Elon Musk's Tesla Motors will change the world, no?
Tesla will be worth as much as Apple one day, said Musk in a February earnings conference call – $700 billion (U.S.) by 2025. Tesla will see sales increase 50 per cent a year over the next decade. The stock will surge 2,700 per cent and annual profits will hit tens of billions, with shares at 20 times earnings.
True, Musk cautions that these "back-of-the-envelope" numbers might not come to pass, though he says he's betting on them. Ponder all that and some other Tesla's announcements:
- 10,030 cars delivered in the first quarter, a 55 per cent year-on-year increase;
- the base Model S becomes the 70-D, gets a price increase, vehicle range in ideal conditions jumps to about 380 km and the 514 horsepower powertrain can go from 0-92 km/h in 5.2 seconds;
- the $5 billion (U.S.) lithium-ion battery “gigafactory” remains on track to open in 2016, despite a Nevada-based report to the contrary;
- the upcoming Model X crossover is in the final stages of development;
- Tesla will unveil a new product at the end of the month.
Meanwhile, Musk envisions the day driving may be outlawed. At a conference in California, Musk said he expects autonomous cars will "become normal, like an elevator." And he predicted driving "a two-ton death machine" may be outlawed.
A relentless "visionary" spin is generally the order of the day for Tesla and Musk. Except, as the International Business Times points out, Tesla didn't sell all 10,030 cars in Q1. A shareholder letter in February stated 1,400 of those deliveries were booked as sales in December. The truth is, Tesla sold and delivered 8,630 Model S cars in Q1.
The Tesla/Musk news factory we are seeing in action seems ripped out of Public Relations 101: keep inquiring minds spinning to the relentless drumbeat of new announcements and audacious pronouncements.
It works. Investors gave Tesla's stock a nice little upward jolt after the sales news – and few bothered even to report that Tesla fudged the first quarter numbers in its sales release. How many have challenged CEO Musk on his preposterous and irresponsible musings about Tesla one day being worth as much as Apple? How exactly will Tesla keep up as sales bound upwards 50 per cent a year for 10 years? Autonomous cars? They require regulatory changes that will be extraordinarily difficult in a litigious society. Cars as "death machines." Silly.
Few seem willing to call out Musk based on facts. When I have, critics call me a dinosaur or much worse. I am, they say, too old and too jaded to appreciate the genius of Tesla and Musk.
Well, I have seen Musk and his ilk before and so has former Reagan budget director David Stockman, who has the financial chops to dissect CEO Musk and Tesla as both company and stock play.
Musk, says Stockman in his Contra Corner blog, is a "circus barker" and Tesla "a crony capitalist con job that has long been insolvent." Tesla survives not on the merits of the product, but thanks to "fat taxpayer subsidies" and a "free money" monetary policy. I'd add a gullible and ill-informed media as co-conspirators – willing or unknowing – and an analyst community whose evaluations of stocks in general are often suspect.
As Stockman suggests, the Model S/70-$ is not "a revolutionary new product like the i-Pad," but "about 4,600 pounds of sheet metal, plastic, rubber and glass equipped with an electric battery power pack that has been around for decade." Tesla is a "fly-by-night company" making "essentially vanity toys for the wealthy."
Stockman says Tesla is nothing more than "a Wall Street scam in plain sight" – a "bonfire of the vanities" boasting financial statements filled with "horrific figures." Hard words.
Now Musk may not be "very driven by money" and one of his life goals may be "to see electric cars become mainstream," as we're told by Bloomberg columnist and Musk biographer Ashlee Vance in Tech Times.
But the facts to date suggest that Tesla represents the worst of capitalism led by a CEO who is, indeed, more P.T Barnum than Henry Ford.