Tag: elon musk

The big short reloaded!

On By ChristofferIn News, Opinion1 Comment

Oh how quickly things can change! Three months ago, most of us would agree that we were in a very different place, and nowhere more so than at Tesla, who at the time was valued at more than all other car companies in the world combined. Yes, you read that right, as incredible as it may sound. And even after it’s lost close to 50% of its value this year (with the stock trading at around USD 240 as I write this), that still values the company at around USD 800bn, about three times the value of Toyota, or 12 times the valuation of GM or Mercedes-Benz. Perhaps most relevant, it means that Tesla is currently valued eight times higher than BYD, the leading Chinese EV brand that has now surpassed it in number of cars sold.

The BYD Seal – a superior competitor to Tesla’s Model Y

The first quarter of 2025 was not kind to Tesla. Not only has the stock price imploded, the company has also seen sales dip heavily in several key markets, with a corresponding loss of market share. And nowhere more so than in China, the most important market of them all and of course, the home market of BYD and other Chinese EV’s. During the first quarter of the year, Tesla’s Chinese deliveries were down 13% as compared to 2024, with its EV market share dropping to 7%, down from 12% a year earlier.

Q1 2025 was also the first quarter when BYD delivered more pure EV’s than Tesla (BYD sells plug-in hybrids as well). In 2024, the two companies sold almost exactly as many EV’s at 1.75m each, but this year, BYD is projected to double that number, and given the brand isn’t present at all in the US and so far on a very limited scale in Europe, most of these will be sold in China and across Asia. And yet, even at a stock price of USD 240, Tesla’s valuation is eight times higher than that of BYD.

Tesla’s stock price evolution year-to-date. Not what many expected.

If it was just to prove that Tesla’s valuation makes no sense, we could probably stop right here. However, there’s a lot more to say and as we’ll see, it only gets worse from here. Tesla has no doubt been instrumental in making EV’s part of today’s car landscape, but I would argue they’ve now fallen so far behind Chinese brands such as BYD that their market share, and thereby stock price, will only keep on falling. I would even say that it’s doubtful whether Tesla will continue to build cars in the coming years, and if that’s even what they aspire to.

To understand why that is, let’s start with the line-up. Models S and X have now been on the market for 13 years, with the Model 3 not too far behind at nine years. That’s an eternity in modern car cycle terms. Their battery packs have seen continuous improvements, but both the exterior and interior have seen nothing more than a quite mild face-lift over the whole period. The Model Y, the best-selling car in the world in 2024 (obviously quite an achievement!), has recently seen a similar cosmetic update, but it’s six years old by now. We’ll never see the Cybertruck in Europe (thank God for that…) just as little as any of us will probably ever see the roadster or the sub-$25.000 car Elon has been promising for years. That means that Tesla has an older model line-up than all the other car brands, the valuation of which it exceeds by up to 12 times.

The Tesla Roadster is suppose to come out next year. I wouldn’t bet on it…

Next, there’s the quality which was terrible in the early years but has gotten better such as to be more or less ok today. As a comparison however, I was in a Polestar store the other day and checked out the Polestar 4, the SUV coupe without a rear window. Polestar may market themselves as Swedish, but they’re owned by Chinese Geely and all models are these days built in China. Except for a bit of Nordic interior design, it’s therefore a Chinese car. In terms of interior quality however, it’s on another planet compared to not only Tesla, but also to any EV coming out of Germany these days (and even worse, of any ICE car the likes of Audi, BMW and Mercedes have in their current lineup).

Beautiful materials, plush seats, no hard plastics anywhere, lots of space and all the features you could wish for. Everything is solid and well put together and as I’m lead to believe, Polestar is hereby not the exception, but rather quite representative of modern Chinese EV’s. They even drive well, in the not very passionate but comfortable way EV’s do. Given Tesla’s European charging network is now open to other brands as well, if I were in the market for an EV, I wouldn’t hesitate a second between a Polestar 4 and a Tesla Model S. I’d actually be prepared to pay a premium for the former, but I wouldn’t have to, given it’s 20% cheaper.

The Polestar 4 – one of the nicest car interiors I’ve ever seen, any category.

