Forums

CNBC Utterly Foolish Article on Tesla and X

CNBC Utterly Foolish Article on Tesla and X

Couldn't resist reposting this here. What an obviously Short and obtuse pitch against Tesla.

http://www.cnbc.com/id/102806414

I couldn't resist also posting a point by point assessment of the author's deliberate ignorance and misdirection....

"Agreed with many folks. The author here is Short on Tesla. No question. Let's go paragraph by paragraph looking for the intentionally inflammatory or ignorant comments:

"Tesla doesn't reveal the actual "specs" of the car [...]" Do any new manufacturers release the full specs of their new cars before the production model is ready? Once the vehicle is ready, buyers will be able to see the specs. Same as with Mazda, Ford, et al. Implying that the phone representative was hiding something when he/she didn't give you more information about unreleased details is inflammatory and ignorant. Was the author assuming he was a special snowflake and would get unreleased information because he picked up the phone? Perhaps he thinks that is what investigative journalism is...if ONLY someone picked up the phone they would certainly learn about the information being withheld on the website!

"So, where do we put luggage for a family of 4-6, canoes, surfboards, 3-4 bikes [...]" You can already fit luggage for a family of 4-6 in a Model S. I'm sure the X will be no different. You answered your own question about the bikes. It certainly remains a possibility that the X will not be able to roof mount a pair of canoes or a stack of surfboards. The implication though that this is a critical failure is loose. The real question is two-fold. One part is whether everyone buying a crossover needs to mount canoes and surfboards on the roof. There are images of S's with bikes tossed into the back with the seats laid down. Sure that won't work for a family of 5 who are all traveling at once, but no vehicle is everything for every family. Using the expansive back may be just fine for a family of 2-3. Second is that the author is of course assuming that he knows all possible storage options. Maybe there's a slide in compartment that you can put skis into that sits under the seats but over the battery. Maybe there's a function for the falcon doors to open only to parallel to the ground with a roof rack in place (in which case entry/exit clearance would be about the same as a regular). It's all speculation.

"Are SUV /crossover buyers going to tolerate being forced to dramatically increase the length of the car [...] I suppose yes if you are planning on mounting your 6 bikes to the rear trailer hitch and then plan to go downtown to parallel park, you'd just have to deal with the increased length like everyone else who uses hitch mounted racks. It clearly hasn't devastated the hitch-mounted rack market. Oh no! Trailer hitches make it harder to parallel park and to change lanes! So do horse trailers! But sometimes they just serve a purpose. I get the impression that if there was a roof rack system on the X that the author would be fretting that "soccer moms" would be at constant risk of running into low clearance overpasses and garage entrances with their roof mounted canoes.

"Most auto analysts I spoke to [...]" Yes, I guess Tesla probably is spending a lot of time and energy making the doors work well. They've said so. Musk has said that part of the reason is to increase head clearance for entering and exiting both the rear and the 3rd row. That seems to have no value to the author. The "only real place" to store extra luggage...is the EXTRA TRUNK? This sentence is written like it's a bad thing. Oh, scoff, where the engine NORMALLY is. Not this madness where there's no engine. NO ENGINE?!? How does it drive?!? You've answered your own first point. You fit luggage for 4-6 people because you have an entire EXTRA TRUNK where a gasoline car has to have an engine. Let's not even address the last paragraph where he implies that folks will buy the car and then "suddenly realize" that it doesn't do the thing it needs them to do. I trust that most folks dropping $75-100k on a car have a good sense of its abilities and flaws.

James, you're obtuse at best and misleading or malicious otherwise. If you want to analyze Tesla's finances go ahead. Analyze them honestly from a asset, income and growth perspective. Is Tesla a good stock from a value investing standpoint? Of course not. Growth is factored far too much into its price right now and that's inappropriate given that they do not have a sufficiently protected market to be considered a franchise and have even released their patents to the public domain. But that's a different argument than implying that the car has flaws because it can't do specific things. It can't haul two yards of gravel either. But if that's what you need...buy a pickup truck."

speyerj | July 3, 2015

Ah...here we are. No journalistic integrity here. I wonder where the loophole is that lets someone with a professional role and vested interest in a Short write about the stock to the public without disclosing their firm's position.

http://www.sagharboradvisors.com/wp-content/uploads/2015/01/SAG_Pitchboo...

