this post was submitted on 10 Dec 2023

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[Businessinsider] Elon Musk's luck has finally run out (www.businessinsider.com)

submitted 1 year ago by dragontamer to c/realtesla

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Clickbait title, I apologize but its Rule5 to keep the original titles.

This article performs a business analysis on Elon Musk, and where the money seems to have been going with regards to Tesla, SpaceX, and of course Twitter this year. With $1.3+ Billion interest payments coming up, Twitter is likely low on cash soon.

It seems premature to call Elon out (ie: the clickbait title is too clickbait), but this article makes a good case why Elon's financial situation across these companies is in trouble.

With regards to Tesla itself: Cybertruck is a dud that is only there to hype the stock price at this juncture. With only 10 deliveries from the delivery event, "2024" for the start of the limited production $80,000 model and an unknown "2025" date for the cheaper mass production model, there's no hope for Cybertruck to be financially relevant any time soon.

With Rockets exploding at SpaceX, with Tesla ramping up production (ie: $$$$$$ spent), and Twitter losing $Billions/year on interest alone (let alone all the other costs going on), the article suggests that a Twitter bankruptcy is in Elon's best interest to keep things moving.

An interesting argument, we will see how it plays out over the next year.

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[–] [email protected] 10 points 1 year ago* (last edited 1 year ago) (2 children)

While the Starship program has been progressing far more slowly than anticipated (no surprise here, of course) it's basically on track and if they manage to create a fully reusable heavy lift rocket, that will be a huge leap for all of humanity. Those exploding rockets are very much part of the plan and represent an approach to developing new technology that is worth emulating.

As for Tesla, yeah, the cybertruck is probably a dud. But that's far from disastrous for them. Right now the EV market is in a bit of a tough spot, because competition is ramping up and demand can be fickle. But this is also the time when future market share is decided and Tesla is in a very good position to take a huge slice of the pie.

So yeah, the guy's a huge asshole but writing him off is very premature.

[–] [email protected] 13 points 1 year ago (3 children)

Demand is fickle because supply consists of 80k dollar luxury barges. Think of all the engineering capital wasted on that cyber truck vanity project that could have been poured into a decent mass market vehicle.

[–] [email protected] 2 points 1 year ago (1 children)

They make Toyota-ish margins on ~$53k asp, roughly $10k more than Toyota. Just not a lot of meat on the bone for an EV…

[–] [email protected] 3 points 1 year ago

Well they can have some money for selling a reasonably priced vehicle to sombody or they can have no money at all for not selling an overpriced vehicle to anyone.

[–] [email protected] 1 points 1 year ago (1 children)

What I meant is that all manufacturers are facing demand issues right now.

[–] AA5B 1 points 1 year ago

I read one article trying to put this in perspective, stated EVs growth was 25% over the last year, the fastest growing car segment. However manufacturers had planned for 100% growth. Who does that? Also different brands had different demand, and finished that it might be affected by who developed compelling h vehicles and effectively marketed them, with dealers that sell them. There’s way too many problems with this picture to simplify it to “there’s no demand”

[–] AA5B 1 points 1 year ago* (last edited 1 year ago) (1 children)

While I agree with the general sentiment, y’all have to look at the actual prices - that price is for Tesla’s high end car. Most people don’t buy those.

I see below a comment on $53k, but that is for the middle trim Model Y. There’s a lower trim, and the Model 3 is cheaper. And other brands are cheaper still

But yeah, this is the point of government incentives: to goose the market to try to get higher volume and lower cost more quickly. In my state, you can get $11k total incentive, plus low income can get an incentive to help wire in a charger. The net result is similar to many gas powered vehicles, except I paid $17 to refuel for an entire month

[–] [email protected] 2 points 1 year ago (1 children)

So the low trim is 40k, even 30k is far too much for normal people. Don't get me wrong on this though I desperately want an electric car. I just can't justify it right now, even used.

[–] AA5B 1 points 1 year ago

For sure, price is still a problem, but it’s only half what your comment said. It’s closer than many people think and it’s getting there

[–] dragontamer 9 points 1 year ago* (last edited 1 year ago) (1 children)

it’s basically on track

Certainly not on track to supporting the NASA return to the moon 2025 program.

Most Musk fans are already heading bets and saying the 2025 moon plan was unrealistic. But at some point the public will catch onto Elon Musk just being a lying asshole without any tech.

Then again, it is said that Nickola Tesla himself had 10+ years funded on bullshit energy weapons research in the early 1900s. So a big cushy 10+ or even 20+ year bullshit project isn't a big anomaly of US history or bullshitting.

