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Tuesday, April 04, 2017

Perhaps not the Whole Story

Tesla Passes Ford in Market Value as Investors Bet on the Future

DETROIT — The record pace of auto sales in the United States is slowing down, leaving investors increasingly bearish on auto stocks.

But there is one exception. Tesla, the electric-vehicle upstart, continues to surge.

On Monday, Tesla surpassed Ford Motor in market value for the first time and moved within striking distance of General Motors, starkly illustrating the growing gap in investors’ optimism over its future versus the prospects for the traditional carmakers from Detroit.

While G.M. and Ford may have strong profits and healthy balance sheets, Tesla offers something Wall Street loves much more: the potential for dramatic growth.

“Investors want something that is going to go up in orders of magnitude in six months to six years, and Tesla is that story,” said Karl Brauer, a senior editor at Kelley Blue Book. “Nobody thinks Ford or G.M. is going to do that.

No need to follow the link, take my word for it. Mystifyingly, this story didn't consume even one syllable about, oh, massive subsidies.

Among other privileges they enjoy, poor people pay rich people $10,000 a whack to drive off in Tesla Model S's.

Tesla Motors Inc., SolarCity Corp. and Space Exploration Technologies Corp., known as SpaceX, together have benefited from an estimated $4.9 billion in government support, according to data compiled by The Times. The figure underscores a common theme running through his emerging empire: a public-private financing model underpinning long-shot start-ups.

But wait, there's more:

New York state is spending $750 million to build a solar panel factory in Buffalo for SolarCity. The San Mateo, Calif.-based company will lease the plant for $1 a year. It will not pay property taxes for a decade, which would otherwise total an estimated $260 million.

And even more beyond that. Corporatism is just a less frightening word for cancer.

And the NYT is a joke, except not at all funny. One can't help but wonder how those strong profits and healthy balance sheets would look if all the government dosh was to disappear. If they would still be hunky dory, then by all means stop abusing taxpayers on Tesla's behalf. On the other, and undoubtedly much stronger hand, if removing the trough from under Musk's nose was to comprehensively crater those profits and the sheets were suddenly capsizing, then one would think that would be worth knowing.

One would think.

21 comments:

erp said...

Nothing is what it seems to be when the government gets into the act. If only Trump would do what he said he would and get the government off our backs.

Clovis e Adri said...

I don't know Erp, but maybe the kind of people who falls for Trump scams is the very same people who will keep getting deceived by every other billionaire with good marketing skills.

erp said...

... examples please.

Bret said...

My soon-to-be-ex-wife lusts after Elon Musk. At least in her mind, he's the pinnacle of success, utilizing every possible resource, public and private, to achieve nearly unimaginable (by me) levels of wealth and power.

Personally, I have to laugh at free-market aficionados who point to Musk and his enterprises as success stories. Really? I'm mean sure, they're success stories, but definitely NOT free market, rather corporatism at its best (and I literally mean "best" in all possible ways).

On the other hand, even I do admire Musk. Even with subsidies, starting a car company is no mean feat. Even with subsidies, starting an ELECTRIC car company is no mean feat. Starting a rocket company is no mean feat. Developing the base hyperloop concept is no mean feat. Even Paypal was pretty clever.

And, in fact, if every, or even most, government subsidized endeavors was as successful as Musk's, I might be convinced that government ought to continue to be involved in such private-public partnerships. Alas, for every Tesla, there seem to be ten Solyndras, so I remain unconvinced that the occasional government success in meddling is worth the loss of freedom.

Hey Skipper said...

[Bret:] On the other hand, even I do admire Musk. Even with subsidies, starting a car company is no mean feat. Even with subsidies, starting an ELECTRIC car company is no mean feat. Starting a rocket company is no mean feat. Developing the base hyperloop concept is no mean feat. Even Paypal was pretty clever.

Well, two out of four.

I wonder how many other car companies could have been successful had the government been giving them $10k a piece, or capitalized on a bunch of rich people frantic for virtue signaling opportunities, driven by the same government having abandoned every bit of the scientific process to push AGW.

The rocket company (I got a tour a few years ago) is impressive -- Space-X is delivering innovation and performance for much less than NASA.

PayPal was a stroke of genius.

And the Hyperloop sucks.

Hey Skipper said...

All that said, it seems the NYT's completely omitting any mention of substantial subsidies to Tesla was either journalistic incompetence, or another example of agenda journalism.

erp said...

... or both.

Harry Eagar said...

Financial markets are not sensible. There was a time when the market value of Valujet was bigger than the market value of United Airlines.