Son of a Gunn | July 3, 2015

Just copy-paste it. Let's not feed them clicks, which is exactly the response they want. Cash for clicks, incentives for controversy and lies.

vandacca | July 3, 2015

Personally, I hope that this guy gets a lot of attention which drives TSLA stock down. I've been waiting to buy some TSLA stock and would appreciate it going down a little before I pull the trigger. :)

I figure once the Model-X is revealed, TSLA will go up too high in price for me to warrant purchasing.

ian t.wa.us | July 3, 2015

Here you go:

"A slide from a Tesla presentation that recently surfaced was interpreted by many market participants to mean a delay in the launch of the Model 3, the "all-electric vehicle for the masses (at $35,000).

Tesla swatted down speculation of a delay, saying the Model 3 was on track to be shown in 2016 and for production to begin in 2017. But rumors of a possible delay shine light back on the Model X, the "hump" vehicle launched between the current Model S and coming Model 3, responsible for carrying the torch for sales in the next few years before the Model 3 is available.

Here's the problem with the Model X: The target consumer is women, according to Tesla, but the design has falcon-wing doors that open up, not out, precluding the ability to attach anything to the roof — like a ski rack or luggage carrier. Would you buy an SUV or crossover that couldn't carry excess luggage, surfboards,kayaks, etc.? Isn't the primary crossover/SUV buyer a large family, sports enthusiast, or both?

With the weight of the entire stock seeming to be carried by the Model X, is it time to refocus on the Model X design? Since 2013, forums on the Tesla website have engaged in energized debate regarding how one could carry luggage for six, multiple skis, bikes, kayaks, canoes or surfboards on the car, and if the ability to do so was crucial to selling an SUV or crossover. It's time to re-engage this debate and start asking for answers from Tesla, as this "hump" vehicle not only must carry the sales torch, but could be carrying the "going concern" torch.
After Tesla's first-quarter earnings filing announced in early May, one avid Tesla bull at Morgan Stanley described the rate of cash burn as "eye-watering." Indeed, Tesla's use of cash per quarter is at historic levels, even higher than in 2013 when Tesla, almost on the verge of bankruptcy, was reportedly begging Google to buy it. Cash burn was $558 million in the quarter ending Mar 31, bringing cash levels down to $1.9 billion. That's worse than negative free cash flow in the Dec 2014 quarter of $455 million, which, in turn, increased from the cash burn of $312 million in the Sept 2014 quarter.

At this cash-burn rate, I would say Tesla could run out of cash by spring of 2016. Tesla recently negotiated a secured bank credit facility of $750 million, encumbering all of its property, plant and equipment (PPE), layering current and future convertible and high yield debt issuance.

Tesla bulls continue to engage in the usual game of "pay no attention to the man behind the curtain," and point to projections by Musk that Tesla will be cash-flow positive by the fourth quarter of 2015 and sell 55,000 cars this year. With the Model S selling at rates of about 10,000 per quarter, which most auto analysts would think is a risky number to maintain given the launch of a new luxury vehicle that generically would cannibalize existing luxury model sales, this puts an enormous amount of pressure for Tesla to sell 15,000 Model X cars in 2015, and an even higher number in 2016. With the Model 3 launch of mid-late 2017, or if it gets pushed out to 2018, the Model X is clearly the "cash-flow cavalry" for Tesla.

Now, here's the kicker: While Tesla claims to have roughly 20,000 orders for the Model X, these actually are not "orders," they're "reservations," which cost $5,000 for your place in line to receive a Model X, currently slated for March 2016 if you order today. When I called the sales rep hotline listed on the website, I confirmed that the "reservation" is fully cancelable and refundable with no penalty.
Tesla doesn't reveal the actual "specs" of the car until later this year when it asks its reservation holders for official down payments on the car, after which the consumer still has a short period to cancel and get a full refund. I asked the sales rep what else she could tell me about luggage and recreational item storage and I was cut off quickly and reminded " I cant tell you anything that isn't already on the website." That line was repeated 2-3 times during my phone call. Tesla sales reps seem to be trained well to end that conversation quickly.
So, where do we put luggage for a family of 4-6, canoes, surfboards, 3-4 bikes? The bike question was answered for me by an avid biker, who said a commonly sold hitch attached to the tow package on the crossover. Stacking the bikes horizontally behind the car was actually a preferred way to carry premium bikes, rather than on the roof. Tesla said in late 2014 that the Model X will come with a towing-hitch package option.
Are SUV /crossover buyers going to tolerate being forced to dramatically increase the length of the car, carry increased risk when changing lanes, and making it very difficult to park, especially parallel park? Will SUV buyers tolerate a a big "asterisk" or "work-around" feature to their car that they wouldn't have with other SUV purchases?

