Dear Elon: There's Nothing Funny About Hitler
Dear Elon: There's Nothing Funny About Hitler
Tesla is already straining vs its record 2021 pace when MY was new, M3 was still growing, competition was still thin, regulator oversight was still lax & recalls were few. Elon's "jokes" don't help.
The new year isn’t starting off well for Tesla (TSLA). As of this writing, the stock is down 13% ytd to $876.35, and down 30% from the peak in November at $1,243.49.
Waves of forced recalls, government probes, and lawsuits haven’t helped, nor did Tesla’s dubious guidance for 2022 that included, again, nefarious promises about full self driving for Autopilot and robotaxis but no new models to revive its troubled, aging fleet.
Moreover, none of this should be surprising.
As I discussed at length, again, in December starting with:
Indications are that Tesla’s long stretch of luck and lavish indulgence may be coming to an end. Musk’s billions, brags, insults, and rants have overshadowed growing concerns that can’t be ignored for much longer, like struggling Model 3 same store sales trends I’ve been tracking for years. Like Tesla’s shrinking market share in key markets from robust competition winning buyers spooked by its own notoriously poor build quality in it cars plus its dismal customer service. Like eroding margins from seemingly inflated levels which likely will worsen through next year.
Add emerging consequences from Tesla’s notorious false and misleading full-self-driving (FSD) claims, sneaky “fixes” of serious problems instead of recalls as required, dicey accounting, increasingly significant recalls as years of shoddy manufacturing and apparent coverups are revealed, and escalating government probes may expose all manner of ugliness to the world.
I long have projected that many, if not all of these negative factors may begin to coalesce next year, particularly in the second half. If so, Tesla could struggle increasingly versus record results this year.
Look Away From Elon Musk To Gauge Tesla's Prospects—and Looming Risks, 12/31/21
What is surprising was CEO Elon Musk deciding that trolling Canada’s Prime Minister Justin Trudeau with his “funny” Hitler joke was a good idea.
It was not well received.
Indeed, the outrage was so vociferous Musk deleted the tweet.
Musk did not apologize, however. Likely because he’s not sorry. His latest stunt comes even as Tesla is in court trying to defend the abject failure of its feckless board to rein Musk’s unhinged tweets as required by the SEC in the remarkably lenient 2018 settlement over Musk’s bogus claims to take Tesla private with “funding secured.”
Incredibly, the company told the court it is the SEC who is harassing Musk for nothing more than just being “an outspoken critic of the government.” Well sure. Like when he says this, for example:
This is the same guy who baselessly called a British diver, the hero in the 2018 Thai cave rescue, a “pedo.”
This is the same guy leading the company \hit with lawsuits packed with horrific allegations of “rampant” and “unchecked” racism, including one in which Tesla was ordered to pay the victim $137 million.
Such problems, which continue to be reported this year, have been going on for years as I detailed in July 2019 in The Trouble With Tesla’s Arrested Development, like:
If only there was mounting evidence from multiple sources showing Tesla has a long history of serious and escalating problems with its working conditions, plant safety, quality controls, and management oversight which already have cost the company millions of dollars in fines and settlements and yet no signs of being convincingly resolved. Hint: there is. Lots, as I've been warning since last year.
It seems comparatively easy to get fired from a Tesla job. Just use sick days or maternity leave, for example. The Guardian reports: "Over the past few years, Tesla has faced numerous lawsuits, National Labor Relations Board (NLRB) charges and allegations that have included unfair firings, union-busting, and a work atmosphere that enabled racial discrimination and sexual harassment. In March, an NLRB settlement mandated Tesla post flyers that affirmed workers’ rights to organize at their Fremont, California plant. A few months later, workers at Tesla’s Buffalo, New York plant filed federal labor charges accusing Tesla of firing workers for union organizing."
Insufficient staffing, weak quality control, and notoriously poor management oversight could aggravate Tesla's atrocious manufacturing safety record, already dramatically worse versus all other US automakers combined.
Employee injuries and job-related illness for 2018 were three times higher versus 2017's record pace. Bloomberg reported, "The sharp increase in the number of days away from work suggests a greater severity of injuries, said Deborah Berkowitz, who served as OSHA’s chief of staff under President Barack Obama and called the data “alarming.” The rise in the average time missed — to 66 workdays in 2018 from 35 the year before — is a “red flag,” she said."
These problems are not new, so why are they still happening? Managers who can't make effective and sustaining changes to fix Tesla's problems don't stay. This is, no doubt, due largely to Elon Musk's entrenched and clearly autocratic management. He doesn't listen to advice or suggestions, he doesn't like criticism, and he really hates rules (right SEC?). Musk doesn't follow rules, and he eliminates those who don't follow his rules.
Little is likely to change with Tesla's manufacturing practices, except perhaps for the worst. The biggest tragedy of Tesla's remarkable story is that it has become its own worst enemy. And Tesla is Elon Musk.
And, here we are, years later, and the bills are coming due for Tesla. Hundreds of millions of dollars more in lawsuit settlements because toxic working conditions persist. Waves of major recalls spurring new and continuing government investigations because serious safety issues persist due to poor manufacturing practices and failed management oversight. Someone using Tesla’s Autopilot finally did kill people, as so many have feared.
Unfortunately, it is Tesla’s workers and customers and other victims who have borne the cost.
But it’s poor Elon Musk, the richest and most gleefully unrestrained man on the planet, who is harassed. And he has a meme for that.
Tesla repurchased its 5.3% senior notes in the third quarter of 2021 as I projected, though I doubt we’ve seen the last of Tesla as a bond issuer:
Now stay tuned for the second step I described: a quickly shopped, likely $2-4 billion inordinately low coupon bond deal, accompanied by a bump in credit quality ratings potentially to low investment grade (see Tesla's Car Business Finally Turned A Profit. Really. Time For A Big Bond Deal). It could even be appealing... if it’s priced at T+100 bps or better.
Until then, I have Tesla: Not Rated.
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