From a consumer standpoint, Tesla Motors is a rock star. Their cars are green, sexy and very fast.
But a fundamental analysis of the company tells a very different story, according to Unit Economics CEO Nathan Weiss.
Weiss savaged Tesla in a presentation at the Subscriber Investment Summit in Toronto on March 5, saying there's a wide gap between Tesla's rock-star image and what's under the hood.
Weiss's Unit Economics is an independent research shop based on Rhode Island that works for a small client list, primarily hedge funds.
Green claims: Weiss asserts that when total carbon intensity is measured, Tesla's Model S actually emits more carbon than a Jeep Grand Cherokee or a Volkswagen Passat diesel -- one of the cars recalled after the emissions scandal.
Reliability: Tesla has a good reputation on reliability. But independent tests revealed a litany of Model S problems extending from door handles and the touchscreen to rear tires wearing prematurely, noises and battery problems, Weiss says. Consumer Reports took the 2015 model off their recommended list, saying it was inferior to the 2014 version.
Management credibility: Management has undertaken huge equity raises days after saying in conference calls they had no plans to raise capital. The company has missed every year's production guidance except for 2013, as well as guidance for new versions, Weiss notes.
Economics: Tesla's costs per unit are actually increasing as deliveries increase; typically unit costs decrease. Tesla receives a raft of state and federal subsidies that exceed Amtrak's annual operating budget, according to Weiss.
There's no denying that Elon Musk and his flashy electric vehicles have shifted the automotive landscape. Whether you love or hate Tesla or are long or short the stock, this presentation is a must-watch.
This is not investment advice and all investors need to do their own due diligence.
