Tesla CFO's Surprising Exit - An Investigation

author: FutureCar Staff    

Stanphyl Capital's commentary for the month ended August 31, 2023, focuses on their short position in Tesla Inc (NASDAQ:TSLA).

One of the major news stories in August was the sudden departure of Tesla's CFO, adding to a series of unexplained departures in the past. There are speculations that Elon Musk, the CEO of Tesla, may be involved in dishonest practices, considering his personal compensation is tied to the company's financial results. It is possible that the latest CFO decided to leave after accumulating a significant amount of money and wanting to enjoy it freely.

Another reason for the CFO's resignation could be linked to the investigation by the Department of Justice into a consumer fraud scheme orchestrated by Musk regarding the range of Tesla cars. Additionally, there were allegations of Musk using company assets to build his own house. These controversies, along with other potential transgressions, may ultimately lead to Musk's downfall.

In July, Tesla reported its Q2 earnings, revealing that the company has become a low-margin car manufacturer that continuously reduces prices to maintain sales volume. Musk hinted during the conference call that price reductions would continue. The company's energy business accounted for only 6% of revenue in Q2, making it a highly competitive and low-margin industry.

Tesla recently announced that it will open its U.S. charging stations to cars from other manufacturers, who will adopt Tesla's charging protocol. However, this move may result in Tesla losing auto sale profits, as competitors can use the charging stations without paying Tesla. The stock price increase attributed to this development is seen as unjustified.

Competition in the electric vehicle market has intensified, with many other car manufacturers offering comparable or superior features to Tesla. Tesla's Model Y faces competition from electric vehicles such as Hyundai Ioniq 5, Kia EV6, Ford Mustang Mach E, and more. Similarly, Tesla's Model 3 now has direct competition from Volvo's Polestar 2, BMW's i4, and other models.

In the high-end electric car segment, Tesla faces strong competition from brands like Porsche, BMW, Mercedes, Audi, and Lucid. These competitors offer better features and performance compared to Tesla's models. The upcoming Tesla pickup truck will also face tough competition from Ford, GM, and other manufacturers.

Stanphyl Capital believes that Tesla is following a similar path as Blackberry, once a dominant player in the market but eventually replaced by newer and better competitors. Several major car manufacturers, both domestic and international, are poised to steal Tesla's market share and drive down its stock price. The NHTSA has initiated recalls for Tesla's "Full Self Driving" system, which could result in significant refund liabilities for the company. Tesla's claims about proprietary battery technology have also been debunked, as the company purchases batteries from other manufacturers.

Overall, Stanphyl Capital predicts a decline in Tesla's value as it loses its competitive edge and faces legal challenges related to its autonomous driving technology and misleading marketing practices.

Sources:

- Stanphyl Capital August 2023 Letter to Investors

FutureCar Staff