Then there’s the whole self-driving thing. Basically since the first Model S came out, buyers have been given the option to add thousands of dollars to the price by opting for self-driving packages that were set to become reality “soon”. Well, in over 10 years, “soon” hasn’t happened yet, which makes you think that at least in Europe, some kind of consumer protection body should step in. How can you be allowed to sell options for functions that never become reality? And for each passing day, Connectivity Day is becoming less likely to happen, quite simply because Tesla’s technology isn’t even close to where it needs to be.

If you’ve been to Austin, San Francisco or a few other American cities in the last years, you will have seen or perhaps been in a Waymo driverless taxi. Based on the Jaguar I-Pace, they transport people around the cities like a normal taxi without any issues. Given they’ve been doing so for some years now, it makes you wonder why they haven’t spread to more places, which may have something to do with their price tag of over USD 250.000 per car. The price is explained by the fact that a Waymo is equipped with not only cameras, but also a radar system and Lidar (Light Detection and Ranging), all necessary for self-driving.

A Waymo in Frisco. USD 250.000 cars usually look differently…

Tesla doesn’t have that. In fact, Tesla is the only brand promoting self-driving on a large scale which relies completely on cameras. That’s of course because it’s a cheaper technology, but it brings the slight disadvantage that cameras struggle to see some things that a radar or Lidar system pick up. Driving in the dark is one of those things you would need to be really stu…. brave to do in a self-driving Tesla. Youtube also has illustrations of someone putting up a picture looking like the continuation of the road at some distance in front of a self-driving car. The Waymos and other radar cars all pick up that it’s not the continuation of the road, and stop. Teslas just run through the picture. Trust me, with the current system and without major developments, no Tesla will ever be fully self-driving, whatever the regulation says, and whatever was promised at the time.

You’ll notice that at no point so far, I’ve mentioned Elon Musk’s politics. Doing so doesn’t improve things. This is not a political blog, so let’s just say that the position he’s assumed in the new US administration doesn’t sit well with his cult-like following, who now start putting stickers on their cars like the one below. No doubt this has also contributed to the falling sales numbers, as apparently, if you buy a Tesla, it’s important that the CEO shares your political positions. I guess I should call BMW then, to make sure the current CEO Oliver Zipse shares my beliefs?

The problem with cults…

More seriously, the problem is of course that if your sales were based on cult-like, non rational behaviour and the cult then disappears, you’re in trouble. In the case of Tesla, what remains is a heavily top-run business where the guy at the top is no longer fully committed to the company. At this point in time, given all the other issues the company is confronted with, that’s not a very good sign.

You’ll also notice than when Elon talks about his companies these days, it’s usually not so much about the cars as it is about AI robots, energy storing and space travel. Given the man is obviously quite talented and probably not as crazy as his once followers believe, I have no doubt he’s very aware of everything I’ve written above, but doesn’t really care, as he may see Tesla’s future elsewhere than in the car business. The problem however, is that no one outside of his head has an idea of what that business is, and thus how to value it.

Coming back to what we can measure, Tesla is a car company on a slippery slope that is likely to continue downwards. EV’s will not take over the world anytime soon but China will most probably take over most of the EV market, such is on one hand the quality of what they build and on the other the size of their domestic market, where various kinds of incentives go towards promoting EV’s.

BYD’s new factory is bigger than San Francisco. Elon, they’re coming for you!

Tesla’s home market is far smaller, and the wind has turned against it. They may get some protection from tariffs, but they don’t solve the fundamental issues of the company. And Elon would do well to remember the 70’s, when the US tried to protect Detroit from superior Japanese cars by imposing tariffs. It made Japanese cars more expensive but Americans still bought them, because they were better.

Then again, none of this matters if Tesla’s future isn’t in the car business. I don’t have more of an idea than anyone else of what goes on inside Elon’s head, but I’d say it’s more likely that Tesla focuses on other things than cars, rather than that they turn the numbers around and bring a new model line-up to market in the coming years.

Whatever the scenario, it remains that Tesla is hopelessly overvalued as a car company and the brand’s cult-like followers are now to a large extent gone. And if you’re in the market for an EV, you’d do well to look at a few options before signing a check for the 13-year old Model S. The Chinese are coming big time, and it will be interesting to see how things evolve in the coming years!

