Chevy Volt a Failure - GM to Layoff 1,300

That puts it past GM. It is the most valuable automaker in the U.S.

GM sold more than 10 million cars last year. Tesla sold less than 80,000 cars.

GM earned about $9.43 billion last year. Tesla lost $675 million.

The thing keeping Tesla stock propped up, and it will for as long as the monetary / liquidity / debt induced bubble is intact, is that there is tremendous short interest in the stock -- close to 30 percent of the float. Every time it gets ridden up a little on some bullshit hype, there is a short squeeze that drives the stock up even farther into insanity. With margin debt at all-time highs now thanks to the idiot central bankers who created monster misallocations of capital like this, it is a tough game to endure. The people like Jim Chanos will be able to ride it out and they are going to make a fortune when this stock tumbles. But without deep pockets, it is impossible to weather -- even if it is the most obvious short in the history of stock market bubbles.

 

I was laughing yesterday evening, when I saw one headline that said, "Tesla more than doubles first-quarter revenue, helped by record deliveries."

This is going to go down as the poster-child for a bubble beyond what pets.com was for the dot.com lunacy.

Here is reality:

1) The company burned through another $620 million (which I guess looks good when you put it into the context of the nearly $1 trillion they blew through last quarter). Those record deliveries? They are losing thousands of dollars on every car they sell. Yet, somehow they are going to sell hundreds of thousands of a "model 3" that is almost as cool as what they have, but costs less than half the price. ... It's a fantasy. Even if you think this is a one-time Cap X thing, only related to growing out with a mass market vehicle.
2) Within a year and a half, BMW, Mercedes, Porsche and a dozen other manufacturers are going to have electric vehicles out there that are going to take away a big part of the niche luxury market from Tesla. Except they can leverage their successful businesses and won't be selling cars at a loss (with or without the massive subsidization Tesla has gotten). Even without competition, Tesla hasn't earned a penny -- it has blown through trillions (not a typo) of dollars. How is it going to fare in the face of competition for whatever market there is for luxury EVs?
3) If you dig into their earnings, one way they have managed the cash burn is not paying vendors on time. Their accounts payable and accrued liabilities has been growing a furious clip.
4) Their stash of customer deposits is declining. ... the euphoria over the fictional model 3 that will never be produced on the timetable he threw out there, or at the BS cost he floated, is fading.
5) And all of that said, even with the hit the stock price is taking right now, this has been the mother of all short killers -- there is record short interest in this stock. And those who see reality and have shorted it have been punished for it. You need deep pockets to withstand irrationality this great. But that is what you get when you are essentially fighting the unlimited printing press power of a bunch of central banks -- for as long as they can hold on before losing control.

This company is a trainwreck. It is the poster child a massive asset bubble / misallocation of capital that was brought about by a central planning authority that hijacked our debt markets and created a "survival of the unfittest" environment to all of our detriment.

 

Lost in the discussion, too, is that car sales have been falling off a cliff the last few months and the subprime market that spurred 5 or 6 years (on the back of an insane amount of credit) is saturated. Defaults are picking up. That isn't Tesla's market, but the writing is on the wall.

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Tesla hasn't only benefited from first government preference, and then rigged debt markets that have thrown insane amounts of money at unfit entities without regard for the lending risk an actual market would have considered. Tesla has also benefited from the aspect of that environment that has allowed people to leverage themselves up well beyond their means to buy cars they can't afford. If that is finally coming to end and credit is going to roll over, Tesla is fubared.