Pelham (The refusal to deport is defacto amnesty)
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To: nascarnation; thackney
"NorCal is perfect.

Even more so for creating the highest value "previously owned" vehicles in the nation!!!

19 posted on 03/01/2015 7:18:38 PM PST by SierraWasp (Help Stamp Out Pernicious Progressives and Arrogant Activists With Their Liberalism!!!)
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To: thackney

Good luck with that... Tesla feels entitled to these subsidies. It’s like asking a hog not to root up and eat all the acorns the squirrels buried in the timberlot.


20 posted on 03/01/2015 7:19:47 PM PST by Rodamala
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