Since Tesla is losing money even with subsidies, it hardly seems reasonable to suppose the subsidies have anything to do with the stock price.

Harry Eagar said...

Skipper, the ex-Ford employee, asks: I wonder how many other car companies could have been successful had the government been giving them $10k a piece,'

Gee, I dunno. Ford, maybe? GM maybe? They got some mighty fine subsidies after World War II

Bret said...

Hey Skipper wrote: "I wonder how many other car companies could have been successful had the government been giving them $10k..."

My point is exactly that nobody else figured out a business model and implemented it successfully where they could get said subsidy and make the whole enterprise work. To me that's very impressive.

Hey Skipper wrote: "...frantic for virtue signaling opportunities..."

My friends who drive Teslas aren't even vaguely into virtue signaling opportunities (they might be a little bit into wealth signaling opportunities, though). It really is a nice car. Probably some do it for virtue signaling but you can get a Leaf or a Prius and virtue signal equally for a whole lot less money.

Hey Skipper wrote: "And the Hyperloop sucks."

Okay, whatever. I think the concept is pretty awesome.

Hey Skipper wrote: "...NYT's completely omitting any mention of substantial subsidies..."

Everybody knows Tesla gets subsidies so I'm not sure said mention would change the substance of the article too much. However, incompetence and agenda journalism are certainly possibilities.

Hey Skipper said...

[Harry:] Since Tesla is losing money even with subsidies, it hardly seems reasonable to suppose the subsidies have anything to do with the stock price.

Didn't read the article, did you?

Gee, I dunno. Ford, maybe? GM maybe? They got some mighty fine subsidies after World War II

Claims without basis may be ignored without hesitation.

Bret said...

Harry wrote: "Since Tesla is losing money even with subsidies, it hardly seems reasonable to suppose the subsidies have anything to do with the stock price."

Harry, we're you really a business reporter? Do you understand the concept of Net Present Value and it's role in the value of a stock? Do you understand that if you reduce the revenue per car by thousands of dollars due to the subsidy it would dramatically change the Net Present Value (not to mention not allowing the company to survive the short term in order to benefit from future earnings flow)?

Harry Eagar said...

Skipper, just because you never studied the history of the auto industry does not mean nobody has. You got burned badly at RtO with your silly skepticism. i cautioned you then about giving too many hostages to fortune.

'Do you understand the concept of Net Present Value'

What my crap-shootin' buddies call betting on the come.

Bret said...

Harry wrote: "What my crap-shootin' buddies call betting on the come."

If yer buddies used NPV analysis, they wudnt shoot craps. :-)

erp said...

... unless they control the dice, ya mean.

Hey Skipper said...

Hey Skipper wrote: "And the Hyperloop sucks."

[Bret:] Okay, whatever. I think the concept is pretty awesome.


Clearly, you didn't see what I did there.

erp said...

Off-Topic Tech Question -- my nerd is infirm.

Simple answers please. ��

Will Roku work if one is neither cable nor wifi connected?

If no, what's the free alternative if there is one?

Thank you. ��

Hey Skipper said...

Will Roku work if one is neither cable nor wifi connected?

No.

If no, what's the free alternative if there is one?

The only free alternative I now of (presuming no wifi or cable) is broadcast TV.

You do have internet available at your house, right?

erp said...

Thanks Skipper. It's not for us, we are fully connected. We have an extra TV and Roku box, so I thought our handyman who can't afford to hook up anymore, might be able to rig something up. He's a genius with his hands and an artist, but totally innocent of all things IT.

I tried Comrade Google, but he's such a pedant, can't give a simple answer, like you did -- thank you -- and insists on telling me how it works, multiple other options and links

Hope all GG's are enjoying the absolutely perfect spring weather that we are, although it was 38F at 8am this morning outside out kitchen window.

Flowers are just rioting.

Hey Skipper said...

[erp:] Hope all GG's are enjoying the absolutely perfect spring weather that we are...

On account of [insert much pilot bafflegab here] I am spending the weekend in Budapest. The weather has only been quasi-spring worthy. This afternoon, a protest march wound its way past my hotel.

I don't understand a lick of Hungarian, but apparently it had something to do with the Soros university in Hungary. There must have been 50,000 people.

All very quiet, well behaved, and didn't trash anything.

First time I've ever seen something like this up close. Well, excepting the Occupy Insanity site in San Francisco. Which, like every one of its ilk, trashed everything within sight.

erp said...

I haven't laughed so hard in a long time. Budapest -- wouldn't have been my first guess! It's probably a very interesting and beautiful city.

Skipper, I hope you are planning to write a book. A suggested title: It's my Story and I'll Stick to It!