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The road was very difficult for Tesla, Inc. (TSLA) this quarter. Closing stores / closing, almost daily price changes, layoffs, SEC shares against CEO Elon Musk, and of course, the worst Tesla unveiling for the Y model with the two third-row seats only useful for dogs short.
Ferrari for $ 59,500
The 3 Performance model has a 0 to 60 km / h time of 3.2 seconds. The last Ferrari I drove, a 360 Modena, posted a time of 0 to 62 km / h (100 km) in 3.9 seconds. Teslas show up regularly on drag racing tracks across the country. The basic model 3 is not far from this mark. Why is it important?
Very fast, very high speed cars have been the domain of a few handpicked buyers, very fortunate so far. Many of these supercars are rarely driven, parked in luxury garages, in impeccable condition, while homeowners see their values rise. Others make occasional appearances at shows and exhibitions or Sunday walks. Few, if any, are used as daily drivers. So the public faces minimal risk.
We all watched and sneered at the videos of new owners of supercars crumbling a few miles from their dealership after being left to their own devices because they were neither prepared nor trained to the monster they had released by striking strong as they did in their last car.
Tesla changes this image. Every day, they deliver fast cars to an unprepared mass market with deadly consequences. The latest was an accident near Miami, Florida, with a Model S lighting a red light at 128 km / h (here) and hiding a large Infiniti SUV. The images with the video show both vehicles after the accident. Last year, two teens from a Model S crashed against a wall at 116 mph in an area of 35 mph at Fort. Lauderdale (here) and the two died in the ensuing fire, while they had survived the initial crash. Just a few weeks ago, another Florida man lost control of his Model S at high speed in Davie, Florida, hit a tree and also died in a blazing hell (here).
I'm not even talking about autopilot-related accidents caused by drivers giving the car too much control and coming up against big rigs, fire trucks and concrete dividers.
Tesla delivering more of these cars to a very poorly trained audience, we should expect a lot more from this type of reports. Reading the comments of parents talking about buying Teslas for their children, some of whom have gone to university, is worrying. If parents would never give their children a Ferrari or a Lamborghini, why would you want them in a Tesla?
I just bought a van destroyed this week on Copart.com for parts of my own Chevrolet Silverado 3500HD destined for an upcoming YouTube channel. Out of curiosity, I looked for Tesla's lists today. Of the 132 damaged Teslas listed (here), the vast majority suffer frontal damage as they seem unable to avoid clashing with objects. Excessive speed will do that. 48 of the 132 are models 3. 47 of the 48 have either a rescue title, which means serious damage or are irreparable. Only one model 3 still has a "clean" title.
At some point, there could be repercussions on several fronts. That would probably start with a rise in insurance company rates, which would make cars unaffordable for many buyers or who would totally refuse to offer coverage. This could be followed by a public outcry that Teslas "is destroying their families". In the same way that burgers, fries and burritos are accused of obesity, the public would probably blame cars and not the reckless gestures of those behind the wheel. Finally, of course, politicians will get into the blame game with hearings and television surveys. Another election season is approaching and Tesla is ideal for headlines.
You will take this abuse and say "thank you".
Tesla buyers so far have been a strange group. Many will apparently go to bed and let Tesla roll on them. Whether it's through phone calls or unreturned emails, declined refunds or model changes, Tesla draws on them with the best practices that it has. Other manufacturers and dealers would not want to. Here is a sample of recent Model 3 publications on TeslaMotorsClub.com. (I do not disclose the user names.) Everything is mine.
1) nice! I ordered a blue representation with a black interior at the end of January. And I'm still waiting. I told the representative that I would like a 2019 car.
2) My representative just told me that I should cancel my order and place a new order. But it would be necessary to wait for the refund of the first deposit.
3) I just spoke to my representative who checked several times. Apparently, I will not get any price adjustment. The only way to do this is to cancel my order, wait for my refund, and then place a new order. Apparently, an immediate cancellation and an immediate order would not be allowed to receive the refund of the initial deposit!
