Elon Musk Is The Master of Yelling "Squirrel"

It is hard not to be conflicted about Elon Musk.  On the good side, he is pursuing fabulous and exciting goals  - space travel, high speed transportation, cheap tunnels, ubiquitous electric cars.  Listening to Musk is like riding through Disney's various Tomorrowland visions.  As a consumer, I love him.

As a taxpayer, I am not so thrilled.  Many of his companies (SolarCity and Tesla in particular) seem designed primarily as magnets for government subsidies.

But it is his shareholders I really have to wonder about.  I can't remember anyone in my lifetime who was so good at serving his shareholders Spam and convincing them they were eating filet mignon from a Michelin three star restaurant.  He announces quarter after quarter of failed expectations and greater-than-expected losses and then stands on stage and spins out all new visions and his fan-boys bid the stock to new all-time highs -- in fact to market valuations higher than GM, Ford, Nissan, or Honda.  Tesla's debt priced in the last offering well above what it should have given its rating and risks.   I thought his purchase by Tesla of his near-bankrupt other company Solar City had no strategic logic and was borderline corrupt, but my brother-in-law who is arguably a more successful entrepreneur than I thought it was brilliant, an example of Musk playing chess when everyone else is playing checkers.

So last week Tesla announced a really bad third quarter.  They lost a lot more money than they said they would, and produced a lot fewer of their new Model 3 cars than they promised.  Their manufacturing operations are in disarray and they are burning cash like crazy, such that the billions of funding they just raised will get burned up in just a couple more months.

But Tesla needs to stay hot.  California is considering new vehicle subsidy laws that are hand-crafted to pour money mainly into Tesla's pocket.  Cash is burning fast, and Musk is going to have to go back to the capital markets again, likely before the end of the year.  So out came Musk yesterday to yell

Tesla's main current problem is that they cannot seem to get up to volume production of their main new offering, the Model 3.  The factory appears to be in disarray and out of production and inventory space.  They can't produce enough batteries yet for the cars they are already making.  So what does Musk do?  Announce two entirely new vehicle platforms for tiny niche markets.

A workhorse truck and a new super car are in the works for Tesla, after founder and CEO Elon Musk introduced his company's latest effort to widen the U.S. market for electric vehicles Thursday night. Musk called the Roadster "the fastest production car ever made, period."

Musk unveiled the Roadster toward the end of an event that was supposed to be all about Tesla's new Semi trucks. Taking a page from Apple and other tech companies in using showmanship to wow crowds, Musk surprised the crowd by announcing there was one more thing to add — and the new car rolled out of the truck's trailer.

After touting the utility and efficiency of what he called a game-changing truck, Musk welcomed the Roadster to cheers from those attending the event at the Hawthorne Municipal Airport near Los Angeles.

You have to hand it to Musk -- no other car company could get a good bump in their stock by displaying what essentially are two concept cars with infinitesimal revenue potential.  Expect Tesla to have a bond or stock offering out soon while everyone still has stars in their eyes from these new vehicles and before anyone can refocus on production and profitability issues.



  1. fourmyle of ceres:

    if they keep giving him money

    he keep spending it

    more fool them

    TESLA going to Zero

  2. Richard Harrington:

    His next announcement will be the Elon ICO and his entry into the cryptocurrency world!

  3. Matthew Slyfield:

    I wouldn't call the semi tractor market a tiny niche. I don't see Tesla getting much penetration in that market even if they can deliver on their performance claims, but I'd call the attempt fairly ambitious.

  4. SamWah:

    Well, I personally do NOT have to hand him my money.

  5. SamWah:

    The semi unit... How many batteries will it take to haul 40,000 pounds of goods 200 miles?
    Color me skeptical. Realy, deeply, skeptical.

  6. sean2829:

    Bloomberg had a different take in this. They see it as a money raising scheme by getting customers to plunk down big down payments in anticipation of the new products and using the money to finance current projects. https://www.bloomberg.com/news/articles/2017-11-17/tesla-charges-up-to-250-000-for-resurrected-roadster-sports-car People keep stepping up to the plate.

