Einhorn Says Tesla Once Again "On Brink of Failure"

-edited

“We believe that right here, right now, the company appears to again be on the brink.”

MarketWatch reports Tesla again ‘on the brink’ of failure, says Einhorn's Greenlight hedge fund.

Tesla Inc.’s “wheels are falling off,” sometimes literally, and the Silicon Valley car maker appears to “again be on the brink” of failure, David Einhorn’s Greenlight Capital told investors Friday.

Hedge-fund titan Einhorn is a frequent Tesla critic who has called Chief Executive Elon Musk “erratic and desperate” and last year compared Tesla’s path to the path of doomed investment bank Lehman Brothers.

While Musk may promise Model 3 worldwide demand of around 500,000 to 700,000, “the reality is quite different,” as demand from the fan base has already been satisfied, Greenlight said.

“If Q1 is any indication, total annual global demand for the Model 3 is 200,000 vehicles,” it said. “We believe that (Tesla’s) poor reputation for quality and service and diminishing tax incentives are limiting broader demand.”

“We believe that right here, right now, the company appears to again be on the brink,” Greenlight said.

“The signs are everywhere, from the lack of demand, desperate price cutting, layoffs, closing-and-then-not-closing stores, closing service centers, cutting capex, rushed product announcements and a new effort to distract investors from the demand problem with hyperbole over (Tesla’s) autonomous driving capabilities,” it said.

Tesla Won't Survive

I side with Einhorn on one point: Tesla will not survive. The company has too much debt and its product is poor.

Timing is another matter. Story stocks survive much longer than anyone thinks, then collapse all of a sudden.

When? I don't know.

Mike "Mish" Shedlock

Comments
No. 1-16
Cocoa
Cocoa

TELSA should have licensed the Cloud, AI,software and technology to US manufacturers who can actually build cars. The software is very cool-the performance of the batteries is great. Its not a bad car but it's too much for an independent. If TESLA tanks the US government should nationalize it and license designs out. Building hardware and writing code are 2 different things and TELSA is bad on hardware

frozeninthenorth
frozeninthenorth

There is no doubt that many "orders" for Tesla 3 were tax games -- buy a Tesla, get the tax credit and sell the car at a premium...However, there are a few interesting facts (1) There are issues with batteries -- and Tesla is not getting enough, (2) Tesla is "profitable" at least not bleeding money anymore. (3) those who purchased Tesla "knew" they were buying something revolutionary -- and that there are certain risks with such purchases.

Now, Tesla is modifying its vehicle offering, even offering leasing! That shows its a maturing company. Now, Tesla may not survive, there is no doubt that the company has a lot of debt, but I think it's a little early to assume that the company will die very soon. Tesla's ultimate risk is the possibility that it will not be able to refinance its debt. Ok, I buy that, still, the vehicle proves hugely popular and have wide profit margins.

On the tech side the new motors have even fewer moving parts than the old ones, Tesla is saying that its cars are good for 1 million miles and that the batteries should last half that. If the cars are resistant to rust with few moving parts, and that the "maintenance" issues are resolved -- Tesla may be seen as the Japanese cars in the 1980s: they lasted far longer than their American counterparts, they were cheap to repair and cheap to operate.

Don't bet against the guy who makes a long lasting simple and elegant product

KidHorn
KidHorn

IMO, a big issue with switching to electric cars for the masses is the batteries require rare earth elements. Which, by definition, are in very short supply. I don't think electric vehicles can account for say >10% of the market unless and until new battery technologies are developed that don't use rare earth elements.

CCR
CCR

If your name isn't Apple, Amazon, Microsoft you are on the brink.

Advancingtime
Advancingtime

Thanks for noting. "its product is poor"! With so much new competition heading it way I also contend it is only a matter of time.