{"id":991,"date":"2018-04-05T07:33:12","date_gmt":"2018-04-05T07:33:12","guid":{"rendered":"https:\/\/www.antya.ca\/research\/tesla-inc-defying-gravity-tiangong-1-or-voyager-1\/"},"modified":"2026-02-17T06:27:32","modified_gmt":"2026-02-17T06:27:32","slug":"tesla-inc-defying-gravity-tiangong-1-or-voyager-1","status":"publish","type":"post","link":"https:\/\/www.antya.ca\/research\/tesla-inc-defying-gravity-tiangong-1-or-voyager-1\/","title":{"rendered":"Tesla Inc.-Defying Gravity: Tiangong-1 or Voyager-1"},"content":{"rendered":"
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This update provides ANTYA\u2019s perspective on comments received since the Tesla Inc. insight published earlier today. Those riding Tesla\u2019s to Mars are bound to hit turbulence, and if Tesla cannot attain escape velocity by Q4-18, the ride back through the stratosphere requires a special heat shield to survive. Add rising interest rates and the pitfalls of a Trump Presidency to the mix, and very quickly one arrives at the crossroads. One road leads to safety of capital with significant opportunity loss, while the other provides a route to riches with a real possibility of a 50% loss of wealth.<\/p>\n<\/div><\/div>\n<\/div>\n

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Dear Friends at SC Capital and Others,<\/p>\n

Many thanks for reading my note, appreciating it, and for providing feedback. I am publishing my response to your comments in the interest of the broader community on our platform. I have republished your comments in italics while delivering my view after each comment.<\/p>\n

I believe the inflection point for Tesla\u2019s valuation will come sometime in the 3rd<\/sup>\/4th<\/sup> quarter of 2018. If Tesla cannot ramp-up Model 3 to about 3,500\/ week at the end of Q2-18, and 4,000\/week by end of Q3-18, momentum investors would walkway.<\/p>\n

(Warning: this is a long comment)<\/em><\/p>\n

My response is equally long?<\/p>\n

It\u2019s so nice to finally have a Tesla bull with whom to have a healthy debate over Tesla on Smartkarma. Together we can help clients (ourselves) better figure out whether Tesla is a good buy or a good short. We believe Tesla is the next Enron and it\u2019s best to scale into your short henceforth. But let me point out a few questions\/doubts we have about some of the statements you made in your excellent report.<\/em><\/p>\n

ANTYA<\/strong>: Tesla is no Enron. Enron was an aggressive accounting fraud for which executives were sent to Jail including Fastow and Skilling. Enron was a capital intensive power generation, transmission, and trading business that survived via off-balance-sheet entities in the hey-day of deregulation of power markets in the U.S. Tesla is an innovative company whose management believes in its futuristic products; customers love the cars and can\u2019t wait to drive them, and independent bodies such as the NHTSB have given its products top ratings. Multiple reputed automotive magazine reviewers have rated Tesla cars highly for safety and for design aesthetics.<\/p>\n

Just like the Apple line-ups earlier in this decade and up until recently, TSLA customers are willing to wait years to get a car and put an advance deposit down, while competitors can\u2019t give their conventional product away including zero financing and incentives, and are rushing into the lowest rung of sub-prime borrowers to keep the treadmill running.<\/p>\n

Therefore, in my humble opinion, Tesla is no Enron.<\/p>\n

(https:\/\/www.nhtsa.gov\/vehicle\/2017\/TESLA\/<\/a>MODEL%252520X%252520P100D\/SUV\/AWD<\/a>)<\/p>\n

1)You said Tesla has been very \u201cforthcoming\u201d in its disclosures. They\u2019ve actually begun omitting things they used to disclose. Given all of the broken promises from Elon Musk, I would avoid using the term \u201cforthcoming\u201d when referring to Tesla. Here\u2019s just a tidbit of anecdotes that leads us to believe Tesla is not to be trusted:
\n<\/em>a)In a February 2017 conference call, Musk said \u201cAccording to our financial plan, no capital needs to be raised for the Model 3\u201d. Three weeks later, Tesla announced a $1.15bn stock offering.<\/em><\/p>\n

ANTYA: May 4, 2016 \u2013 Tesla First Quarter Update<\/strong><\/p>\n

\u201cAdditionally, given the demand for Model 3, we have decided to advance our 500,000 total unit build plan (combined for Model S, Model X, and Model 3) to 2018, two years earlier than previously planned. Increasing<\/strong> production five-fold over the next two years will be challenging and will likely require some additional capital, but this is our goal and we will be working hard to achieve it\u201d.<\/strong><\/p>\n

In my opinion, we all know and believe Tesla will seek more capital going forward, for leasing operations, for capital expenditure funding, etc. More importantly, in my view, that capital will be acquired at higher stock prices than current levels, thus managing dilution expectations of investors. Therefore, capital raises will make the stock less risky \u2013 less valuable perhaps \u2013 and less volatile for sure.<\/p>\n

b) I<\/em>n October 2016, Tesla announced an LA to NY drive on autopilot by the end of 2017. Last February, this was delayed for \u201cthree to six months\u201d.<\/em><\/p>\n

ANTYA: October 26, 2016 \u2013 Tesla Third Quarter Update<\/strong><\/p>\n

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Last week, we announced that all newly produced Tesla vehicles have the hardware needed for full self-driving capability. This same capability will also be built into every Model 3. Eight surround cameras provide 360-degree visibility around the car at up to 250 meters of range. Twelve enhanced ultrasonic sensors complement this vision, allowing for detection of both hard and soft objects at nearly twice the distance of the prior system, and computing power has been increased by 40-fold over our previous generation hardware. Fleet learning means that all Tesla vehicles with Autopilot will naturally get better over time. Additionally, new safety and convenience features will be rolled out via over-the-air software updates. Tesla vehicles have already been driven over 3 billion miles, including more than 1.3 billion miles logged by vehicles with Autopilot hardware\u201d.<\/p>\n<\/blockquote>\n

Tesla delivered on the promise of a quasi-autopilot. No one believed they could do what they said, at least no reasonable person thinks that it is possible anytime soon. However, the prospects clearly are endless given the investments in R&D by Nvidia Corp (NVDA US), Waymo, Uber, Tesla Motors Inc (TSLA US) and umpteen others in the fray. An automated car will usher in Nirvana for Lyft, Uber, Waymo, Tesla and others while decimating the traditional car business and livelihood of millions of others. A network of on-demand accessible cars will require fewer overall vehicles anyway; but that is a discussion for another place and time.<\/p>\n

So, I agree with your contention that they promised a Frappuccino and delivered an Americano. For some, those are good substitutes. Others can and will wait. Does not make them a fraud? Just overzealous in my view.<\/p>\n