  7. slocum:

    Actually, you do -- the government takes your tax money and hands it to Musk.

  8. Roy_Lofquist:

    Curb weight of Chevy Bolt is 3,500 lbs, battery is 960 lbs. Range is 240 miles. That comes out to 2.65 lbs of payload/pound of battery for 240 mile range. I have no idea of the scaling factors but it sure looks like hauling 40,000 lbs of freight 500 miles would require more than 20,000 lbs of batteries. In other words, - well, I don't have 'em. I'll leave them to your imagination.

  9. SamWah:

    It may be my money, but I'm not giving it to him.

  10. SamWah:

    Looks worse than I thought. Muchly.

  11. The_Big_W:

    Isn't that the definition of a Ponzi scheme?!?

  12. Andrew_M_Garland:

    Customers are placing $250K deposits on future delivery of the Roadster. Do they know that those deposits disappear in any bankruptcy? Deposits have no preferred status; they are general liabilities of Tesla, like cash owed to suppliers.

  13. billyjoerob:

    Musk will probably be forced to do an AOL/TimeWarner and merger with a real company for the cash flow so the question is what company to acquire? Fiat/Dodge? A truck company? Maybe a gas station network (with lots of convenience stores, the real source of cash flow) that he can switch to electric recharging stations? That last one actually makes the most sense. Tesla could replace gas with electric and maintain the same cash flow from the convenience stores (or mostly the same cash flow).

  14. John O.:

    I'm fairly confident the engineers at Tesla are enjoying their salaries knowing that they are just riding the wave that Elon keeps generating. Eventually the sea of ideas will freeze over and these guys are free to jump ship to a real car manufacturer that has the actual capital to put into designing an electric car and semi truck.

  15. marque2:

    The only way it could feasibly be done is to have an "electric rail" of some sort built into the freeway. There are.proposals to do such for an all electric vehicle fleet - so don't be surprised.if that is the ultimate answer.

  16. Matthew Slyfield:

    They are claiming a 300 or 500 mile range at under 2 kwh per mile.

  17. Matthew Slyfield:

    Interesting article, but in theory, electric traction motors would be even more efficient in heavy haul situations than low payload. The rail industry claims that a diesel electric locomotive can haul a ton of freight over 470 mile on a single gallon of diesel fuel.

    If the rail industry is correct regarding the efficiency of diesel locomotives, the very likely Motor Mouth's math is off significantly.

  18. Matthew Slyfield:

    Except the scaling is likely better than linear. The claimed efficiency for diesel electric locomotives is 471 tons/miles/gallon So 1 ton for 470 miles on one gallon of diesel fuel or 471 tons for one mile on the same one gallon.

  19. Roy_Lofquist:

    As I said, I don't know the scaling factors but I suspect that nobody will know until the machines are built. My brother recently retired from Cummings. He says that $/ton mile is the overwhelming focus of their efforts. The fact remains that electric tractors will have to drag around tons of dead weight, and that costs lots of $.

  20. marque2:

    I guess they can be over the freeway as well. Not as sexy as what I was thinking (maybe magnetic induction coils in the road). You think that would work at freeway speeds?

  21. cc:

    I'm trying to imagine what magnetic induction coils under or over the road would do to pacemakers and all the electronics in a car. zzzzaaap!

  22. marque2:

    You have a good point, but it is not necessarily a problem. First the metal in the car acts as a shield, secondly the power of the magnetic field dissipates fairly rapidly. And the pacemakers do have basic safety features. Non-the-less, I am sure there would have to be significant studies into this. Another ground option is live rails, but that has its own deadly issues.

  23. marque2:

    There are differences though. Rail is on carefully laid track, on very carefully graded lines which are no more than about 2% and because of this can use very efficient metal wheels. It is also 470 miles on a flat surface (relative to the center of gravity). The motor for a diesel train is also more efficient because it is several times larger, goes at more constant speeds, a train has to push away the atmosphere once, per 100 trailers, Trucks have to push the atmosphere away for 2- 3 trailers max (this is actually pretty significant) so for drag a train is what 30+ times more efficient. Trucks have more ability to move to different places, but the tradeoff is that they are much less efficient.

