Thread by @John54436259

1/Musk avoided bankruptcy last summer by selling egregiously overpriced high margin variants to credulous poseurs on the wait list.
Effectively, he cherry-picked the dumbest consumers in California and conned them into paying $60,000 for $25,000 cars.
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2/Unfortunately for Tesla, the supply of people willing to pay $60,000 for $25,000 cars was exhausted very quickly; the backlog evaporated after the low-hanging fruit was plucked and juiced.
He’s trying to repeat the process in Europe and China, but it’s not working
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3/(Apparently, consumers in those markets are more discerning.)
Tesla only managed to eke out tiny profits in Q3 and Q4 because he cherry-picked high margin cars, slashed warranty reserves, cut cap-ex, and sold hoarded regulatory credits.
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4/He then lied to investors and told them Tesla would be profitable forevermore. Anyone with any native intelligence could see this was a con; sure enough, Musk just admitted he’s going to start losing money again.
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5/To make matters worse, consumers have now had time to assess the terrible build quality of the Model 3; Consumer Reports revoked its recommendation because the cars are extremely unreliable.
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6/Now, because Tesla is cash starved and seemingly can’t raise equity, Musk is eliminating all Tesla stores and galleries.
He’s asking consumers to buy cars they haven’t been able to test drive; those cars break easily, but are almost impossible to fix.
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7/On top of all these problems, regulatory support is being phased out and every car maker on the planet is rolling out high quality EV at every price point. Tesla simply doesn’t have the balance sheet to stave off this competitive onslaught.
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8/Musk needs cash, which is why he accelerated the roll-out of the Model Y and is begging for deposits.
As a final note, it is very troubling that the CFO and General Counsel quit the same week.
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9/If I was an investor in this company, I would have sold my entire position the day the day the GC resigned.
Tesla is a massively leveraged, structurally unprofitable manufacturing company whose peers all trade at book value.
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10/Tesla’s in big trouble, and its book value is $26 per share.
This story does not end well.
Caveat emptor.
Addendum: The fact that Musk pledged 40% of his stock against personal loans and just remortgaged all his properties should make investors queasy.
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