Tesla CFO's Unexpected Exit - Shortseller

author: FutureCar Staff    

Stanphyl Capital recently provided commentary on their short position in Tesla Inc (NASDAQ:TSLA) for the month ending August 31, 2023. One of the notable events in August was the sudden departure of Tesla's CFO, which is part of a pattern of sudden and unexplained departures. One possible explanation for this trend is that Elon Musk, the CEO of Tesla, has a history of dishonesty and securities fraud. It is speculated that Musk may not want CFOs who can run the books honestly, as his personal compensation is tied to the company's financial results. The latest CFO may have decided to leave after accumulating a significant amount of money from the company and wanting to enjoy it freely.

Another reason for the CFO's resignation could be related to the investigation by the Department of Justice into a massive consumer fraud directed by Musk regarding the range of Tesla's cars and the alleged theft of company assets to build his own house. Additionally, a safety cover-up by Tesla was revealed in May, which could have also contributed to the CFO's decision to quit. Regardless of the specific reasons, it is believed that Musk will face consequences for his actions, as individuals like him tend to do.

In July, Tesla reported its Q2 earnings, which further demonstrated that the company is now a low-margin car company that constantly needs to lower prices to maintain delivery volume. Musk hinted during the conference call that the price-slashing would continue. Tesla's "energy business" accounted for only 6% of its revenue in Q2 and operates in a highly competitive, low-margin industry. Additionally, Tesla announced that it would open its charging stations to cars from other manufacturers, who would adopt Tesla's charging protocol. This move may cost Tesla more in lost auto sale profits than the potential gains from charging profits.

Tesla's competitive position has weakened significantly, with many other electric vehicle (EV) manufacturers offering comparable or better real-world range, improved interiors, similar or faster charging speeds, and higher quality. Consumer Reports' reliability survey and the 2023 JD Power survey ranked Tesla near the bottom. Tesla is now often the second, third, or fourth choice for EV buyers, and its volume lead is maintained only through a temporary edge in production capacity that will diminish as competitors increase their ability to produce superior EVs.

Tesla faces competition from various EV models in different segments, including the Hyundai Ioniq 5, Kia EV6, Ford Mustang Mach E, Cadillac Lyriq, Nissan Ariya, Audi Q4 e-tron, BMW iX3, Mercedes EQB, Chevrolet Blazer EV & Equinox EV, Volvo XC-40 Recharge, and Polestar 3. In the high-end electric car segment, the Porsche Taycan outsells the Tesla Model S, and new models from BMW, Mercedes, Audi, and Lucid Air make Tesla's offerings seem inferior. The Tesla Cybertruck, which has not been released in its final form, will face tough competition from Ford, GM, Dodge, and Rivian in the pickup truck market.

For years, it has been argued that Tesla is similar to Blackberry, a company that was once a pioneer but eventually became obsolete due to newer and better versions of its product. It is believed that Tesla will face a similar fate, with numerous competitors stealing its market share and causing its stock price to decline. Additionally, Tesla's "Full Self Driving" technology has faced scrutiny from the National Highway Traffic Safety Administration and may lead to significant liabilities for the company. Tesla's claims of proprietary battery technology have also been debunked, as the company purchases batteries from Panasonic, CATL, and LG. Other manufacturers will also have access to new-format 4680 cells, further diminishing Tesla's competitive advantage.

In conclusion, Stanphyl Capital's commentary highlights the challenges and weaknesses facing Tesla, suggesting that it will be valued as "just another car company" in the future.

FutureCar Staff