    BTW a quick look on the internet, An "18 wheeler" truck driving 65mph on the freeway fully loaded gets about 6 miles to the gallon. My ford focus, - the time I actually tested a full tank long haul truck speeds at 65mpg it got 42 ( normally I drive a bit faster), about 7x better mileage - so the paper is reasonable.

  24. Baelzar:

    Tesla is the Star Citizen of the car industry. The new Tesla models are like the jpegs of new ships that Chris Roberts has been hawking, and the deluded fanboys just keep buying. The crash will be huge.

  25. marque2:

    Slightly more research. In 2014 there was a mandate that under certain conditions semis get 7mpg (I doubt that is for max load though I would guess for 12 tons, but lets go with it) and the average is 4 - 8mpg . The maximum allowable weight in the US (it is different per state) is 40 tons. Therefore a truck moves 1 ton of goods 280 miles on one gallon of diesel (I would guess it is closer to 200). But yeah, seems like the railroaders, while more efficient are also trying to confuse people using metrics no-one really uses. Trucks are about 1/2 as efficient as the trains.

    However, you need to consider the people cost as well( and the total energy cost of a person) if doing real efficiency comparisons. I imagine having a 4 - 5 person cost for the 100 rail cars, vs a 1 person cost for 3 trailers, and trains go 24/7 vs trucks which I believe go 10hous/day 6 days a week max unless you have a partner.

  26. marque2:

    More math - see my notes below. 1 gallon of diesel is ~=40.7 kWh. The best of the best semis (8 mile per gallon) use 5.09 kWh per mile

  27. marque2:

    Oh, and the Environmental Defense fund believes that trucks can get up to 11 miles to the gallon in 2025 merely by legislating it, and it will cost no more than any other truck (eye roll).

    Maybe that is where Elon is getting the 2 kwh. I saw there is a demonstration truck that can supposedly get 14.7 miles to the gallon. Though, as a demonstration truck, it might not be all that useful in hauling goods.

  28. OldManRick:

    I would agree that rail transport is very efficient but much of that is from having a controlled roadway. Railways are designed to be flat and low traffic. They don't have to make the up-and-down climb and the stop-and-go traffic that is inherent in road traffic. The train traveling at a constant speed only has to overcome air friction (with a better profile per ton than a truck) and slight ups and down in the track. It can slow down on uphill grades and reclaim the energy on the downhill.

    Plus long distance freight trains don't travel at 60 plus MPH that truck on the road has to reach. Using the old Energy = mass times velocity squared, it takes more than twice the energy to get a truck's ton to reach 65 MPH as it does to get the train's ton to travel at 45 MPH. Add the slow and go, every time you accelerate from 60 to 65, you use another 17% of the energy required to get back to 65. Do that six times in an hour and you have four times the energy required for a train that doesn't deal with traffic.

    His math maybe off because he compares it to a car but, as he points out, the current trucks use 40 to 50 gallons of diesel for 60 miles. Max legal truck weight is 40 tons (limited by bridges and road capabilities), giving at best one seventh the efficiency of your train. Given that the battery potentially weighs over 20 tons (by independent estimate), for the freight carried, you can halve that to one fourteenth of your train. (I'm assuming that your train number represent the added diesel for freight over the diesel required for moving the engine and cars when empty. I am also giving you the all of the forty tons as freight and none as required to move the truck and trailer.)

    Since we are also reducing the load carried by the weight of the batteries, it means it may take close to two electric trucks to carry the load of one current diesel. So, in order to do the same job, you have to buy two electric trucks, each at twice the price of a normal diesel. We haven't even considered battery life time vs diesel engine lifetime

    Maybe a hybrid electric diesel could be more efficient than the current diesel designs, but if it was I would expect to see some truck manufacturer working that solution. I don't see the electric truck as anything more than a gimmick as our host suggests.

