Forbes: Tesla Green Car Production Circus Distracting From Solar City Woes

Guest essay by Eric Worrall

As Elon Musk ramps up the hype over whether Tesla will hit its Model 3 production targets, another financial disaster may be unfolding at Tesla’s subsidiary Solar City.

Tesla’s Constant Turmoil Can’t Hide The Fact That SolarCity Is Dying

Jim Collins
JUN 22, 2018 @ 03:07 PM

I am convinced that the financial media will never end its fascination with Tesla and this week has been even more rife with intrigue than most. While the actions of self-proclaimed whistleblower Martin Tripp—including his extraordinary email exchange with CEO Elon Musk—have garnered most of the headlines, there are more relevant news items for investors.  Thursday’s Reuters article has the details of Tesla’s abrupt shutdown of a major part of its SolarCity sales network, and the ending of the company’s partnership with Home Depot had been announced last week in the press release detailing Tesla’s workforce reductions.

As Tesla’s struggles to perform the most basic assembly tasks at its Fremont car plant grab the headlines, the SolarCity news is signaling to the market a reality of which I have been convinced for some time: SolarCity is worthless. So, now the focus has to shift to that transaction, in which the former Tesla Motors paid 11 million shares of its stock to a company that was also chaired by its chairman and CEO and run on a day-to-day basis by his cousin (SolarCity’s former CEO Lyndon Rive.)  The conflicts of interest were so obvious then, and even though most of Tesla’s Board members recused themselves from the SolarCity acquisition process, the simple fact is that Tesla picked up a lemon when they drove SolarCity off the lot.

How would the market perceive such a write-off given that Tesla is contractually obligated to spend $5 billion in capital in the ten years following the completion of the currently-in-construction (also being built by Panasonic) Gigafactory 2 in Buffalo?  I am terrible at predicting Tesla’s share price movements over the short-term, but over the long-term, SolarCity will be a huge drain on the value of a car company that has been massively overvalued for years.

Read more: https://www.forbes.com/sites/jimcollins/2018/06/22/teslas-constant-turmoil-cant-hide-the-fact-that-solarcity-is-dying/

How different things would have been had Hillary Clinton won. Hillary Clinton pledged to install five hundred million solar panels during her presidency. Solar City would likely have been front of the queue to supply those solar panels, and Elon Musk would likely have pocketed billions of dollars of taxpayers cash helping Clinton fulfil her solar pledge.

Perhaps a Clinton victory is what Elon Musk had in mind when he bought out Solar City, and signed binding deals to build those extravagant Gigafactories.

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180 thoughts on “Forbes: Tesla Green Car Production Circus Distracting From Solar City Woes

          • Yjim you should have read every word of my comment which would have saved you replying with your fallacious put-down.
            People who comment at WUWT typically have a high level of technical knowledge; many across a broad range of subjects.
            WUWT is not for you pal.

          • Would the two down-voting ignoramuses care to debate railroad physics and traction motor system design?

          • No, but I’ll be glad to suggest that you tolerate gladly those you see as fools instead of lashing out at them.

            I’m not one of the two ignoramuses, I’m the third.

        • PS: The survey wrongly categorizes the choices as Factual vs. Opinion, explaining in the introduction that Factual items may be incorrect. That anti-intuitive distinction is surely going to mislead some respondents into categorizing certain (incorrect in their view) statements as Opinions (e.g., “Barack Obama was born in the U.S.”). The name should have been “Factual CLAIMS.”

        • Roger ………THAT means that when you answered the question on
          whether or not DEMOCRACY WAS THE GREATEST
          FORM OF GOVERNMENT you answered that it was only an OPINION !
          I disagree with PEW
          ( perhaps that should be Oh! Phew!…but that IS my opinion )
          and I disagree with you too !
          IT IS A FACT THAT DEMOCRACY IS THE GREATEST
          FORM OF GOVERNMENT !……..UNQUESTIONABLY !
          ALL the other forms have been tried and in MOST CASES
          have gone horribly wrong , recently MARXISM in Russia ,
          China , Cambodia and elsewhere and most recently in Venezuela.
          “Guided Democracy” such as Singapore is the next best
          although somewhat repressive compared to say the USA.
          SO……..whilst exulting in your 10/10 ……PLEASE EXPLAIN YOURSELF !

          • “when you answered the question on
            whether or not DEMOCRACY WAS THE GREATEST
            FORM OF GOVERNMENT you answered that it was only an OPINION ! ……PLEASE EXPLAIN YOURSELF !”

            I agree with Churchill—it is the worst form of government, except for all the others (“that have been tried so far” he qualified). Being the least worst doesn’t make it “the greatest,” which has a connotation of something positive in an absolute (non-comparative) sense.

            Substantial efforts to mitigate CO2 have been made almost entirely by democracies, which is a strike against them. Public opinion has been engineered in this case—and this isn’t the only case (removal of all types of asbestos is another).

            In addition, the quality of leaders in the U.S., UK, Australia, and NZ in recent decades has been poor (especially in appeasing rogue states that are going nuclear), another reason not to call democracy great. It’s barely tolerable.

            Regardless, Pew was right in calling this claim a statement of opinion. It can’t be proved statistically. Even that high casualty-count of totalitarian regimes isn’t yet statistical proof of their inferiority. Here’s a hypothetical: If the triumph of communism (say) had eliminated the chance of nuclear proliferation (which, if unchecked, will lead to the end of man and the poisoning of the earth), and the triumph of democracy leads to nuclear proliferation and devastating nuclear wars, then, weighed in the balance 50 years on, democracy will have proved inferior.