Closing out 2023…

On By ChristofferIn News, OpinionLeave a comment

It seems yet another year is coming to an end and at least if you ask me, it’s been one that’s passed quicker than most! I guess that may be a sign of our accelerating society, where everything seems to move at an ever increasing pace. Except for the adoptions of EV mobility that is, but let’s not get ahead of ourselves. As usual, in expectation of a hopefully good 2024, I’ve compiled a few paragraphs of stuff that we’ve seen, may see, or is just interesting to think about, following the first letters of the 12 months of the year. Enjoy the reading and the holidays!

January

The J for January this year is for Japan, not because of the exciting cars they bring to market (they don’t), but rather because they’ve become the last bastion of some kind of realistic thinking around future electric mobility, continuing to largely ignore full EV’s in favour of various types of hybrids, and with a number of projects also in e-fuels. It’s actually a rather simple calculation to see that if for all the reasons we know, your battery producing capacity is limited, then splitting what you have between several cars and complementing it with a combustion engine is far more efficient than building a small number of full EV’s. Let’s hope Japan can export its thinking to other countries in 2024 – but I wouldn’t hold my breath…

February

The February F is for Ferrari, and the fact that the Maranello company is doing better than ever before. Looking over the last 10 years, production numbers have more than doubled, the product range receives praise from motor journalists and is up to date. and had you bought the stock five years ago, you would have tripled your money. Not only that, if you were one of the lucky few to get your hands on a Purosangue, the most elegant SUV (kind of…) on the market, you could re-sell it for around twice what you bought it for – if you find one. There’s currently not a single one for sale in Germany, as an example. In two words already used when I wrote about the FF a few weeks ago: Forza Ferrari!

The first Purosangue I’ve seen in Zurich, as late as last week. Worth a fortune!

March

We’ll take the March M to mean money, since no month starts with an E, in which case I would have said Euros. Because it’s largely in Europe that money is getting increasingly scarce, and nowhere more so than in Germany, where the government is trying to find enough money to fill a small EUR 17bn budget hole that was “discovered” a few weeks ago. One of the measures taken is an immediate scrapping of the EUR 4.500 cash premium for buying an EV, and I’ll let you guess how that will affect already slowing sales numbers. Things are getting harsher, or let’s say less subsidized for EV’s in many other countries as well, so at least for now, the party looks to be over before it even started. Except for Tesla that is, more on that in May…

April

Before May though we have April with A for Alfa Romeo, that returned to full form five-six years ago with both the Giulia and Stelvio Quadrifoglio, a 500hp sedan and mid-sized SUV that received praise all over, and to everyone’s surprise, saw Alfa all of a sudden being able to compete with cars like the BMW M3. Given many of us enthusiasts are Alfistis at heart, this looked like the new dawn we had been waiting for since the 80’s – but then nothing happened. No further exciting models, an ageing line-up, and with as latest addition the small SUV called Tonale, which is unexciting, uninteresting, and overpriced. C’mon Alfa, time to wake up before it’s too late!

The Giulia was the most positive Alfa Romeo surprise since the 80’s!

May

Even though this is a blog for those of us favouring combustion engines, I’ll take the second M for the year to mean Musk, as I continue to be fascinated by the man. As mentioned last week when writing about the Cybertruck, it’s amazing what he has achieved with Tesla in only 10 years, and at the same time, it’s rather pitiful how the traditional industry still isn’t managing to produce good alternatives. This is something we’ll come back to next year, but looking at it now, the Model Y is the best-selling car this year in Europe, it ranks no 4 in the US, and the motoring press seems to agree on the Model 3 currently being the best EV out there. So was I wrong about e-mobility not taking off? No, but Tesla is the shining exception. I still don’t want one, but I’ll take my hat off for Elon!

June

J for June or a Jubilant Max Verstappen, who took his third consecutive F1 title in 2023 and by June of last year, had basically already settled the whole thing. Max is the best driver on the grid and also has the the best car from what is currently also the best team. He also has the aggressiveness and sometimes carelessness that can be irritating but, that almost every true champion has, and although the other teams came closer towards the end of the year, as discussed in the last round-up of the 20230 F1 season, it seems unlikely that he will not be on top again when we sum up 2024. Well done Max!

