Dear Mr. Berko: I’m one of the “stupids,” as you call them, who bought 200 shares of Tesla Motors at $265 in April. I should have listened to you, because the stock is now trading below $210. What do you think of Tesla’s purchase of SolarCity? Should I continue to hold Tesla or sell it? — CM, Akron, Ohio
Dear CM: On June 19, Elon “The Wacko” Musk, Tesla’s screwball CEO, bragged on Twitter that his Model S car “floats well enough to turn it into a boat.” A couple of days later, this fruitcake decided to merge SolarCity (he’s a major shareholder), with cumulative losses in the billions of dollars, into Tesla (he’s also a major shareholder), which also has cumulative losses of billions. Neither company has near-term profit prospects, and both expect to continue posting losses for the foreseeable future. Musk, once a Wall Street darling, is in trouble, big fat financial trouble, and some banking partners are becoming nervous about their money and Elon’s sanity. Musk knows that his empire is imploding, that his personal and business bank accounts are bleeding, and that investors fear that the Tesla, like the Fisker and the Edsel, could eventually disappear into the ether and vapors. This merger of two cash-hungry businesses has as much chance at success as one would have in teaching a 3-pound lady lobster to play a harpsichord. This merger, even in the most Panglossian sense, surpasses the bounds of logic by orders of magnitude. This stretches the ethical limits of propriety; SolarCity’s CEO is Elon’s pal and first cousin, Lyndon Rive, who, with Elon, borrowed heavily to buy SolarCity shares that were down 60 percent from the previous year’s purchase price.
Tesla (TSLA-$210) and SolarCity (SCTY-$25) burn cash like gigantic industrial waste incinerators. And TSLA’s $5 billion battery factory ($1.5 billion financed by the state of Nevada) is having technical and money problems and may not turn a profit until 2021. TSLA burns 52 cents of cash for each dollar of sales, while SCTY burns $5.91 for every dollar of sales. However, Lyn and Elon believe they will have “the world’s only vertically integrated energy company offering end-to-end clean energy products,” starting “with the car that you drive and the energy that you use to charge it” and extending “to how everything else in your home or business is powered.” Elon and Lyn reason that the deal makes sense because they think consumers who buy Tesla’s cars also want solar power for their homes and the consumers want it from the same company. These two banana-heads must be smoking some pretty strong stuff that is altering their cognitive abilities. This merger suggests that there is some permanent impairment of their temporal and frontal lobes.
TSLA believes that it has orders for 400,000 Model 3s at $35,000 a pop, which is the starting price for the base model; then the lucky buyers get a $7,500 tax credit, which reduces the cost of the Tesla to $27,500. I’m sure this credit doesn’t warm the heart cockles of the bosses at General Motors, Ford or Chrysler, some of whom might sacrifice some body parts for that generous government boondoggle. So if you purchase a Tesla Model 3 and your accountant says you have a federal income tax bill for 2016 of $10,000, the $7,500 tax credit approved by your congressman for Elon’s company will reduce your tax bill to $2,500. Without that tax credit, Tesla could be out of business in a month of Mondays.
Meanwhile, Tesla owners have reported various annoying problems with their vehicles, and many owners promised not to make the defects public. Someone ought to ask a TSLA executive why that was necessary. The Model S is having big problems — which seem to be getting worse, not better. The problems with the Model S are so bad that Consumer Reports recently pulled its recommendation. So where will the escargot? What if the Model S car’s problems are replicated in the Model 3? Sell your TSLA now.
Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email him at [email protected]. To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.
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