          • PS:

            “You know what the fellow said – in Italy, for thirty years under the Borgias, they had warfare, terror, murder and bloodshed, but they produced Michelangelo, Leonardo da Vinci and the Renaissance. In Switzerland, they had brotherly love, they had five hundred years of democracy and peace – and what did that produce? The cuckoo clock.”
            ― Graham Greene, The Third Man

          • This was a trick question – it was easy to get all 10 right, but only because it was so obvious what answers the test makers wanted. The trick is that any question on any topic that contains the words “greatest” or “best” or “worst”, and doesn’t match them with any numerical basis, is by definition an opinion statement. All you had to do was see that single word in the sentence, ignore every other word, and you knew that the “correct” answer was Opinion. (yes, I always found multiple choice questions trivially easy on any topic – this is how to approach them)

          • Churchill said, Democracy is the worst form of government, except for all the others.

        • Got 9 out of 10, because I disagreed that the first statement – about US health costs per person being the highest in the developed world – is factual. In my opinion it is a statement of opinion because there is no standard means, as far as I am aware, of defining health costs. A country could, for example, spend very little on direct medical care but then be faced with massive indirect costs in terms of lost production because sick or injured workers take much longer to recover, or don’t recover at all and must be supported by the state in some manner. Until there is a definition of what exactly is encompassed by the term health care, this is a statement of opinion rather than a factual statement.

          • That question caused me to hesitate but then I decided it had to be true. Why? The rest of the “developed” world controls cost by various means and access via long waits. The US doesn’t do this. Only curb we have on costs is via insurance premiums and what insurance companies will cover. But then if you don’t have health care the emergency room still has to care for you also if denied coverage the insurance company can be sued as a last resort.

            Sarah Palin was mocked for her “death boards” statement but they exist, countries with government supplied care have been known to cut their loses and deny expensive care and/or treatments. It’s all part of controlling the costs that happen when you turn your healthcare decisions over to bureaucrats. Most recent article in the news showing this was in the UK where the government had the doctors pull the plug on a baby who was for all intents and purposes brain dead against the parents wishes.

          • Taxpayer-backed insurance, loans and grants enable US hospitals (and universities also) to raise their prices with little to no risk to their business. The wealthy can still pay, and the state picks up the tab for those who can’t. There’s hardly any motivation to keep costs down or offer alternative payment options to low-income consumers.

            Downsize or eliminate Medicare/Medicaid, tax hospitals and other healthcare providers as for-profit businesses, and let them claim cost-of-ethics deductibles for unpaid emergency room care and similar expenses. Watch healthcare costs plummet.

          • “Until there is a definition of what exactly is encompassed by the term health care, this is a statement of opinion rather than a factual statement.”

            The problem with Pew’s nomenclature comes in here. It should have called these questions “fact-oriented questions.” IOW, if there were the definition you call for, then the matter could be settled. The Opinion questions are ones that more facts and better definitions couldn’t settle definitively.

        • 9/10 “Government is almost always wasteful and inefficient.” I knew they wanted me to say it was opinion, but I couldn’t resist.

          • Actually all their “opinion statements” were right-wing opinions, it’s obvious that they try to paint those as having no relation to reality. BTW, “Immigrants who are in the U.S. illegally have some rights under the Constitution.” – isn’t factual in my opinion. Constitution describes rights of the US citizens.

    • Just saw an article about the first electric plane on the market. A small market. These Piper Cub sized planes can only stay aloft for about an hour and a half and are apparently envisioned as trainers or (very) short hop people transporters. I have to wonder if these planes are used as trainers of gas powered planes, where’s the logic in that? They must be slated for training electric planes. As a flight simulator afficienado, an electric plane would be a whole lot simpler to fly that a gas powered or jet engined plane. The maintenance requirements are practically nothing compared to that required for a gas powered/jet engined aircraft. Need lighter batteries, folks, lighter batteries.

    • Nah. They haven’t fallen. They’ve always been bottom feeders living in the muck. It was just the media who told you that they lived in the clouds.

      • not even close … Delorean was a car guy and a real engineer … Musk is a salesman … nothing more …

      • John DeLorean resorted to smuggling cocaine to try to generate the cash he needed to keep his car venture running in 1982.

        What will Elon do? How far will he be willing to go to keep Tesla afloat?

        • If DeLorean had the government connections that Musk does, his car company would be one of the big three by now.
          And yes, that’s an opinion.

          • The car was a brilliant concept and design. It’s implementation and build quality is where it failed and no amount of Govn’t connection would have saved it. Should have been built in Coventry not Belfast.

          • Money can fix implementation and quality problems.
            It doesn’t hurt if the government were to mandate that x gull wing door cars must be sold every year, and provide a subsidy for such cars as well.

    • Oh how the mighty have fallen 🙂

      That was the first thing I thought too!…….great minds

  1. The whole reason Tesla bought SolarCity in the first place was because SolarCity was one of Elon Musk’s companies and it was headed straight for bankruptcy. Having one of Elon Musk’s companies go bankrupt would tarnish the Savior’s name, and they couldn’t have that, so using Tesla to bail out SolarCity – and its shareholders, one of whom just happens to be Elon Musk – then gradually unwinding it was, from their perspective, the logical thing to do.

  2. Musk shouldn’t have put Solar City planning on auto-pilot. He was just too confident that Clinton would win, and keep the lights turned on for him. Smart businesses held cash positions until after the election were over and it became obvious which way the wind was going to blow, ah, if the Business climate was going to be sunny for them. Instead, Musk hurried in and stuck a lot of money where the sun don’t shine.

    • It appears that he might have been practicing a corporate version of bannana republic economics, betting on Ms. Clinton oroviding the Musk family with a bannana republic.

  3. Perhaps a Clinton victory is what Elon Musk had in mind when he bought out Solar City, and signed binding deals to build those extravagant Gigafactories.