July

The second J is for Jaguar, that a bit like Alfa, I can’t really get my head around. Jaguar has all the tradition and brand name you can ask for, but currently a line-up which is not only small, but also pretty unexciting. In Europe as we end 2023, there’s only three models: the obligatory EV SUV called the I-Pace, a conventional one called the F-Pace, that is mildly exciting at best, and the F-Type sports coupé or convertible, that in V8 shape sounds really good, but is also getting rather old. The sedan called XF isn’t even on sale here anymore, neither is the smaller, E-type SUV. Given Land Rover has a fully up to date line-up, let’s hope it’s time for Jaguar in 2024, but it currently doesn’t look like it.

As mentioned in the post, it’s a good-looking car, but it’s getting old…

August

The second A of the year is for August and the auto shows, which are no longer the same, especially not in… you guessed it, Germany. The IAA used to be one of Europe’s largest auto salons, that would alternate with Paris every other year, and that has been at home in Frankfurt for longer than anyone can remember. In its old form it’s gone, replaced by a smaller event that will alternate between different German cities, and of course focus on EV’s. The show saw a 30% drop in visitors during Covid and somehow never recovered, at the same time as auto makers prefer invest the millions these events cost in more lucrative parts of the world, i.e. Asia and especially China. At least we still have the Auto Salon in Geneva – for now…

September

The only month with S in its name is September, that will here represent senses. This is something I’ve thought quite a lot about lately, and that became painfully obvious when re-acquainting myself with the wonderful Ferrari FF recently. Like most cars featured on this blog, it very much appeals to all your senses at once. But the EV’s we’re supposed to drive going forward don’t have much going for them in this regard. I think there’s very few people who would choose between accelerating to 100 km/h in sub-3 seconds in an EV, compared to doing it in sub 4 seconds in a V8, V12, or for that matter, turbo four-cylinder. And that’s before even looking at the car, since for efficiency reasons, every EV looks like a soap. How will our senses get any form of excitement from our future mobility? You tell me…

October

The O of October goes to Opel (Vauxhall in the UK), a brand that will never be a regular feature on the blog, as with very few exceptions, Opel builds practical cars of average looks, average quality and average size, that have absolutely zero attraction for anyone with an interest in cars. So what are the exceptions? I can think of three: the Speedster, a sister car to the Lotus Elise which was said to actually work, the Lotus Omega, an early kind of super-saloon from the 90’s that Lotus helped develop, and of the course the Opel Manta, that in certain circles in its native Germany has a very loyal following which has even been caught on film, as you may remember from the post back in the spring of 2022. So here’s to Opel, probably for the last time.

The Manta – probably the only Opel to ever be featured on this blog!

November

The N for November stands for Nio, one of the many new Chinese car brands, mostly electric, that sell literally millions of cars in China and that are now increasingly making it to Europe. Others include names such as BYD, Aiways and of course also MG, that has gone from a stylish UK builder of roadsters to a Chinese producer of basic EV SUV’s. Supported by their domestic market and rich on capital, many of these groups have now become a serious threat to especially European manufacturers, who still can’t get their act together when it comes to electrification and also can’t compete on price, something we’ll look closer at in 2024. The Chinese of course have the huge advantage of also controlling a lage part of the global battery market, which certainly helps!

December

We close out with a D for December and for the good old Defender, Land Rover that is, in the generation prior to the current one (that is also cool, but doesn’t quite have the same personality). Although becoming less frequent, you still see them more or less regularly, and they still have as much presence. These days, they also represent a simplicity that is otherwise long gone in a world where cars are judged by the size of their infotainment screens and the number of interior light colors. They still hold their value really well, even though you’d be forgiven for thinking that should no longer be the case. I have no idea where they will go, but I wouldn’t be surprised if people continue to be attracted to them, in our increasingly complex world. I’ll have a 90 version please, in dark green or black, with the optional Recaro seats!

It’s still the only car you’ll ever need – and the coolest!