4) ordered P3D 2/18 – estimated at 2 weeks, changed color to spend money from midnight to blue on 2/26, Wine received 2/26, Delivered today – 3/5, My # wine is a 2018 production car.
Answer of another poster?
Congratulations ****** !!!
So let's recap these messages.
1) The order was placed in 2019. Why should a buyer request a 2019 unit? If you look at Kelley Blue Book and look for identical Model S units for 2014 and 2015, you will see a difference of about $ 5,000. It makes sense to expect that a 2018 car will be worth less than an identical 2019 car in three or four years, even if both have the same mileage. But this buyer has felt compelled to ask 2019.
2 & 3) Connect the same problem by canceling an order and replacing it to take advantage of the option price change. In either case, buyers are told that they must cancel and wait for a refund before placing a new order, otherwise they will lose their first $ 2,500 ordering fee. With the repayment waiting times a common complaint, it is a total nonsense.
4) This buyer placed an order in February and received a 2018 car in March. I love the answer from the other poster of "congratulations". He is apparently as distraught as the buyer with regard to the resale values used.
The buyer should have refused the car and insist on a 2019, but many of these comments seem reluctant to challenge the cause of Tesla. Why? Dragging a car that has been purchased for a year more from an increasingly reseller would result in any other dealer being tarred and plucked in the press.
The very real probability is that new buyers, as opposed to Tesla's fans up to now, are balking and that Tesla is forced to adopt standard practices. Like new car discounts from previous years, for example.
Ironically, Elon Musk announced today that all existing stock units (most are likely 2018 models) will be price-adjusted to match the price of the new car. How does he intend to erase existing old stocks? Will Tesla threaten not to pay down the installments to order unless you take the unit that Tesla wants to give you, since more and more people are asking for 2019 units? In talking with a Chevy Chevrolet General Manager in his showroom today, we are both puzzled to see how Musk expects it to work to move older stocks. In current industry practice, manufacturers never lift PSRS on already built cars. They can indeed change the prices of future cars built.
Incorrect identification of products.
Model Y takes the cake on this one. Elon Musk should have revealed that he was joking about calling the Y model a 7-passenger SUV whereas it's actually a 5-passenger crossover. These third-row seats will be as useless as the two rear seats of a Porsche 911. The rear seats of the Porsche offer a good margin of safety but no room for the legs. Model Y has neither one nor the other.
Let's look at revealing it. You can watch the video again (here). (The Y comes out at 29:46.) Watch out. First, only six people left the vehicle on stage that night. Several people coming out of the back doors were rather short. The lighting above the Y model was so low that you could not see at the rear of the vehicle. During the road tests later in the night, the seats in the third row were folded down and no one was allowed to go there.
The closest comparison I could find was the three-row, seven-passenger Dodge Journey. With 68 cubic feet of cargo space with both rear rows folded, it only has 2 cubic feet more than the 66 cubic foot Y model. But compare the rooflines of the two vehicles.
Note that the roof line is almost level to the rear door of the Journey. With the three rows, the remaining cargo space is reduced to just 11 ft 3.
Now look at the Y model.
Model Y has a roofline that begins to descend downward just behind the side jamb behind the driver's head. Considering that third-row passengers would sit on the rear axle in both SUVs, can anyone see a margin-of-safety problem for third-row passengers in a Y-model?
During a test drive (here) the night of the revelation, Kim (the popular Tesla influence of the YouTube channel "Like Tesla") was in the front passenger seat to film the ride with her husband and two other guys in second place. Listen carefully from 6:15 am to the comments and answers from the back seat when she asked the guys if the seats in the third row could accommodate a child car seat. "Not at all" was the unanimous answer. One of the guys sitting in the second row commented that his head was against the roof. They all pointed out that no adult could be part of the third row. (Knowing that this exchange was filmed, the Tesla driver apparently could not get them out quickly enough at the end of the tests).