    Illuminating. BTW, to follow daily pro and con articles and news alerts on Tesla (mostly con), go to the Seeking Alpha stock market site here: https://seekingalpha.com/symbol/TSLA

    • +1 The only problem with tracking TSLA on SA through email was the sheer volume of stuff flowing in. Guessing a 25/75 pro/con split. I was initially surprised at the detailed articles about the company (with a higher market cap than Ford) by numerous analysts outlining why it is nothing more than a house of cards. Remember the electric semi-truck? Tesla does not even talk about it anymore. The new high speed tunnel in Chicago to be completed in three years? Maybe, but will the SEC or other federal agency pull the plug on this scam first?

      • “The only problem with tracking TSLA on SA through email was the sheer volume of stuff flowing in. ”

        But it’s very entertaining to follow the soap opera. The past weeks have exceeded all, what with the Tent, the Saboteur, the LA video’d Model S fire, the Jaguar I-Pace reviews (very positive), the sharp runup and then decline of the stock, Musk’s threatening the short burn of the century, the Business Insider leaked data, etc. (I’ve likely forgotten half of it all.)

        “The new high speed tunnel in Chicago to be completed in three years?”

        Tthat’s being built by a different Musk venture, The Boring Company.

    • Tesla is still a company valued at $56B.

      There are not many companies that have a market cap that big.

      If you have money in pension funds or mutual funds or own Nasdaq index funds, you are a shareholder in Tesla.

      But don’t buy Tesla or short it. It is completely unpredictable so just stay out. As I said, you probably already own it anyway.

      • And don’t forget, Tesla has pre-orders for 500,000 Model 3s. People are buying the cars even though it is not clear right now if the cost of production versus sales value is at a profitable level.

        Tesla’s market value is as much as GM and is worth more than Ford.

        • “Tesla has pre-orders for 500,000 Model 3s. ”

          Not quite—I think it’s more like 460,000 (based on $1000 per reservation), some of which is for other cars, and may even include semi-truck reservations. The number of $460 million has been flat for many months. Many M3 reservation holders want to buy the bare bones $35,000 version, which Tesla says won’t be available until next year, once it’s optimized its assembly line. Bears are skeptical of its ability to sell it at that price profitably.

          • How many of those 460,000 customers are willing to wait a year for a car they have “reserved”, when they can walk into a dealership and drive a gasoline-powered car out on the same day? What will they do for transportation in the meantime? Ride a bicycle?

    • Cuomo is involved with the one in Buffalo. Lots of tax breaks for a factory that we do not need.

  4. “Oh we got trouble! Right here in Solar City!”
    The hucksters and con artists are always with us…. and their confidence game is best aided and abetted by crony socialism.

    • That’s because he built, from scratch, the world’s heaviest operational lifter and devised, from scratch a way to re-use large parts of it. Or do you think he should have left the cozy coterie of launch vehicle manufacturers undisturbed?

      • From ‘scratch ‘ oddly you may find quite a bit of rocket science has existed long before the holy one was even born .

      • This appears to be the single most useful thing he has done. The commercialization of space exploration is crucial. An example of how basic government-funded research can lead to the creation of a whole new industry. MAGA!

          • If–and it is a big if–the BFR can fly for anything like the cost numbers Musk has been throwing around, we’re going to see hundreds of new industries develop in space.

            And he’s certainly turned the launch industry upside down, with pretty much every competitor who plans to stay in it now saying ‘hmm, maybe we shouldn’t build these hugely expensive rockets and then throw them away with every launch?’ after decades of saying ‘reusability doesn’t save you money, just look at the space shuttle’.

        • Musk built the company, hired the engineers, told them what he wanted, and let them take risks to achieve that. SpaceX hasn’t done anything that its competitors couldn’t have done, but they lacked the balls to do so.

          The fundamental problem with spaceflight for a long time is that there’s no known mass market for launches between billion-dollar satellites and the middle class taking vacations in space, so there was little incentive to cut costs because it just meant you made less profit (same number of launches at low prices == lower profits). Musk is the first to be willing to take the risk of cutting costs and hoping that a new market appears.

          • Wasn’t his premise, hoping that a new market would appear, the same for Tesla and Solar City? Look how that’s working for him. Cheaper boosters are needed to open up markets in near-earth orbit. Cheaper hasn’t happened in electric cars and solar panels.

          • That is a good point. But in SpaceX’s case, there was a real, multi-billion-dollar market there, and he was just reducing the cost. With Tesla and Solar City, there was no real existing market, or, at least, a very small market.

      • Musk’s next big launch will carry his favorite solar panel into space. There will be lots of photos of it majestically floating in front of the Earth.

        …and no, it won’t be hooked up to anything.

        ~¿~

      • His space enterprise has successfully launched a number of payloads, all on streaming video. The booster engines are restartable and the boosters have been successfully recovered by landing on land and floating platforms. The team of engineers and scientists working for SpaceX have demonstrated the dedication and perseverance that echo that of NASA in the ’60s. The ability to restart a booster engine was key to lowering the price of satellite launches. He’s now getting competition from Jeff Bezos and possibly three other startups. This will drive much lower cost launches and get private enterprise into space and earning profits much faster.

        As far as compromised enterprises, I suspect the dependence on Gov. funds for the auto and solar panel/battery enterprises made them losers from the start.

        • Yes. SpaceX is supplying a service the market wants at a lower cost than its competitors. Tesla is providing a service the market doesn’t want at a higher cost than its competitors, with artificial subsidies from governments.

          Big difference.

