With Tesla announcing plans to build a manufacturing plant in Central Texas – and with the possibility of company headquarters arriving as well – many in this state will rejoice. Not me.
Tesla is the worst. And Elon Musk, Tesla’s CEO? He’s awful too. My hatred for both the company and the CEO burns inside me with the heat of ten thousand SpaceX rocket launches.
My reasons for rage range from the profound to the petty. I’ll list them in that order. Tesla, how do I hate thee? Let me count the ways.
- Taxpayer Subsidy for Private Enterprise
Del Valle ISD offered $46.4 million in tax breaks for the privilege of hosting Tesla’s new manufacturing facility. Travis County commissioners approved other goodies, for an announced total package of $60 million. Will the state’s Texas Enterprise Fund be far behind in offering public subsidy for private enterprise?
In return, Tesla plans to employ 5,000 workers at a salary of $35,000 per year. In other words, poverty wages for a family of 6. And this was celebrated by Governor Abbot and other Texas leaders? But see, it’s already obvious Tesla moved here precisely because they could pay their workers $35,000 a year! We shouldn’t have to pay Tesla an additional $60 million dollars in public subsidy for the thing they planned to do already.
And anyway, why does a CEO with an estimated net worth of $70 billion demand to take money from Del Valle public school kids – 85 percent of whom are economically disadvantaged – for his company’s bottom line? Because he can. Because there is no shame anymore in late stage capitalism, as practiced by Elon Musk.
Thanks Mr. Musk! Please sir, may I have another?
- Electric Vehicle Subsidies
A debate rages over the past four quarters whether Tesla is profitable over the past year, or whether it is still losing money at this time. What is not debatable is that the only way the firm can report a profit is because – for regulatory reasons – other car manufacturers are forced to purchase “regulatory credits” from Tesla. Because other companies do not produce enough electric cars in their fleet, according to federal government regulations. Tesla booked $782 million in payments from traditional auto manufacturers in the first half of the year. Tesla reported a profit of $16 million in Q1 and $104 million in Q2 2020, meaning it would show a loss without the “regulatory credits” forcibly paid by its competitors.
Tesla’s entire business model to date has been built on government subsidies. From the $1.2 billion to build a battery plant in Reno, to the $7,500 EV car purchaser credits (now phased out for Tesla.) Without them, they’ve never been profitable. Can we stop publicly subsidizing a $270 billion market cap company, please? Again, something about capitalism has broken here.
- Accounting Shenanigans
Fundamental investor David Einhorn of Greenlight Capital wrote a scathing analysis in his August 4th quarterly investment letter about Tesla’s accounting practices in 2020. All but accusing the firm, and Musk, of fraud, Einhorn writes:
“We question whether TSLA’s accounting, which does not appear to correspond to the creation of regulatory credits through auto sales, transfers of those credits to a counterparty nor payment for those credits, conforms to GAAP accounting.”
The bottom line from Einhorn is he thinks Tesla is cheating, in order to show a technical profit for 4 quarters in a row, which will allow the firm to be included in the S&P 500 index. “Through what appears to be sheer abuse of the accounting rules, TSLA has now contrived reported profits to make it technically eligible [for S&P 500 inclusion].”
Einhorn goes on to predict Tesla’s future crash along the same trajectory of the June 2020 catastrophic fraud of WireCard (WDI) following its inclusion on the German stock exchange (DAX) “As with WDI and the DAX, we expect the TSLA parabola to end around the speculated inclusion in the prestigious S&P 500 Index.”
- Stock Valuation
I’ve made exactly one forward-looking “market call” on an individual stock in my 6 years of writing a newspaper column. I wrote about Tesla in 2015 as a company “I’m reasonably certain will be dead in five years, despite its $25 billion market cap.”
Ha-ha the joke’s on me, because I revisited that call in January 2020, to point out that its growth to a $100 billion market cap was even more ridiculous.
A mere half-year later, the stock switched into ludicrous mode (probably as a direct result of karma from my once-only-ever market call.) The company is now valued at $270 billion. Keep in mind this nearly tripling in value happened amidst a global recession and pandemic. The lesson, as always: I am an idiot. I burn with special hatred for Tesla specifically for making a mockery of my considerable investment skills and business acumen.
CEO Musk uses Twitter all day long for lying, bullying, distracting, and constant salesmanship.
When criticized for his PR stunt regarding kids stuck in a cave in Thailand in 2018, Musk replied to the critic over Twitter with unsubstantiated slander: “Sorry pedo guy you really did ask for it.” 1
In the face of critics who pointed out the precarious financial position of Tesla in 2018, Musk lied about a taking-Tesla-private deal “Am considering taking Tesla private at $420. Funding Secured.”
Lying, bullying, and distracting over Twitter doesn’t make Musk unique among leaders in the world in 2020. But Musk’s style reminds me of the unquenchable narcissism of another lying, bullying, distracting salesman who has an important job to do but who nevertheless chooses to spend his day on Twitter.
I hate cars. I get it, people like Teslas. They look cool and they zoom fast. Wearing my personal finance hat, I have tried my best to convince my children (and anyone else who will listen) that paying a premium for a cool car makes as much sense financially as paying a hefty premium for a cool washing machine and dishwasher. They are all just rapidly depreciating metal and plastic consumer goods. (To be clear, I mean cars and household machines, not my children.)
Cars are a bad use of your money. They shouldn’t be cool. Harumph.
7. His Name
“Elon Musk.” Even his name. It sounds like a brand of splash cologne you get for 3 quarters inserted into the gas station lavatory vending machine. Just a few notches in quality below “Axe” fragrance. I’m sorry. My disgust stacks up on itself. If Tesla and Musk were a supper plate, for me they would be black olives and anchovies, garnishing a plate of pan-seared liver. My senses reel with disgust.
Am I being petty? Yes, you’re damn right I am. I’m so Tom Petty right now that I’m Free Fallin’ and I Won’t Back Down.
A version of this ran in the San Antonio Express News.
Please see related posts:
Sin Investing (and my 2015 market call on TSLA)
Tesla as an example of difference between Castle in the Sky and Fundamental investing
Tesla is Stupid (But, it turns out, I am stupider)
Post read (4325) times.
- He later deleted this one from Twitter ↩