Tesla kept to himself and didn't piss off anyone though. Elon Musk derangedly doubles down every year on his decisions, win or lose. So eventually, Elon will get burned.

[–] [email protected] 9 points 1 year ago (1 children)

The entire Artemis program is on very shaky foundations in funding, technology and timelines. SpaceX is only part of the picture here.

[–] dragontamer 2 points 1 year ago* (last edited 1 year ago)

My overall point is that "promise the impossible" and then "fail but take people's money for 10 years" is a fucking stupid way to run our society.

There's a bit of fault on NASA here. But everything Musk does is of this pattern. Battery swap? Tesla humanoid robots? Dojo? Boring Company?

Starship is just a very small piece of this problem, but its yet another example of this pattern. I dunno when people will recognize how stupid this all is. You should only fund project that have a realistic chance, and its the visionary's job to convince you that every step is realistic. And yes, its the Royal "you", a lot of the funding here is from the Stock Market and driven by individuals throwing money at Elon Musk.

There are non-monetary costs associated with Starship. Boca Chica was an animal sanctuary full of endangered species (actually, it still is an animal sanctuary, just no one gives a shit anymore), it was only supposed to be a test center for smaller rockets (less noise / less damage when smaller rockets get launched). We're well into scope creep and real environmental damage is occurring now and is well documented. The noise complaints from the human neighbors have gone up as the rockets get louder and louder, they didn't even properly buy out the nearby houses because all the calculations were done on far smaller / less noisy rockets.

[–] [email protected] 8 points 1 year ago

It's an interesting situation. Each of the ventures are in very different places.

I think that Space X is too big to fail at this point. It's a key partner for NASA and a defense contractor with a monopoly on propulsive landing. I'm not a finance guy, so I don't know what happens if the company gets overburdened with debt, but I think it's fundamentally in a good position even if Musk isn't.

Tesla is complicated. They employ a lot of folks, and a lot of powerful people have money in the company. Again, I don't know the mechanics here, but based on my understanding of centers of power, I think that if Musk starts threatening the existence of the company they'll cut him and keep going. They've got international factories, supply chain relationships, a distribution network, a brand, and so on, so I could see them falling hard, but I think there are enough people who have an interest in the company that it should be about be able to survive whatever happens to Musk.

Twitter would be in a similar position, but it's taken such a hit, and it's strongest asset is the user base, which is a fragile arrangement. It'll survive until users no longer feel like it's where everyone is. If that happens, I think all the money in the world won't save it from becoming MySpace.

[–] [email protected] 8 points 1 year ago (2 children)

You misspelt Xitter. And I'd rather see Musk bankrupt.

[–] dragontamer 7 points 1 year ago* (last edited 1 year ago) (1 children)

Article points out that at least 63% of Tesla stock that Elon owns is tied up in loan agreements. That means that Tesla stock and Elon are tied together.

I didn't realize that much of Tesla stock under Elon has been pledged on various loans. If this is true, then Elon may not be able to afford to save Twitter going bankrupt. Which... is the best we can hope for in the near future.

Tesla itself is a public company whose shareprice is determined by the public (aka: Musk supporters) who buy his Tesla stock. I don't know when those shares will start declining in value, but public companies with a reality-distortion-field like this are strong due to the large public base behind them. A declining stock price is "propped up" by the faithful, who see a declining stock price as a bargain rather than an actual problem.

There's a chance that a Twitter bankruptcy causes the Musk-faithful to sell some Tesla stock and therefore decline Tesla's price / Elon's fortune though. I don't see any cascading set of failures leading to a Elon Musk bankruptcy though.

I think there's been theories that Tesla itself has been lying about depreciation curves of its tooling and other such financial trickery to make it appear that they're profitable. But this is all idle speculation (albeit: with more basis behind it than the typical speculation. Tesla seems to have great difficulty keeping CFOs, suggesting that the financial beancounting type do NOT like what they see when they enter the job of running Tesla's finances). Such issues can go on for 10+ years undetected however (see Enron or Worldcom), so there's no short-term thing to hope for on this front even if it is true.

[–] MotoAsh 9 points 1 year ago

I mean, an audit would reveal pretty quickly who's fudging what numbers, but that would require the government to actually do its fucking job towards a large business.

[–] RestrictedAccount 7 points 1 year ago

It uses the Chinese pronunciation: shitter

[–] [email protected] 6 points 1 year ago

I’m in favor of (relatively) inexpensive commercial space flight, but I’m not crazy about it being dominated by megarich assholes. The way this guy has been acting, I won’t be that upset if Space X fails.

Of course, that will leave us with the other megarich asshole, but at least he doesn’t constantly mouth off.