        • Exactly, wsb. Here is an example of three satellites to be launched by SpaceX, with relevance to arctic ice, a topic that we often see discussed here.

          https://www.theglobeandmail.com/business/technology/science/article-major-canadian-space-project-to-monitor-arctic-sea-ice-moves-a-step/

          Three Canadian radar satellites will provide high resolution coverage of arctic ice. FYI the existing data from the CIS (Canadian Ice Service) already includes maps showing the percentage of ice cover. As opposed to the almost meaningless NSIDC data where this fiction prevails:

          “14 percent ice cover = no ice; 16 percent ice cover = 100 percent ice”

          We can hope that the CIS maintains its policy of publishing meaningful data, and we can hope that they will extend it to the whole arctic and not just Canadian waters, as they do now. It’s going to be the subject of very contentious debate if (as we suspect) arctic ice starts to increase. Alarmist data manipulators will strive heroically to prove that it isn’t increasing, Wadham will go ballistic and start wittering about murder again, but he still has the ear of the Guardian Good quality data will be decisive.

          OK it’s off topic but still highly relevant to SpaceX. Cheap and reliable launches will only expand the market for satellites. Uses for satellites are limited only by the imagination and the cost of a launch.

    • After jettisoning NASA’s safety rules , only a fool (or SpaceX shareholder), would ride the BFR spaceward. One-way tickets only.

      • NASA’ was quite happy with the Space Shuttle, which killed the crew about one time in sixty. Why would anyone listen to them talk about safety?

      • The space shuttle was a disaster waiting to happen from the get go. Political considerations demanded the multisection solid rocket boosters. They also demanded that the shuttle fly without sufficient testing. And launching outside the pre-determined launch parameters.

        NASA bureaucracy and lack of cost controls, lackadaisical safety standards, and political considerations all made it problematical.

        • Space is dangerous – private firms will not survive the risk. The Shuttle will be remembered as one of the greatest achivements ever. Private firms will cut safety corners – astronauts beware!
          But meanwhile back to settling the Moon, not just a Gateway with no lander.

    • Economic, reuseable launch rockets are useful and desireable. Solar power is at best a marginal, break even proposition without extravagant subsidies. The Solar City model of leasing solar power installations to customers is basically a fraud. Any long term savings are pretty much all due to government subsidies.

    • Richard and others :
      THAT does NOT MEAN that what he is doing is either ECONOMICALLY
      VIABLE in the future OR that another operator won’t “TRUMP HIS DEAL” !
      Launching satellites for the military is STILL A GOVERNMENT SUBSIDY !

      • If the military is going to launch satellites, it’s going to have to pay someone to do that. And SpaceX is the cheapest option right now. Would you rather they spent far more money to launch it themselves, or to pay someone else to do so?

        You can argue that the government shouldn’t be launching military satellites, but no-one who complains about SpaceX seems to be arguing that.

        Otherwise, by your argument, a government employee stopping at Starbucks to buy a coffee is A GOVERNMENT SUBSIDY, and the only way to eliminate subsidies is to eliminate the government.

  5. Nassim Nicholas Taleb referred to Hillary Monsanto-Malmaison, now AlSaud-Malmaison. link So, he’s associating her with a large agribusiness, the Saudi royal family, and Napoleon’s last palace. It sounds to me that he’s accusing her of corruption as well as her thinking she was anointed to be the Empress of America. For what it’s worth, Empress of America is already taken … unless Hillary’s really really deranged.

    In Listen Liberal Thomas Frank describes the sense of entitlement of the liberal elite. He also points out that the Democrat party has wholeheartedly embraced people like Musk. The liberal elite love each other and are deeply deeply disconnected from reality. In that context, Taleb’s snide remark makes total sense.

  6. Don’t know who to believe these days – so many shorts on Tesla and so much opposition from dinosaur manufacturers that it is a bit like climate change – there is a lot of money going into anti-Musk stories.

    • https://www.fraserinstitute.org/sites/default/files/government-subsidies-in-canada-a-684-billion-price-tag(1).pdf

      “Between April 1, 1980 and March 31, 2009, federal, provincial, and local governments in Canada
      spent $683.9 billion on subsidies to private sector business, government
      business enterprises, and consumers”

      That is over $22 billion per year in Canada in subsidies alone. That doesnt include government loans for startup loans for high tech or small business. It has now increased to $29 billion per year in Canada.

      Imagine what the figures are in the US which is 10 times bigger.

      Also that doesnt include indirect subsidies via regulation being forced on certain industries.

      Musk would be my hero if he had never taken government money. Any entrepreneur who feeds at the government trough risks joining the long list of failed adventurers/companies such as Bricklin, Synthetic Fuels Corporation , Solyndra, Clinch River Breeder Reactor, National Ignition Facility, Superconducting Super Collider, FutureGen, Partnership for a New Generation of Vehicles, FreedomCAR, and the Yucca Mountain nuclear waste, Sun Edison,…….etc the list is endless

      REASONS WHY SUBSIDIES SHOULD NOT BE GIVEN OUT.

      1) Firms that receive subsidies become spendthrift. Nelson contrasted his firm’s lean operations with Solyndra’s spendthrift ways. He noted that the “most powerful driver in our industry is the relentless reduction in cost.” But government subsidies tend to inflate costs.
      2) Subsidies are not driven by market demands. Nelson noted that U.S. adoption of solar energy at the time lagged behind some other nations. But “this should not bother us if it means that the other countries are investing in technology that is not economically viable.” Put another way, just because other countries may be misallocating resources, does not mean that we should also.
      3) Subsidies distort business decisions. Nelson noted that “giving companies money to set up manufacturing in the U.S. may doom them to failure by financing them into a strategically uncompetitive position.” If subsidies induce U.S. firms to set up production in higher-cost places, it will ultimately disadvantage them in the global marketplace.
      4) Venture capitalists have already funded the best projects, leaving the dogs for the government. If venture capitalists “reject a project, it is difficult to believe that the government could do a better job of picking a winner,” argued Nelson.

