Tag Archives: Tesla

Wall St pushes to have SpaceX save Tesla

Three articles in the news today illustrate both the corruption of the press as well as a desire of one analyst on Wall Street to convince Elon Musk to use his success at SpaceX to save Tesla.

All three news articles are based on a single recommendation made by one Morgan Stanley research analyst. Thus, the headline in the first article is an outright lie. There isn’t growing speculation, there is one guy with an opinion, an opinion by the way that Elon Musk doesn’t appear to share, according to the third article.

Musk said last year that there was too little cooperation between Tesla and Space Exploration Technologies Corp. to justify merging the two, dismissing the idea that had been raised by one of Jonas’s colleagues as “quite tenuous.”

From SpaceX’s point of view, combining these companies makes little sense. It would essentially be using the success of SpaceX to prop up Tesla’s financial weakness.

Musk of course controls both companies, and can do this if he wishes. If I was Musk, however, I would keep the companies separate, and let the chips fall where they may. Musk however might care enough about Tesla that he might want to save it, using SpaceX’s profits. If he does, however, he will instantly weaken SpaceX, as it will then no longer have as much cash available to pay for its future plans, such as the Big Falcon Rocket.

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Tesla stock crashes due to possible loss of tax credit

The stock of Elon Musk’s Tesla electric car company crashed this week, dropping 7% on Wednesday, with the revelation that the Republican tax plan proposes eliminating the $7,500 tax credit for buying an electric car.

Its share price fell more than seven per cent to about $296 apiece from Wednesday’s $321. The draft law emerged as the Elon-Musk-led automaker announced its worst-ever quarter, recording a $671m loss and admitting it had not met its production target for its new Model 3 car, producing just 220 of them against its 1,500 target.

Economists believe that the tax credit is a key driver for electric car sales, and cite the example of when the state of Georgia cut its $5,000 tax credit and saw sales of electric cars slump from 1,400 a month to just 100 a month in response.

What this story highlights is that electric cars are simply not economical at this time, and that the government is distorting the market by pushing them. Without government aid, practically no one would buy them.

It would be far better for everyone to let the market decide. Not only would this save us tax dollars, it would allow the industry to focus its innovative efforts on upgrades that are cost effective and profitable, rather than on pie-in-the-sky fantasies that actually do no good at all.

Hat tip Wayne DeVette for pointing me to this story.

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