I have followed Elon Musk and Tesla for years. He has been touted as a genius, which I’m sure he is. I just don’t know what he is genius about – making cars or spending other people’s money.
He has been given $10 billion in federal incentives because of his electric car, making promises. President Barack Obama and the “Greenies” loved this guy from the very start of his ideas for an electric car company.
He blew through the $10 billion (your money), and holds another $10 billion in debt (lenders) and has never turned a profit. The company was valued at $56 billion recently by stock market experts, without any profit! This is how bankruptcy happens – a big bubble of debt, huge expectations, no cash or assets to cover the debt, then bankruptcy.
When he started eight years ago, his electric car idea was heralded as the future of the car industry. After years of trying to get the car produced, the trickling numbers of completed cars are way under the projected manufacturing rate. Figures released lately show delivering 975 cars per week. This is well short of the target of 2,500 units per week predicted by the end of the quarter.
Recently, their stock has been downgraded to areas deep in the junkiest of junk-bond area! The recent firings of employees, large negative cash flow, and the pending maturities of bonds to be paid are not predicting a good outcome. Recently, the stock has fallen to its lowest level in a year, down over 25% in the past month alone.
To add on to the mounting pressures, established automakers Volkswagen, Porsche, BMW, Mercedes-Benz, and others are now entering the electric car market, finally giving Tesla stiff competition in the marketplace.
Unfortunately for investors, it has not done well in the marketplace nor on the public highway with a crash in a fatal accident in a Tesla Model X sport utility vehicle, the second in two years.
Many car insiders and investment people don’t see Tesla lasting to the end of the summer due to the hemorrhaging of cash. Many think bankruptcy is the only avenue for the company not able to meet its obligations.
And who is the largest investor in this boondoggle? Look in the mirror! Yup, another wonderful gift from the Obama administration to Mr. Musk underwritten by the American taxpayer. Grab your ankles again – the gift that keeps on giving!
This is the reason government should never subsidize or incentivize industry – ever.
The rotting of America from within continues…
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