      THE ONLY REASON GOVERNMENTS SHOULD FUND SUBSIDIES

      Subsidies should only be used to prop up a company that produces a domestic product that is key to national security.

      • Fraser Institute is pure von Hayek London School of Economics. The belief that economic benefits spring spontaneously in an unknowable way from market friction is pure alchemy, and ancient medieval pastime, today pure farce. What is this kind of horse-trading “theory” doing in a modern technological society?
        Von Hayek argued in his 1966 Mandeville lecture that Mandeville’s poem, The Fable of the Bees,” was perhaps the greatest philosophical treatise ever composed. He credited Mandeville with inspiring Adam Smith’s argument for the unbridled free market., a master mind,” as the inventor of modern psychology, and as the true intellectual forbearer of David Hume, Adam Smith, Jeremy Bentham, Carl Savigny and Charles Darwin.

        Mandeville – the Hell Fire Club-runner of the British Isles, as an economist? Surely nuts!

        No wonder Thatcher’s von Hayek IEA invited “Chicago Boy” Pinochet, their favorite fascist, to Britain.

          • All of von Hayek’s quotes are thoroughly documented. Literacy seems to be diversified out of the LSE, and the Fraser club. von Hayek was indeed “historical” – right out of a medieval marketplace.

          • To date, your argument has been that Hayek is wrong because he doesn’t believe that government is the solution to all problems.

          • Daft. As Alice said you cannot be wronger than that. Hayek touted feudal alchemy in a rapidly developing world after WWII. What an anachronism! He believed as his rather shrill acolytes do, that he had the “answer”. Well look up Mandeville’s Fable of the Bees and keep a straight face.

        • No, what you meant was, economic benefits spring spontaneously in a perfectly well understood and predictable way from market interactions – there, fixed it for you.

          • I just quoted von Hayek himself, straight from the horses mouth.
            The unknowable bit he praised on high as brilliant. Pure alchemy -essences from matter. To think that stuff passes for economics, it’s worse than magic CO2 passing for climate science.

          • unknowable to predict i.e. no government mastermind need be in charge … outcomes still occur but only with alchemy can anyone claim to predict the exact outcome … its you who is selling snake oil …
            economics is not and NEVER has been a science moron … its always been a psychology exercise …

          • The Fraser Hayek’ians parade much like Comey, claiming no ideology, liberal. When these are fed back their own beliefs, suddenly the liberal grows a mustache. Alchemy has no place in modern society (shamans in Armani suits). Hayek utterances like NEVER (longtime) claim to predict the future even worse than (straw dog ) Hansen. So a little bit of homework is recommended. von Hayek makes Hansen, Comey look like amateur theatrics.
            Tell bankers FDR’s Glass-Steagall – splitting commercial from risk – is psychology – stand well back though. Because that’s what’s on the way. It will give Fraser/Mises/Hayek acolytes conniptions! Delightful!

          • Funny things. Those who follow Hayek, produce wealth.
            Those who worship government produce only death.

        • Ah yes, the whine of the dependent socialist.
          Nothing good happens without government direction.

          Reality is too complex to predict, that’s why market intervention by government always fails.
          The market is unpredictable, and that is it’s strength.

          • We can’t just trust the unenlightened proles with unsupervised economic freedom. Why, they might make the *gasp* WRONG choices! 😮

            (The criteria for wrongness being anything the Enlightened don’t like. Remember kids, choice is sacrosanct, but don’t you dare make the WRONG ones lest your Betters chastise you.)

    • odd thing is EV are ‘dinosaur ‘ they even pre-date ICE , and the problems they had at the start ,and why they where overtaken, are virtual the same they have now.

    • Fascinating how the fault is with others for talking about the bad news.
      Not with Musk for generating the bad news in the first place.

    • “there is a lot of money going into anti-Musk stories.”

      Huh? How? Authors on the Seeking Alpha site get $100 IIRC plus a penny per view, which adds up to another $100, maybe. Journalists at business publications like the WSJ are paid a straight salary. The leaker to Business Insider last week didn’t get anything.

  7. Who Will Become the First Master Builder of Clean Energy?

    By Steve Heins, The Word Merchant

    Many have probably heard a lot about Tesla lately, including the latest dust up with the “Autopilot” accidents. Beneath the headlines, the recently announced Tesla and Solar City merger will be an interesting experiment: Can massive government spending stimulate its own economy, without the usual worry about return on investment or real market demand. Stated differently, can the public sector make “better” and more clean energy choices than the private sector?u

    First, with so many phrases being bandied about by the energy and environmental communities like “sustainable,” “clean,” “renewable,” and “environmentally friendly,” a broader meaning is required: “Clean energy” is energy efficiency, solar, wind, large scale battery storage, new gas/natural gas pipelines, new state of the art transmission lines, geothermal, hydro, improved and cleaner coal power plants, wave, new or updated nuclear power plants, and new natural gas power plants. They are all a part of a global greenhouse gas emission reduction strategy that at a minimum doesn’t damage the 3 billion people living in poverty, and 1.6 billion people still living without clean water, reliable electricity and inadequate telecommunications.

    A necessary measuring stick is that all “clean energy” must share the ability to be measured and verified over time. Also, instead of the many imperfections of the cap and trade platforms like the European Union’s Emission Trading Scheme (and its ilk) and the carbon tax, the plan should be all inclusive. Renewables would not be treated as the only tradable emission credit, voluntary or otherwise. This notion reflects a sense that a 100 % renewables world isn’t a sacred goal nor is it even desirable.”
    Frankly, when it comes to global economic development, the political class has proven, at their best, that they are enormously vulnerable to the Chinese menu of human frailties. Conversely, the private sector corrects its own historical mistakes, if only for economic survival.