On EV tanks, stupid politicians and Finnish cobalt…

On By ChristofferIn News, Opinion1 Comment

When I grew up, I remember my parents speaking of most political leaders with (sometimes great) respect. Churchill was still in vivid memory for many, as was JFK. De Gaulle in France was seen as a true statesman and in general as I remember it, although people didn’t necessarily agree with the political leader of the time, there was a fundamental respect for those leading a country.

Oh how times have changed in this regard. It’s a long debate well beyond this blog to try to define where things went in the wrong direction, but what it’s lead to is no doubt an environment where at least some political leaders deserve far less respect than used to be the case. Then again, the blame on that falls on us since in the end, we’re the ones who somehow, directly or indirectly, elected them…

This is not the face of reason. Jennifer Granholm, US Energy Secretary (Source Fox News)

An example in the category of those not deserving much respect is US Energy Department Secretary Jennifer Granholm, who a few weeks ago stated that she fully supports efforts from the Biden administration to require (among others) the U.S. military to implement an all-electric vehicle fleet by 2030. Granholm says that global events like the war in Ukraine aren’t good for (fossil) energy security, conveniently “forgetting” that the US is pretty much self-sufficient in oil.

The team at Doomberg (an excellent geopolitical newsletter I highly recommend to anyone interested) calculated what it would take to electrify the main US battle tank M1 Abrams, weighing 60 tons. The answer is a battery pack weighing 2/3 of the vehicle itself, i.e. 40 tons, and being roughly the size of the tank itself. I’m sure the US military is thrilled at the prospect, and probably also curious as to how Granholm plans to ensure war zones are well covered with charging stations!

No, this isn’t it either. Robert Habeck, Germany’s Finace and Climate Minister

Idiocy is certainly not limited to the US. In Europe the undisputed champion is of course Germany, a country that used to be the backbone of the European economy but that now has transformed to a schoolbook example of failed energy policy. Germany’s Finance and Climate Minister, aka Green Party leader Habeck fully supports the recent decision to turn off the remaining German nuclear plants, while seeing no problem with those in war-torn Ukraine, a country currently being bombed on a daily basis and very much in “nuclear radiation” distance from Germany, continuing to be operational. Nope, I’m not making this up.

Another European privilege is to have a large bunch of politicians in the EU Parliament in Brussels representing the EU member states. They have now – hallelujah! – discovered that there is a risk that neither the lithium, nor certain metals required for the “energy transition” will be available to Europe in the quantities needed over the coming 10 years or so. Well, had they read this blog, for example in early December, they would have saved some time coming to this assessment…

Somehow preferable to a cobalt mine

In order to find a remedy to this annoying reality, various prospecting projects will soon start, aiming to find suitable excavation sites for metals and lithium in Europe itself. There are, hmm, a number of problems with that. Just to name two, there is of course the small fact that the quantities you can hope to find in Europe are far from being sufficient. Also, as opposed to the Congo where we do business by closing your eyes bribing everyone and letting children do the dirty job, that doesn’t really work in Europe.

Take Finland as an example. There is apparently cobalt in various places across the beautiful Finnish landscape of lakes and forests. But, surprise surprise, the Finns would like to keep that landscape as it is and not transform it into a giant cobalt mine. Of course there will be similar resistance in other places as well, meaning that any excavation at all, which again will not cover Europe’s future needs, is at least 10-20 years away, well past the deadline Brussels has set itself.

If your car smokes like this, you should probably see a garage anyway…

Fortunately though the world hasn’t gone completely crazy just yet, because when you really start to lose hope, a few voices of reason have started to emerge. One was heavy lobbying from French and German automakers, resulting in the ban on selling new combustion engine cars being pushed forward from 2030 to 2035, and then also being changed such as to continue to allow combustion as a technology for cars running on clean fuels (more on that below).

Other sensible voices showing resistance is starting to form have included the CEOs of notably Renault and Stellantis who strongly opposed the planned Euro 7 emission rules for diesel and petrol cars, saying the multi-billion investments these would require of manufacturers would only result in a very marginal reduction of greenhouse gases, hardly being worth it if we’re anyway supposed to go all electric a few years later. Or put differently, there’s about 1198 better ways to spend your money…

They are of course right, although if you agree with me (or even if you don’t, but can count), the truth that I’m sure they’re aware of is that full electrification will not happen any time soon, bar a sudden revolution in battery technology. For those new to the blog, this is something I wrote about notably in the post I’ve linked to above (and again here) from December.

