Its our fault because we’re animals. We’re aggressive, we attack perceived weakness – we’re all ambitious, and sometimes civilized. And in our civilization we invented the quarterly report and the lobbyist. The first tool, public company governance, helps us keep the ships going straight in a large ocean of companies and numbers. The second tool, the influencer of our politicians, is a job as old as humans are – with one of our first stories involving the merits of eating forbidden fruits, and since the 1960s – funding public lies about climate change.
On Tuesday, August 7 2018 at 9:48 AM PST, Elon Musk tweeted:
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
About thirty minutes before this tweet, the Financial Times reported that Saudi Arabia’s sovereign wealth fund had taken a 5% position in the company. This caused share prices to spike from $342 to $358. Musk’s tweet caused a further jump before the SEC halted trading. Upon resumption of trading the stop jumped closer to $380.
In a letter released to employees, Musk stated:
- we are subject to wild swings in our stock price that can be a major distraction for everyone working at Tesla, all of whom are shareholders
- quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term
- there are large numbers of people who have the incentive to attack the company
Elon Musk has had enough of our shit, and I agree with his decision.
Very recently, Montana Skeptic – the Twitter-based Tesla short seller – was doxxed, and it just so happens that the fellow worked for an investment firm heavily into oil. Short sellers, like Montana, lost $1.3 billion in the minutes after Musk’s tweet. But they’re still up overall as they’ve managed to create a high amount of volatility in the market over the past years, and skilled traders make money off of that.
These short sellers are absolutely being complemented by right wing “think” tanks whose sole purpose in the electric car industry is to muddy the waters. Tens of millions of dollars are spent to create fake news. First, a paper is released, then a blogger picks it up, then the article is copied and pasted across many websites, and lastly, the politicians start to talk up the point.
This is not something pv magazine discovered. It’s old news, and groups like Energy and Policy Institute have documented it clearly. For the past two years, Massachusetts Attorney General Healey has been seeking to determine whether:
Exxon may have misled consumers and/or investors with respect to the impact of fossil fuels on climate change, and climate change-driven risks to Exxon’s business.
Let’s be frank. This fossil game is in its waning years. Saudi Arabia, the capital of global oil, has aggressive – nation changing – solar power ambitions, and as of yesterday, they’ve also got electric car ambitions with the hottest brand name on the planet. The UN showed that in 2017, more money was invested and more capacity was built for solar power than for coal, gas and nuclear combined. However, those with money and power are more than willing to extend this game – at the cost of human lives.
Musk has a vision that is clear.
And in case you’re worried that Musk will get soft without the refining pressure of the markets, I present evidence otherwise:
Good job Elon Musk, hope you enjoyed the fish.
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This is an incomplete account of what is happening at Tesla.
I have as much respect as anyone for what Tesla and Musk are doing, and I think there is a legitimate point to be made about how short sellers and fossil industry interests are trying to take down Musk. But I also think that there are legitimate concerns about the company, its lack of transparency, and inaccurate public statements.
I’ve been covering publicly traded companies in the solar space for eight years, and among the dozens of companies I have reported on Tesla is by far the least transparent. Never mind factory visits – I can’t even get them to tell me how many megawatts they have manufactured, a number which is consistently missing from their shareholder letters and which I have never found in quarterly reports.
Adding to that, the company has made a number of inaccurate statements for which there can be little defense. The “hundreds of solar roofs” is unfortunately in line with other statements, such as Musk’s declaration that they would “blend” Silevo and Panasonic products at the Gigafactory. This was simply a lie, as the subsequent takeover by Panasonic showed.
At the end of the day Musk wanted the funding available from public markets without the scrutiny of his company that comes with that. And that’s not how these things work, so like his Chinese colleagues he is taking his chips and going somewhere where he will have less scrutiny. Short sellers aside, that’s not necessarily a failure of public markets.
What Weaver is right about is that Tesla is a company that is changing the world and changing people’s perceptions about what is possible. But under such circumstances we still can’t lose site of nuance.
> I can’t even get them to tell me how many megawatts they have manufactured
They have stated its a challenge to manufacture. It’s an irrelevant number, they’re not selling the product. This argument reminds me of the Model 3 people looking for a car that is still being figured out. What they’re manufacturing with the solar roof today is more an R&D question, versus a relevant number that will generate any value.
> “blend” Silevo and Panasonic products at the Gigafactory
Business changes shit. Maybe the Silevo purchase didn’t pan out the way they wanted. Sometimes you make purchases that die. Do you think they bought the company so they could sideline? Think they threw the money away because they wanted to trick people? There is no evidence that this statement was a lie.
> Musk wanted the funding available from public markets without the scrutiny of his company that comes with that
This isn’t true. Musk is one of the most accessible CEOs on the planet. How many people take hints from tweets and then push them into their cars within a week? As noted above, the “scrutiny” that is in the marketplace is 50% funded by oil interests, and 25% by short sellers and VOX traders who are looking to make money off of their market manipulations. This isn’t scrutiny. This is a bastardization of free speech in the United States.