    Even the most recent example of a successful federal program, the Internet itself, only became commercialized and successful, after the heavy-handed regulation by the federal government was supplanted with technologies developed in the private sector. The TCP/IP protocol was established in 1983, and the invention of the browser by Marc Andreesen in 1993. Unlike the inevitable ossification of any large government entity, the private sector has the ‘machinery for change”, as Leonard Cohen put it.
    One could argue, as the Wall Street Journal does, that Telsa and Solar City are both taxpayer subsidized companies. In fact, neither company has returned its first dollar of profit.

    Essentially, the public sector, including well-funded politically active environmental groups, have decided that the solar industries, coal capture, electric cars, and large scale storage batteries are some of the best investments for the future of energy, economic development and environmentalism. “Tesla customers can drive clean cars and they can use our battery packs to help consume energy more efficiently,” as stated in a recent Tesla blog, “but they still need access to the most sustainable energy source that’s available: the sun.”

    Lost in Tesla’s quote is the fact that the solar industry, coal capture or battery storage business cannot yet be defined as a “clean energy” sources, at least until they can prove they have the profitability and scalability to create the enormous amount of capital necessary for the global infrastructural investments, and all without the kindness of governmental assistance.

    Currently, the public sector seems awash in money for renewables, studies and reports dedicated to the environmental community by the environmental and energy agencies. In addition, there is large amount of money that is being donated by individuals and foundations to environmental organization, which receive public or private funding.

    At a minimum, there must be full disclosure of all public sector funding, when these funds and grants are received and expended on these environmental and economic debates. In a world flooded with funding biases and dubious economic claims, material facts help Wall Street and global investors keep the world in economic perspective no matter what is being said in public about energy and the environment.

    After the failures of Solyndra, SunEdison, FutureGen in Illinois, the Kemper Project of Mississippi, Telsa and Elon Musk must grow from being great marketers to becoming a master builders of energy sustainability. If Telsa fails, they certainly will do irreparable harm to the credibility of federalism, renewables, and clean energy.
    ####

    • YOUR SELF DESCRIPTION : “By Steve Heins, The Word Merchant”
      YOUR OWN WORDS : “Tesla customers …” “If Telsa fails , ”
      “The Word Merchant”……obviously not fussy about the quality then ?
      I guess it must rely on quantity ?
      I have read and re-read your comment and I still can’t work out WHAT IT IS
      THAT YOU ARE TRYING TO SAY .
      That “clean energy” is the future energy source and the way to go ?.,
      QUOTES:
      “but they still need access to the most sustainable energy source that’s available: the sun.”
      ” This notion reflects a sense that a 100 % renewables world isn’t a sacred goal nor is it even desirable.”
      ” If Telsa fails, they certainly will do irreparable harm to the credibility of federalism, renewables, and clean energy.”
      How the heck does “federalism” get involved ?????
      Surely you mean UNWARRANTED SUBSIDY HANDOUTS by government !
      SORRY….For A WORD MERCHANT you sure shovel a lot of…………..it !
      I suspect that the word Heins is a derivation from the word heinous !

    • Irony totally missing from the BBC’s report I heard. As with so much in the climate wars, you cannot make this stuff up.

  8. When is the US companies regulator going to look into these transactions and act on behalf of all shareholders not just Elon Musk?

  9. Perhaps a Clinton victory is what Elon Musk had in mind when he bought out Solar City, and signed binding deals to build those extravagant Gigafactories.

    If he had that in mind it was a good business gamble. After all, he is part of the globalist elite, and no doubt knows the lengths to which the swamp dwellers will act so as to secure a Clinton victory.

    If he had had informal discussions with Clinton’s team, and was assured that his company would be a preferential supplier, then it was an even better business gamble.

    Can you truly knock someone for their insider connections and dealings? It is well known that what is important in life, is who you know, not what you know, and as a subsidy farmer Musk must know a lot of the right people.

    More to the point, presently there is an article on Jo Nova’s site suggesting that all the installed solar in Australiea, has reduced CO2 emissions by just 1%. It is that effective!!!

    I recall a few years ago (I think 2015), there was a study conducted by Stanford University that looked at solar installations worldwide and which concluded that as at the date of the study when taking into account the CO2 used in the manufacture/erection of the solar installations, no CO2 emissions had at all been saved when compared to the amount of power that would have been generated had fossil fuels been used as the generating medium.

    • Really dumb deal with no escape clause? Bad business. He needs to read Trump’s book, or rather I think he has. See How 9 “Art of the Deal” quotes explain the Trump presidency over at axios . Only problem – Elon is not Donald.

      • One rarely gets something for nothing (although subsidy farmers are certainly dining out on a free lunch paid for by the tax payers).

        If by an escape clause you mean that the purchase was conditional on a Clinton victory, then presumably the sellers would have demanded a higher purchase price for the company, since the uncertain element would have been removed from the equation and the company would be more valuable if enacted Government policy was for the installation of 500 million solar panels.

        The gamble, that appeared to be a sure bet, was made on the basis of ‘insider’ knowledge as being part of the swamp, and the swamp looking after their own.

        Obviously we do not know what was in his mind, but it does not necessarily look as if the decision was a bad decision. It may be that he just got caught out by underestimating the Trump wave, and underestimating the power of the swamp to fix and carry the election.

        If you remember the DOW futures, after Trump won, it was down by about 800 points, but when it opened, it was down about 200 points but very quickly within minutes was in positive territory.

        A lot of people won or lost a lot of money upon decisions/positions taken in the immediate run up to the election, positioning, following the election, with respect to futures, and dealing in the Far Eastern markets that were open when the news came in of Trumps victory. There was some 6 to 8 hours of madness, before sanity broke out.

