Last December, Tesla announced its largest quarterly loss in its history and started sacking more after an earlier round of sackings earlier in the year. By the middle of January, the value of its share price had fallen by more than 10 per cent making a total loss of 20 per cent per share or about $12 billion in the last quarter of 2017.
Musk and Telsa have built their reputations on their highly hyped electric cars. This reputation took a terrible battering when Navigant, a highly respected independent management consultancy and risk management company reported that Tesla’s electric cars ran dead last in the driverless car race.
It was reported that Navigant had ranked ten major companies developing AV technology based on 10 criteria including vision, market strategy, partnerships, production strategy, technology, product quality and staying power.
It stated in its report, “Tesla’s autopilot system on current products has stagnated and, in many respects, regressed since it was first launched in late 2015.”
Tesla has repeatedly failed to meet its own production projections. Last October, for example, it only produced 260 cars despite an announced target of 1,500. In the December quarter Telsa delivered only 5,000 Model 3 units versus the 15,000 target set in November which was revised down from a July projection of 80,000 units. The company has been burning cash reserves at an alarming rate spending $US13 million more each day just to deliver an extra 12 more cars each day.
With the disastrous profit fall news, Tesla announced that it would be slashing production of their Model X and Model S cars to focus resources on their new Model 3 vehicle. The US “Consumer Reports” have rated the Model X as the “absolute least reliable vehicle made.”
The fact is that Tesla has never ever met any of its production targets or actually made a profit in its thirteen years. Now US analysts predict that Musk will soon dilute shareholders holdings by selling another $US5 billion of stock at a huge discount. Musk and Telsa need that sort of cash to keep the company functioning and might even get it given that many existing investors and shareholders are almost cult-like in their slavish devotion – or suspended belief.
Predictably, Mr Musk went on the attack taking to Twitter to spin fanciful dreams of a full-sized electric pick-up truck.
And he even went one better than that – he floated the idea of a flying car. Mr Musk very obviously believes that attack is the best form of defence.
Despite never meeting previous production targets, Musk said that the new Tesla Roadster, retailing for a modest $US250,000 each could go “from 0 to 100 KM per hour in 1.9 seconds” and there was the ability to buy a “special option package that takes it to the next level”.
Just what that “special option package” costs remains a secret as does what exactly it might do at “the next level”. In any case, the new Tesla Roadster is not due until 2020 although pre-orders are already being taken with a $US50,000 deposit. After reviewing what this vehicle allegedly might do, the US magazine “Car and Driver” somewhat cynically noted, “We’ll believe all of this when – and if – we see it.”
Mr Musk has blithely ignored his own reluctant admission to shareholders in 2016 that the first Tesla Roadster was a disaster. He’s very good at ignoring realities like that.
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