Most auto analysts I spoke with would agree that gull-wing or falcon-wing doors are a novelty item that carry complications. They notoriously leak water in the car during hard rains, and are very problematic when snow accumulates on the roof. Rarely do they appear on anything but sports cars, as they limit the ability to store anything on the roof, and the only real place to store extra luggage in the X is the "frunk," or the front of the car where the engine normally is.

So the question remains: When the target Model X consumer, the "soccer mom," realizes she can't fit extra luggage, surfboards, etc., what is her reaction going to be? Take it back? Why not — she gets a full refund.
With the Model X being crucial to turning Tesla cash-flow positive and stopping the "eye-watering " burn, the time for this discussion is now. "

Ouch. That was painful to have to read again. Edited out the photo description and links to other articles.

I think I may have been the one to tell him the best way to carry bikes. I remember replying to a few posts with that question so I think he may actually have an account here and has most assuredly been lurking.

vandacca | July 3, 2015

Okay, this guy is a true idiot. I just saw his Short TSLA argument and there are some wild-a$$ comments in there. Like Elon is CEO of 3 firms: SpaceX, Hyperloop, Solar City. Couldn't even get that one right.

Ankit Mishra | July 3, 2015

I hope Model X falcon wing doors will make people who experience the ease of ingress and exit fall in love with them. It might become a new demand lever and an unique benefit.

timf2001 | July 3, 2015

All I know is over the course of 15 years of driving SUV/CUVs, I never once carried anything on the roof. The prime advantage of a SUV is having large amounts of interior cargo room, and that's where even the big items like skis or bikes go for me. The potential inability of Model X to use roof racks is a complete non-issue.

Red Sage ca us | July 3, 2015

timf2001: Precisely.

georgehawley.fl.us | July 3, 2015

The article is an obvious crock, suggesting either wanton ignorance or self-serving agenda. All of this will blow away in the wind in a couple of months when the "long-awaited", wing-flapping, three row BEV finally shows up. The canoe and surf board toting "soccer moms" will buy something else and there will still be a backlog of over $2 billion worth of vehicles to build for people to enjoy. Can't wait.

oragne lovre | July 3, 2015

@timf2001

I couldn't agree with you more! A large interior cargo room is for sport equipment which you don't want to be exposed to elements.

ernie | July 4, 2015

I am confident that the X customer will not want surfboards, skis, kayaks of anything else of consequence on the roof. If you are going to load every seat with a person you are better off buying a bus unless the trips are short with minimal to no luggage.

Red Sage ca us | July 5, 2015

Did someone need a tour bus?

Red Sage ca us | July 5, 2015
Nantang | July 5, 2015

I saw the article, and you beat me to it. They must believe that the overwhelming majority of families like to carry around luggage and canoes on top of their SUVs all the time. They seem to think having cool, futuristic doors will be a deal-breaker.

aaquino22 | July 5, 2015

If I want to decrease the range or fuel efficiency of any vehicle then I'll put something on the roof. My ICE Van that comes with a roof rack does not get used often. Why? Because I want my stretch my buck. I want it to be fuel efficient and save money. If you are a buyer that doesn't care about this then don't buy the model X.

leh22a | July 6, 2015

Yeah. I also loved the argument of soccer moms needing space for their surf boards. Way to analyse a huge part of the auto market there bud!

christurbeville | July 6, 2015

Neither Cobalt or Lithium are rare-earth:) This guy is just lost

JBRatner | July 7, 2015

The cargo room... that is what I look for in a SUV. That is what I've needed in the 4 SUVs I've owned in the past.

Oh, and I do have a surfboard or two. Guess where I put them... inside the car! I have VERY rarely put them on top. Only if I just HAVE TO, because it's too much work and I'm way too tired after being in the water. And they don't have to be put on top flat if the doors really are a concern. You could have a rack the holds them securely on their side. Oh wait! No! Look out for the overpass!! ;-)