        • So a gamble based on MSM polls – could’nt happen to a nicer guy. Musk should sue WaPo, CNN, NYT for the losses. The others too. Makes Mad Dog Madoff look sane.
          It just had to happen this way. And actually sanity is still out to lunch. There is an implosion worse than 2008 rumbling (hint – watch Deutsche Bank).

  10. Tesla best product has always been himself , if that gets stale with the money men , he is deep in it.

    • Convince people you can eat coal and pass diamonds, and always flush before they can look in the toilet.

      SOP for a smooth talker like Musk. But he can’t keep the skeptics out of the bathroom forever.

  11. The downfall of Eloon Gantry is going to be quite entertaining. Time to put Robbie Mueller to work investigating him, make that scumbag do something useful for once in his life.

    • ““What we’re doing is targeting a peak speed of 1,000 km per hour, which is roughly 700 miles an hour.””

      ..N.U.T.S. !

      • targetting is targetting not doing, you can have any target you like. Doing actual involves doing real things.

        • Bingo!

          It’s like when companies pledge to give money for this or that…show me the bank statement of the cleared check 🙂

  12. Tesla was never an automotive company, it sells Panasonic laptop batteries in a variety of packages, some have wheels, none have any value outside the cult. How come the guy who invented credit card’s didn’t take a run at automobiles, they are far more significant than PayPal.

  13. I have never criticized this website, ever, but today is different. I am up, it is 8 AM. I sit at my desk, out to my right through my sliding glass doors and past my lanai is my lush, tropical back yard. Sun rays sparkling through the variety of leaves and plants. Greener abounds, flowers in bloom, such a peaceful setting I wake up to every morning. As usual, I get my cup of coffee and go to this site. But what is staring me in the face? The wicked witch of the west, with her goofy, I still don’t have a clue look. It will take me the rest of the morning to recover. Thank you very much.

  14. A $20,000 Tesla battery is quite remarkable. Over the lifetime of the battery it can store as much energy in total as $20,000 worth of gasoline.

    Unfortunately it will take another $20,000 worth of electricity to charge the battery but so long as cities provide free charging stations everything should be fine.

    • Your first paragraph is very optimistic. And your second paragraph is 30% too low in cost if based on home charging.

      I assume your reference to “a $20,000 Tesla battery” means Tesla’s 100 kWh battery pack, the largest they currently manufacturer for vehicles.

      A gallon of gas has the energy equivalent of 33.4 kWh of electrical energy* (ref: https://en.wikipedia.org/wiki/Gasoline_gallon_equivalent ). So, at the current US average cost of $2.90 for a gallon of regular gasoline, $20,000 would buy about 6,900 gallons. This is then equivalent to the Tesla battery storing and then discharging the equivalent of 230,350 kWh of electricity. In turn, this means the 100 kWh Tesla battery would have to go through 2,900 cycles of 20%-100%-20% charge-discharge.

      One credible source (https://cleantechnica.com/2016/05/31/battery-lifetime-long-can-electric-vehicle-batteries-last/ ) puts the usable life of a lithium ion battery pack (the technology Tesla employs) at 2,200 cycles to a 80% depth-of-discharge. This is about 75% of the number of cycles that were calculated to be needed in the previous paragraph.

      US residential customers currently pay about $0.13 per kWh for electricity, so the current cost for the 230,353 kWh passing through the battery over its lifetime is closer to $30,000 if it all comes from home charging.

      *Keep in mind, however, that not all of that gasoline energy equivalent goes into moving an ICE vehicle . . . only some 20-30% does, so gasoline is not as efficient for powering an ICE car as is battery-stored electrical energy in powering an EV.

      • So how efficient is the battery charge-discharge-electric motor loop? And I’m not being sarcastic, does anyone know? Are we still in the sample-size-insufficient-to-produce-statistical-relevance zone?

      • Don’t forget to include the transmission losses in that electric power delivery. Changes the numbers a bit.

  15. Perhaps some better marketing investments other than vehicles that explode on impact and a solar industry with a litany of bankruptcies might be wise. Maybe lean hogs futures?

  16. Has Trey Gowdy or Nunnes checked share positions of Mueller, Page, Strzok, Wray, Halper, Comey, Rosenstein?

  17. Musk was not the only person to bet on Hillary Clinton becoming president. Consider the worthlessness of the favors owed contributors to the Clinton Foundation!

    • Tesla has financed the construction of its new models with down payments from customers. Now that the stars tell us when the models will be delivered to the global market, Tesla would have to repay the down payments. But it can not, because, it is close to bankruptcy. I think we will see a MUSK bankruptcy over Tesla in the next few months and SolarCity is not far off. However, both will not itch Musk big. The shitty is the buyer who gets from the bankruptcy estate maybe 100 euros, Musk’s private assets, which he has brought over the years on the side, remains untouched. However, my compassion is limited, a financial Nasenstüber does some cloud cuckoo-well.

  18. If I was Elon Musk, I’d watch my back. Clinton’s mistakes have a history of sudden death!

    • 104/5000

      Musk should first and foremost watch the rear traffic if he wants to cross the road.

    • And that is the incarnation of the welfare state. Without unlimited immigration, going on for ever more, it will collapse under its own weight.

  19. Tesla, as I understand it, is only selling their solar shingle panels. These function as both a roof and an array of solar units. That’s actually a much better way to go than solar panels, whose lifespan can not match the shingles, leading to the needed to uninstall the panels, reshingle the roof, and then reinstall the panels. Since a panel installation’s labor costs about half of the price
    of the whole system, that would get downright expensive. Howevere, the prices I saw for Tesla’s shingle solar collectors was quite high – up to $70,000 , depending. Which was justified by claiming that the shingles would somehow save enough electricity over 30 odd years , coupled with a rather stupendous $20,000 subsidy,to equal the installation costs. No mention of inverter costs. Tough sell, I’d say.