Yet, based on Musk's claims during the revelation of his seven-passenger capacity, people have reported enthusiastically placing orders for this option on the blogs once the Tesla Configurator started working later in the night. These people will be very unhappy to see the Y model for the first time.
In a new Troy spreadsheet on TMC.com (here), only 34 people say they have placed Model Y orders and only 2 of them ordered the $ 3,000 advance option for the third seat. Is it any wonder that Tesla wants to announce the pre-orders of the Y model? Should potential buyers expect a complete overhaul before the start of production? Who made the decision to call it a 7 seater SUV?
A poster of 15/03/19 on TMC.com sums up his comment perfectly:
When will Tesla do their marketing properly, unequivocally, unambiguously? So that Tesla fans are no longer forced to defend their tactics with: "I would have liked them to say so," or "I think that's what it's all about. they meant ", or" they are a new society that has difficulty growing up ",…
And tonight, there was this post on a thread about persistent paint problems encountered on shipments on TMC.com:
Hearing all these stories over and over again, I begin to think that the time has come for Musk to withdraw. He was revolutionary in his idea and achievements, but Tesla needs an experienced CEO in quality control, systems, service, parts, customer service, training, and more.
Gymnastics Prize
We have all heard about increases, decreases and price declines. At the same time, however, few unnoticed changes have been made to the main features of the "after savings" price. Today, as I type this article, the SR 3 model is back at the advertised price of $ 24,450, after fuel savings and encouragement. These fuel savings are now calculated over a 6-year period, previously used to reflect the previous 5 years when the FITC was $ 7,500. In addition, Tesla began using the $ 2,500 rebate from the FITC and California to offer a total of $ 6,250 in premiums. Does Tesla intend to sell only cars in California? Everyone wonders how he will calculate his total savings on July 1st. Ten years of fuel economy? Colorado's $ 5,000 tax credit?
For the record, Germany is not the only country where Tesla displays the actual selling price on the right side of the website's screen. If you pass the flag in the upper right corner of China (here) and allow Google Chrome to translate the page, you will see that 412,000 yuan is the current price of the LR RWD 3 model. On the bottom left you will see the price after the gas savings of 372,200 yuan. Strangely, in the Chinese version, no delay is given for fuel savings. How are the savings calculated exactly? So much for transparency.
Why should investors be concerned?
First, we have the obvious effects that these small rockets could have on Tesla's general and general feeling. Ford Dealers (NYSE: F) could not give up on Pinto cars after a few fires in rear-end collisions.
Second, it could be class actions that lawyers like to take against manufacturers when their products kill people. Tesla already has a full plate of lawsuits.
Third, buyer uprisings might resemble those in Taiwan, where warning banners were stuck on the windows of Tesla's showrooms because of the tariff gymnastics (here).
Where do you think the course of action would go in response to any or all of these possibilities? Ignoring the real threats faced by Tesla investors could have devastating consequences for their portfolios. Investors would be well advised to take precautions now. The Saudi investment fund has already (here).
More and more problems could lower the SP. Unfortunately, I read articles from supposed investors who always claimed to buy more stock with every price drop, in the hope of a rebound. The same posters claimed to buy more shares since the $ 350 MS.
It's a dangerous cycle. Although the money average may work, a prolonged downturn may result in bankruptcy or margin calls. You must know when to cut and run. Stop Loss orders must be a tool in your arsenal with put options for some insurance.
It reminds me of the common myth of blackjack. Sit down at a $ 5 table with $ 300 and double your bet on each losing hand and "everything will be fine". In theory, there are three problems. 1) Lose the first six hands and you're gone. 2) Other players at the table can ruin your chances with sloppy play. 3) Catch a dealer on a "hot" series and you can go bankrupt again.
The moral of this is that no matter how much you want TSLA to rebound, there are always factors you can not control. So, know when to fold your cards and leave the table.
Disclosure: I am / we are short TSLA VIA OPTIONS. I have written this article myself and it expresses my own opinions. I do not receive compensation for this (other than Seeking Alpha). I do not have any business relationship with a company whose actions are mentioned in this article.
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