Good morning Win,
A car company built on debt is a fool's game.
F has billions in cash, just so they make it through the next decline.
Elon is going global trying to get other governments to fund assembly plants in their countries.
The lack of a refresh showed up this last quarter in the S and X models.
When luxury car makers do not have a wow look, other stronger and better competition will eat your lunch.
A complete pallet of new EV's is aimed at Tesla and they all have global footprints.
If Tesla has not made money by now - their edge is over. Couple that with the US government dialing down the rebate / incentive monies, the price of a Tesla is going up.
The auto business is all about moving metal and reaching a volume level of production, such that the tools ARE DEPRECIATED, and you start printing money - enough to come out with the next newer looking version that WOWS the buying public.
Talk about an income inequality bad spin. The U.S. Government is helping the wealthy buy $100,000 EV's.
BAD OPTICS and more Obama crony capitalism gone awry.
Musk has so much crumbling around him, it won't end up well.
The smart money already knows that. A January 2020 $270 put ($2.85 in the money) is selling at a bid/ask of 48.35 to 48.75. One contract on an in the money put sells for $4835.00. That's a lot of premium to pay.
Time decay is one heck of a head wind.
Price is half way between the ATH and ATL.
Needless to say, no dividend being paid.
DOES NOT FIT MY INVESTMENT RULES AT ALL!!
When the auto business enters its next recession, selling a put ought to be juicy.
Who is going to buy the next replacement battery when your Tesla gets 5-6 years old?
What will be the residual value of a 36 month Tesla lease? These should be coming into the market soon.
Remember when oil/gas prices spiked and the big SUV's coming back from leases were averaging $4500 losses at the used auctions.
Well cheap oil/gas will hurt the residuals on Prius's and Tesla's EV's.
It's a dangerous game to build innovative EV's in a historically very ultra competitive market that has low margins for most and better margins for a few, that rotate in "status" for the wealthy.
Tucker and Studebaker were well ahead of their competitors in innovative features and design. They joined Stutz and Cord in bankrupt auto makers.
Move over boys, make room for Tesla - place them right next to Obama's other great move Solyndra.
I think the entire adoption of BOTH EV's and Autonomous vehicles has been hyped.
It will take substantially longer for these vehicles to be in volume demand by the broad public.
Durability is a big question. Resale is a big question. Cost of repairs beyond the warranty period is a big question.
An OEM taking on the franchisee responsibility of service and repair in the aftermarket has been tried before and has a horrible track record of complete failure (GM and F have both tried and lost millions).
Wait till the buying public gets a $6000 bill for a new battery. I can hear the howling already!
ELON's a brilliant guy they say.
For my two cents, he made a critical error by entering into a low margin business. A business that is protected and coveted by huge trade tarriffs and barriers - let the Europeans get a dose of reciprocity from Trump and we'll be seeing more Cadillacs and fewer Bimmers and Benz's.
The world is going to change and it won't be pretty in Euroland especially.
Volkswagen has 660,000 employees. GM has 110,000.
There's a reason Germany is the export machine.
When reciprocity enters fair trade there's going to be a lot of push back and ultimately pain coming Germany's way.
That or there will be some assembly plants suddenly being built in the USA (Bimmer's largest plant is in fact in the USA). The German worker is being threatened and does not yet know it.
Any wonder why Germany's chancellor Angela Merkel, wanted more immigrants? Answer is cheap labor.
Popularism has been let out of the bottle. Her not running for another term is enough said.
Trade issues just beginning!!
Tesla is TOAST !!
Bob |
