Tesla 'Is Headed For A Brick Wall,' Investment Manager Says

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1st Gear: Tesla Might Be Caught Short

To put it simply, short selling is a practice where you take out a loan of shares from a certain company with the promise that you’ll buy those shares back for whatever they’re worth in the near future. The hope is that the share will be worth less when it comes time for you to buy them back so that you have a net gain. Jim Chanos, a well-known short seller and investment manager, says that the outlook for Tesla’s stock price is grim.


Tesla is a favorite for short sellers, and it’s “headed for a brick wall,” Chanos believes, according to Bloomberg. “Tesla is one of the bad ones.”

In fact, Chanos predicts that Tesla CEO Elon Musk may soon leave the company:

Chanos predicted Musk will depart Tesla in the coming years for another one of his companies, Space Exploration Technologies Corp. Morgan Stanley analyst Adam Jonas said earlier this month he could envision Tesla merging with SpaceX as the rocket company becomes a more time-consuming focus for Musk.

And as soon as German car companies like Porsche and BMW create competitve models, Tesla’s edge of producing the first fun and elegant electric cars will vanish, he says. Also, he thinks that Tesla isn’t a leader in self-driving tech:

Chanos said he also believes that Tesla is behind when it comes to self-driving vehicle technology. General Motors Co. last month showed off the latest version of its self-driving Chevrolet Bolt electric car to investors and reporters. Alphabet Inc.’s Waymo is the leader in autonomous vehicles and Volkswagen AG has good technology, he said.


It seems that the only way Tesla will be able to make money is if it is successful in bringing the Model 3 and the semi truck to market.

2nd Gear: New York Makes It Harder For Car Insurance Companies To Screw The Poor

Depending on where you live and what insurance company you use, it can ask you a bunch of questions about your life, background and personal data in order to determine your rate. It’s a controversial practice because it can allow some insurance companies to discriminate against poor and low income people.


Financial regulators have just forbidden insurance companies from using education and occupation information as factors in determining premiums. The ban only takes place in New York for now, but consumer groups that represent lower-income people elsewhere could see it as motivation to do the same, according to the Wall Street Journal.

From the story:

New York Financial Services Superintendent Maria T. Vullo said Wednesday that her department made the decision after wrapping up an investigation of the long-controversial matter. The state also said that Allstate Corp. and Liberty Mutual Insurance, among the insurers the state focused on in its investigation, have already taken steps to eliminate their use of the factors with New Yorkers. Insurers have 180 days to comply with the regulation.

Reviews by several state insurance departments over the years have found the difference in rates paid based on education, occupation and credit histories can be in the single- to double-digit percentages.


Which is tremendously shitty!

Insurance companies, on the other hand, argue that factors like education and employment are helpful in determining the probability of insurance loss and allow for more accurate pricing.


Still, consumer advocates like Vullo believe that insurers should use a much broader rubric when determining their rates.

3rd Gear: Toyota First To Test At New Autonomous Testing Site

The American Center for Mobility is a new autonomous and connected vehicle testing site in Michigan that officially opened this week. Though it’s federally designated, it actually doesn’t receive federal funding, which is... uh, okay?


Anyway! Who’s first in line to test there? Toyota and Visteon, an automotive supplier, reports Automotive News. From the story:

Visteon Corp. and Toyota Research Institute are the first companies to be on site and use the first phase of the $135 million project, which includes a 2.5-mile highway loop with on- and off-ramps, a 700-foot curved tunnel, a customer garage and an operations center. Others are scheduled to begin next week, the center said in a statement on Wednesday.


The center also has partnership agreements with Michigan’s 15 public universities to create a curriculum, retraining programs and research opportunities.

For anyone looking to work in the autonomous field, this center is especially exciting because you’ll get to work at the same site as real automakers.


4th Gear: Big Nissan Recall In Japan

The worst-case scenario? Fire. And there have been eight reports of fire.

Nissan, reports Reuters, is recalling almost 320,000 cars in Japan in order to “fix defective coating in an electronic power unit that could cause a short circuit and fire in the worst-case scenario.”


The recall affects six models, including the Serena minivan and other minivans and vans built for Suzuki and Mitsubishi that were produced between February 2010 and September 2014. Vehicles sold outside of Japan are not affected, Nissan confirmed.

5th Gear: Car Sales In Europe: Not Bad!

Here’s some happy news: a lot of people in Europe bought cars last month.

Sales went up 5.8 percent, reports Bloomberg, because European unemployment has dropped. Also, because SUV sales were strong as well. From the story:

The region is set for the highest annual delivery volume in a decade, cementing a comeback from the global recession and sovereign debt crises in some European Union countries that plagued the car market for years. The EU raised third-quarter gross domestic product growth figures a week ago, while unemployment in the countries sharing the euro is at a nine-year low, encouraging consumer and business spending on autos, especially roomier sport utility vehicles.


We’ve yelled and yelled about it on this site numerous times before, but there’s no denying the SUV cash cow. Citroen started delivering the C3 Aircross compact SUV and Toyota was helped along by the C-HR.

I’m sure there are also people in Europe buying up those manual diesel wagons, too. I am sure of it.


Reverse: Done!


Neutral: Do You Think Elon Is Going To Stick Around?

Making cars is hard! I have a suspicion that Musk has realized this. Do you think he’s going to stick it out with Tesla, or jump ship to another one of his companies, like Chanos predicts he will?


Update: We’ve updated the headline to make it abundantly clear that it’s not us saying that Tesla’s “headed for a brick wall,” rather, an investment manager.

Writer at Jalopnik and consumer of many noodles.

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Death By Cornbread

Short sellers have been bashing TSLA for years, and they have been on losing side of that argument time after time. There have been plenty of them since well before the stock even hit $100 a share. They want bad publicity around the company, so they can stop getting burned on their bad investments.

If there’s anyone you shouldn’t listen to about the future of TSLA (besides your drunk uncle at Christmas), it’s short sellers.