Chevy Volt a Failure - GM to Layoff 1,300

There are reports that the SEC has asked a judge to find Elon Musk in contempt for violating the deal he made. This could be a big deal.

Tesla shares fall on report SEC asks judge to hold Elon Musk in contempt for violating deal

BTW, add to the list of executives who have fled (about 4 pages single-spaced now), the new general counsel, who quit last week after only 2 months on the job to go back to his cushy law firm. That one makes sense now.

 

Tesla and Panasonic Freeze Expansion of Gigafactory, Nikkei Says

Sounds like Panasonic is bailing on its "gigafactory" mistake.

 

The Nikkei story said "financial issues" had led to the decision.

Tesla's sales and delivery numbers were abysmal for the first quarter. By all accounts, there are lots filled with vehicles collecting dust. People who signed up for the $35K Model 3, at least those who haven't demanded their deposits back yet, were told they were days away from delivery, and now are being told the cars aren't there. Which is because Tesla takes a bath on every one it delivers. So he hasn't been producing them. It is losing money on each car at the higher price point, and demand for those cars seems to have totally evaporated.

Nothing has changed about this company. It exists on debt, not on sales of viable products. The debt markets have been destroyed by administered interest rates, and this company is the poster child for the "survival of the unfittest" environment that created. If Tesla can borrow again, or somehow the irrational exuberance that ran up its stock price comes back again (central banks are back at it now, and have been reflating their bubble after they tried to step back and saw the stock market start crashing), and it can do another equity offering to dilute its float, it can extend this con. If not, it either needs to start selling way more cars than it does somehow, and do it profitably, or find another business that is profitable, if it can. Because it is several billion dollars in debt (and that doesn't include the publicly funded subsidies it has blown through), and even with artificially low interest payments due thanks to the administered debt markets, it is going to hit a point where it can't produce enough cash to service its debt. It may not be too far from that point, but it's hard to tell. If you believe some of the forensics people are doing, they are fraudulently fudging their financials.

Tesla can spend zillions on factories that it says will produce batteries that aren't a reality... IF it can borrow money endlessly and keep blowing through cash -- wasting the cheap money that it should have never gotten in the first place. The Fed, and the other central banks, completely reversed course like cheap wind up toys, because they found out that the only way to keep propping up their bubble is by injecting more and more liquidity in via mispriced credit. If that environment persists, Tesla can exist. Ultimately, it ends really badly, and people will probably look back at Tesla as a poster child for all of the misallocated capital and bad debt that is going to weigh on the economy for a long time.

 

Insiders describe a world of chaos and waste at Panasonic's massive battery-making operation for Tesla

 

The fraudulent f'er is going to need to raise more cash. The debt markets have to be out of the question. For perspective, their unsecured bonds are trading well below where Toys' R Us debt was when the company went bankrupt. That means an equity raise is coming. If bubble world persists, and cheap credit keeps getting pushed by central planning authorities (Japan went full dovish this morning, and the Swedish Central Bank backed off its previously hawkish talk), that is maybe possible. They have rewarded failure -- Tesla is high profile, but it goes well beyond this. I was looking this morning, and Tesla has raised more than $16 billion in its life, of which it has already pissed away $14 billion on his BS. The fact that it still exists demonstrates how much they have destroyed our capital markets, and should give a hint of what is to come when the bill comes due. All of that money Tesla has raised doesn't include all of the government subsidies, which have acrrued billions of dollars to the company, as well, at public expense -- or the expense of consumers or car competitors who have borne the cost. People don't get the huge societal cost this levies on all of us, and the opportunity costs involved. We are surrounded by zombie companies (maybe as much as a quarter of the S&P 500) that exist at this point only on escalating debt. You can not price fix a market to such artificially low levels forever. The supply and demand imbalance in the case of mispriced credit creates huge crises like what we saw in 2008. Too many people don't care until the crisis hits. When rates normalize, either because they stop (but nope, because they are all in), or because they lose control (how it is going to happen), there are hundreds of companies like this one that won't be able to service their debt. Even just a 100 basis point increase and this company is out of business, although if rates were 100 basis points higher (which is still artificially suppressed), it wouldn't be able to do its endless equity raises, because you wouldn't have people who are being robbed reaching into insanely risky things to get the return they are being cheated of.