  29. Matthew Slyfield:

    True, but electric motors are far more efficient than a mechanical transmission in getting power from the engine to the ground in heavy haul situations. Diesel electric locomotives get 471 mile tones/gallon. for a semi with a 40,000lb(20 ton) payload that would come to 23.5 MPG.

    Now trains have a much lower rolling resistance and fewer stop / starts then road trucks, so 23.5 MPG is probably out of reach, but I could see reaching half that with a diesel electric semi

    I think a good preliminary test for the viability of electric semis would be to convert a tractor from diesel/mechanical transmission to diesel/electric and test the fuel efficiency of that.

  30. Matthew Slyfield:

    "Trucks are about 1/2 as efficient as the trains."

    See my comment above, that would put a diesel electric semi at just shy of 12 MPG, a considerable improvement over diesel trucks with mechanical transmissions.

    Even that may leave Tesla's claimed performance numbers optimistic, but not nearly as overly optimistic as the Motor Mouth article cited above implies.

  31. Matthew Slyfield:

    But what about pedestrians crossing the road. A magnetic induction field that powerful is probably going to be strong enough to cook unprotected organic tissues.

  32. Matthew Slyfield:

    How much of that is lost in thermal losses by heating the transmission components? Electric traction motors a each drive wheel hub would probably be significantly more efficient.

  33. Matthew Slyfield:


    Found an article about it. It's a diesel electric tractor.

    "A recent test run through Texas saw the Freightliner hit 12.2 miles per
    gallon at 65 miles per hour. That's not bad for a truck pulling more
    than 65,000 pounds".

    That bodes relatively well for a pure electric semi for short haul and even long haul if the charging infrastructure could be built.

  34. me:

    Age old tactic, everybody use the same (google Whataboutism).
    Our politician X is accused of sexual harrasment? But what about...
    It's beyond me why people still fall for this crap

  35. Orion Henderson:

    Musk is part PT Barnum and part Ken Lay in my opinion.

    Though I actually think the semi truck is a better use of electric power than anyone's personal vehicle.

    -If it has enough range for a full driver shift-the driver can sleep-like they are supposed to-when it charges.

    -Building a charging network at interstate truck stops seems far more practical than putting them in every town.

    -Big rigs also pollute a lot more-both emissions and noise-having quiet trucks running around would be quite nice actually.

    -They are major capital purchases-so the extra cost is depreciated-and the maintenance should be less than a conventional rig (I would assume).

    -High torque electric motors and regenerative braking make a lot of sense for a semi.

  36. marque2:

    Not too many pedestrians cross the freeway. At least not in California. It might be a problem where you live :P

  37. Matthew Slyfield:

    For such a solution to be practical, it couldn't be limited to limited access highways. It would have to put out enough power to run the vehicle, but then why not forgo batteries altogether to reduce weight / power requirments, or use very small batteries that are just enough to get on/off the road. But then the solution has to be applied to city streets as well.

  38. rst1317:

    That efficiency is obtained not just because they burn diesel to generate electricity but through things like having unit trains and intermodal trains. When you have a mile and half of 100+ton cars that rarely stops during a 800 mile journey and rarely goes more than 35 or 40 MPHS, you can gain a lot of efficiencies.

    The issue with trucking is that most of it is the opposite. YOu have a single load going to a single destination with lots of starts and stops and having to travel at speeds up to twice that of the trains. The amount of energy needed increases exponentially. Their advantage, a lot less calendar time and more flexibility.

    And the electric truck faces another issue, weight. In theory they have more space for batteries but they have weight restrictions. Add too much battery and you're going to need to sacrifice weight from that load.

  39. Matthew Slyfield:

    Actually, much of the extra efficiency comes from low rolling resistance.


    A diesel electric Semi Tractor has obtained 12.2 MPG hauling 65K pounds in tests. Around half the ton mile/gallon efficiency of a train. and around a 50% improvement over a standard tractor.

  40. rst1317:

    Thank you. I'd love to better understand that but the link you provided isn't working.

  41. Matthew Slyfield:

    Sorry, but apparently the copying the link from a prior comment didn't work properly. Here is the correct link.