    • Even better for Musk. From the New York Times. Salvation is on:
      “By Ivan Penn
      May 9, 2018

      347
      SACRAMENTO — Long a leader and trendsetter in its clean-energy goals, California took a giant step on Wednesday, becoming the first state to require all new homes to have solar power.

      The new requirement, to take effect in two years, brings solar power into the mainstream in a way it has never been until now. It will add thousands of dollars to the cost of home when a shortage of affordable housing is one of California’s most pressing issues.

      That made the relative ease of its approval — in a unanimous vote by the five-member California Energy Commission before a standing-room crowd, with little debate — all the more remarkable.

      State officials and clean-energy advocates say the extra cost to home buyers will be more than made up in lower energy bills. That prospect has won over even the construction industry, which has embraced solar capability as a selling point.”

      California coming to the rescue.

      • A law that indiscriminately requires ALL new homes to have solar power has the following unintended consequences:
        — ensures that building contractors will install the cheapest possible solar panels and associated electrical control and inverter components, thereby saddling future home buyers with poor quality, less reliable technology; that is, it’s no skin off the builder’s nose if the solar installation completely degrades and fails after 7 years if the builder only has to offer a 5-year warranty
        — ensures that certain homes will be even more solar-PV inefficient due to shading from nearby trees and/or nearby buildings, and for PV installations on flat roof surfaces that are oriented north-south (less inefficient over a year) versus east-west (more efficient over a year)
        — ensures that certain homeowners will have additional maintenance hours/costs (e.g., in semi-arid areas with blowing dust or in areas with large leaf falls in autumn, homeowners will need to periodically clean the solar PV panels) . . . and what about the mountain areas of California that have many months of snowfall during the year?
        — ensures that neighbors will occasionally have unwelcome sun glinting into their widows from reflections off the solar roof panels on adjacent/nearby buildings
        — ensures that the homeowner’s insurance rates will increase significantly above that of an equivalent house without rooftop PV solar (due to extra liability for firefighters, roof repairment, house painters, additional danger of electrical fire, etc.)
        — possible increase in probability of lighting strike(s) due to running a conductive metal ground path to rooftop height . . . that is, solar panels may prove to be effective lightning rods
        — ensures that certain homeowners who do a life cycle cost estimate for their specific solar PV installation and site location and find they’ll only continue to lose more money over time will act accordingly and have said solar installation stripped off their home as soon as possible (that assuming the same police state doesn’t pass another law that would make that a felony offense).

    • “Tesla, as I understand it, is only selling their solar shingle panels.”

      They’re being made, in small numbers, at Gigafactory 2 in Buffalo, which was financed by NY State. I’ve read that Tesla must pay NY $500 million per year for the ten years, starting soon. That’ll be quite a weight on its finances unless sales pick up radically.

  20. If it smells like crony capitalism, looks like crony capitalism, it must be crony capitalism..

  21. The Giga factories are Lithium battery factories Musk needs to make the EV sales figures he has always talked about. The batteries are needed mainly for the EVs. Some may go to Power Wall production, but that is small niche market that serves the wealthy, evenmore so than a Model 3 buyer. If you are wealthy, you are not going to buy a proletarian Model 3, you are going for a high-end Model X or Model S.

    The Power Wall is hugely expensive, and in the expected service life of batteries, there is no way an ROI becomes positive wherever cheaper grid power is available 24/7.

    So it is only a wealthy person wanting to express some Green Virtue that will fork over the huge cash to buy and install this house junk that will be obsolete in 10 years.

  22. I keep telling people: Three Card Monte.

    Musk has been playing a large shell game, adding shells as necessary. When will the merry-go-round end?

    • If the “regulator” is going to allow that, why even have one in the first place?

      • One constant with government regulators, they are ALWAYS captured by the industry being regulated eventually.

    • As long as Musk can smooth talk the suckers into believing that the ball is still under one of them.

    • Simon,
      I don’t know about Eric.
      But I would love to be able to afford a Tesla.
      And an elephant.
      And a half-mile-long marble-and-amethyst drive up to me front door.

      I could then buy something useful . . . .

      Auto

      • Hey, a well-trained elephant can be useful. They’re still used in many parts of India for heavy lifting and as general draft animals. 🙂

  23. I’ve been following Bloomberg’s Tesla production tracker the last few months. It is almost always 2500-3000 cars made one week than 1500 the next week. Can someone explain why this is happening?

    • Because they run all their lines full blast the first week, then have to shut them all down for maintenance for the first few days of the next? Because they skipped the part of the automaking manual about staggering useage schedules so that only one or two lines are down at any one time, to keep production rates constant? Because they are Silicon Valley know-it-alls who’ve never made cars before? 🙂

    • Bloomberg mostly bases its tracker on VIN numbers reported by Tesla. (And also on numbers spotted and photographed in the wild.) Tesla reserves these from the government erratically, in large bunches, anticipating several weeks of production. It hasn’t reserved a batch in several weeks.

  24. The deal smelled bad at the time but then solar companies including Solyndra managed to hang on long enough to bomb others later. Normal investors and Wall Street know better but political deals and Musk are different.

  25. “another financial disaster may be unfolding at Tesla’s subsidiary Solar City.” Without government “Crony Capitalism” to save bond holders it was bound to fail. From what I understand Tesla receives 12% of their profit (gross or net?) from Co2 cap and trade, which is nothing more than a hidden tax, and this “Dude” squanders tax payers money.

    • OCW …. did you mean to say earnings? Tesla is never profitable on an annual basis and has only ever had one or two profitable quarters when a lot of the government cheques showed up.

  26. It won’t mean anything. Tesla’s stock price is operating under Trump Logic. Things that would normally be game-changers and company-killers are nothing due to the following and charisma of the leader, and nothing can truly shake this up.

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