A GT4 running on synthetic fuels – no mines required

Interestingly, a lot of people are now all of a sudden also talking about synthetic fuels (see my post from two years ago here on the topic), tacitly admitting as much. This has notably become a big debate in the UK, with pressure being put on politicians to start encouraging promising technologies in the field. Since the post on the topic I linked to above, Porsche has increased production of its synthetic fuels, proving that the technology works, although the cost is still prohibitive and viability of this as a solution at scale is still insecure.

The recognition that the future is perhaps not 100% electric is however best seen in EV prices, when in notably the US market, pre-owned combustion cars are increasing in price again whereas used EV’s have started to fall like stones. As I wrote about back in August last year, that used to be the case for some EV’s but not for others, notably not for Tesla.

If it’s so great Elon, then why are you cutting the price?

Of course, if like Elon Musk you start cutting the prices of new cars (in itself a good sign itself that things aren’t going that well), that’s hardly beneficial for residual values, but even factoring that in, it’s clear that price falls across all EV’s are heavier than before, and bigger than for (at least some) conventional cars. Could it be that when an increasing number of countries have cut subsidies, or when like here in Switzerland, EV’s will need to pay road tax from next year, and when the electricity price has increased quite dramatically, the whole EV thing isn’t as fun any longer?

We’ll see where all this takes us, but at least the question on what our future car landscape will look like has become a bit less one-dimensional. There’s of course many more issues with the planned electrification that I could have added to those above, making me all the more convinced that the future of new cars is somewhere in the triangle modern hybrids – new battery technology – alternative/synthetic fuels, probably in some combination. But while we figure that out, I can’t help hoping that someone with a sense of humour parks an M1 Abrams tank in Secretary Granholm’s driveway.

How near the brink is Tesla?

On By ChristofferIn News, Opinion1 Comment

Elon Musk was full of praise for Tesla at the launch event of the Model Y last week, starting off with a (not very new) perspective of where Tesla and electric cars stood 10-11 years ago when Tesla built their first car, as compared to today. At the time the world was obviously in the midst of the financial crisis, when some rather large car makers in the US went bankrupt and had to be rescued. Given Tesla’s Q4 -18 and 2018 full year numbers are known, I believe it’s justified to have a closer look at to what extent Tesla in 2019 is comparable to some of those companies in 2008. Unfortunately, this is not that far-fetched if you listen less to Elon and look more at hard numbers.

The Model Y, completing the slightly imperfect S-3(E)-X-Y range

Tesla had current assets of USD 8.3bn at the end of 2018, of which USD 3.8bn in cash. With liabilities at 10bn, the working capital ratio is a negative -1.7bn. The current ratio, i.e. assets over liabilities, comes out at 0.84, and the so called quick ratio, i.e. cash over liabilities, at 0.46. However in Q1 -19, Tesla made a 0.9bn bond payment, thereby bringing the two above ratios to 0.74 and 0.39 respectively. This is where it gets interesting to look at a company like General Motors during the financial crisis, when at the time of bankruptcy the two ratios stood at 0.6 and 0.3. As a further comparison, today the average for the car industry is at 1.36 and 1.2. An established company such as BMW comes in at 1.18 and 0.96, a “new” car brand such as Chinese Geely, at 1.09 and 0.94. There are thus many billions between the car industry at large and Tesla’s current numbers.

It’s also important to remember that a part of Tesla’s cash position is for cars not yet delivered (down payments etc.), and thus not cash in the proper sense. Finally, car sales are still the only meaningful income for the company, with energy sales making up only around 0.3bn per quarter.

SEC darling Elon Musk

Tesla is currently cutting costs by closing its re-sellers and moving to online sales, but savings achieved there will mainly go to reduce prices in the US, where state subsidies to electric cars are about to end. So when Elon announces the launch of the Model Y (and if you want to move directly to the actual showing of the model Y, you can skip a lot of bla-bla to around 27.30 minutes in to the video), completing the slightly imperfect S-E(3)-X-Y range, one can’t help but wonder where the development money will come from. Or will Tesla’s model range effectively end with the slightly less subtle S-E(3)-X?