> like his Chinese colleagues
The Chinese colleagues had stock prices that were failing. Yingli was de-listed. That’s not hiding away, that’s recognizing that their business model doesn’t make sense in Western stock markets.
Also, per the megawatts issue: I have asked Tesla about not only the Solar Roof, but the volumes of HIT cells and modules that are being produced at the Buffalo gigafactory. All they will provide is future projections. This is not in line with other U.S. manufacturers. First Solar is transparent about their manufacturing volumes, SolarWorld has always provided numbers, and smaller companies like Mission Solar have as well. In my experience Tesla is an outlier in refusing to tell reporters how much volume they are producing, which interestingly enough does not apply to their cars.
Solar roof question, again, isn’t valid. Its an R&D project still.
Have you asked Panasonic what the HIT volume is? If they’ve not given you answers either, than there is something more here than just Tesla. There is business intelligence that the public isn’t privy to.
In terms of what they hope the volume to be they’ve stated it is 1 GW/year, and this has been stated many times in public statements. They’ve not yet broken down exactly what product is to be manufactured – but maybe they don’t know?
> blind apologists
The blind apoligists that you so slyly reference are me. And I’m the guy that said in his last coverage of the company that Model 3s were taking away from energy storage manufacturing, that the solar roof wouldn’t generate any real profits until – at the earliest – middle 2019, and that solar installations for 2018 would be the lowest total annual amount since 2014 – a plan that they explicitly stated was coming.
All I know, is that the two rockets landed on their own, that the Roadster, and Model S and Model X made the the automatovie world say holy shit, that the Model 3 sold more than all over mid-size luxury’ish cars in Q2.
I see things happening in the real world, and complexity and challenges in the business world – while the reality of global politics stabs with its ever present long knife.
Disagree with you boss.
Since we are delving into ancient history, imagine where we’d be if Thomas Edison and Henry Ford had had to deal with short-sellers in an instant “information” marketplace. Add in the media machinations of oil interests and ICE automakers made loose-boweled by Tesla’s determined success. Let them call Musk a spoilsport for going private, smart money is apparently unconvinced he will fail. Hooray for good old American grit and innovation!
…And who’s to say that Musk’s Tweet is not just another spout of his exaggerations / projections that is simply meant to stir up the media this week to keep his company relevant… It’s really hard to believe him any more.
That’s my take.
I was one of those early people who registered to make a downpayment on a Model 3 that fateful Thursday night, had my finger lingering near the “send” button, but didn’t push the button. Whew!! I’m glad I didn’t fall for his promises. He has proven me right on nearly every one of his exaggerated claims. I’m with Christian R. on our disappointment with Musk.
I’m not disappointed in Musk. I think he is doing amazing things, and expanding our ideas about what is possible – which we desperately need right now.
But I also think that Musk and Tesla are not interested in being transparent, at least about their solar business. That’s been frustrating as a reporter, and I think this points to one potential contributing reason for Musk wanting to take Tesla private – so that his team doesn’t have to answer so many questions.
Incidentally I see the same thing with Trina and other Chinese solar makers. They want the access to capital that being a publicly traded company on the NASDAQ brings, but they don’t want anyone looking too closely at the nuts and bolts of what they are doing.
For the record, I’ll state again that I think John Weaver and Musk are both correct in that short sellers and naysayers have been a distraction and something of a parasite on this dynamic company. I just don’t think that’s the whole story here.
“But I also think that Musk and Tesla are not interested in being transparent, at least about their solar business. That’s been frustrating as a reporter, and I think this points to one potential contributing reason for Musk wanting to take Tesla private – so that his team doesn’t have to answer so many questions.”
— Your point is well-taken, and Musk has said as much. The panting media and a corrosive sector of the investment community demand operating data and production access that they feel entitle to, and which is needed to gin up daily articles and shorting profit opportunities that require a celebrity company. Their (your) livelihood depends upon dissecting, interpreting, and monetizing the gathered data. If Tesla goes private, some other lucky stock company will enjoy that attention, and Musk can make his sausage in private. He simply doesn’t want Tesla to be another of the quarter-focused, publicly-traded corpses that Wall Street produces in such large numbers.
That’s a fair assessment. In my coverage of publicly traded clean energy companies I have definitely seen how quarterly profits get in the way of larger vision – most notably at NRG, whose shareholders essentially vetoed David Crane’s clean energy plans.
I’m not saying public companies are the be-all to end-all. All I’m saying is that by their nature they come with scrutiny, and some of that is legitimate.
Thoughts on this now that Elon has canceled the privatization plans?
If it means the board turned down a bid of $420/share then it says a lot about confidence in the long play. Someone else said main reason Elon can’t do better in private market is that Tesla has already attracted those with a different reason for investment – no need to involve Saudis.
It’s good to see the board decline an Elon Musk request.
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