March 23, 2018, 10:05 am
Tesla agreed to give Elon Musk what is potentially the richest executive compensation package ever. I will give my (*gasp*) cynical reason why I think they did this. I can show you in one chart (Tesla Model 3 production, from Bloomberg):
I would argue that Elon Musk is the only one in the world who can run a company with so many spectacular failures to meet commitments and still have investors and customers coming back and begging for more. A relatively large percentage of Teslas get delivered with manufacturing defects and their customers sing their praises (even while circulating delivery defect checklists). Tesla keeps publishing Model 3 production hockey sticks (apparently with a straight face) and consistently miss (each quarter pushing back the forecast one quarter) and investors line up to buy more stock. Tesla runs one of the least transparent major public companies in this country (so much so that people like Bloomberg have to spend enormous efforts just to estimate what is going on there) and no one is fazed. Competitors like Volvo and Volkswagon and Toyota and even GM have started to push their EV technology past Tesla and actually sell more EV's than does Tesla (with the gap widening) and investors still treat Tesla like it has a 10-year unassailable lead on competition.
All because Elon Musk can stand up at a venue like SXSW, wave his hands, spin big visions, and the stock goes up $3 billion the next day. Exxon-Mobil has a long history of meeting promises, reveals its capital spending plans in great detail, but misses on earnings by a few cents and loses $40 billion in market cap. GE lost over half its market value when investors got uncomfortable with their lack of transparency and their failures to meet commitments. Not so at Tesla, in large part because Elon Musk is PT Barnum reincarnated, or given the SpaceX business, he is Delos D. Harriman made real.
Disclosure: I don't currently have any position in TSLA but over the last 2 years I have sold short when it reaches around $350 (e.g. after Elon Musk speaks) and buy to cover around $305 (e.g. when actual operational or financial data is released). Sort of the mirror image of BTFD.
March 19, 2018, 9:16 am
I continue to marvel at the nearly 100% positive press Elon Musk gets for his Hyperloop project. For those who do not know, that is his concept for a high speed transportation system that can achieve high speeds in part because it is in a vacuum sealed tube. Here is an update on the project and a picture of a prototype below:
So here is the story so far: We know that the main barrier to high speed rail projects is that they are astonishingly expensive to build and maintain given the high cost of the right-of-way acquisition and building track to the very high standards necessary to support safe high speeds. See for example California high speed rail, which is following some sort of crazed Moore's law where the cost estimate doubles every 18 months.
So we are going to fix the cost problem by ... requiring that the "track" be a perfectly smooth sealed pressure vessel under vacuum that is hundreds of miles long? What about this approach isn't likely an order of magnitude more expensive than rail? The prototype above which allows only one way travel cost about a billion dollars per mile to build. And with a lot less functionality, as current prototypes envision 10-20 person sleds, one step beyond even the worst airline middle seat in terms of likely claustrophobia, and less than half the capacity of a bus. It would take 15-20 of these sleds just to move the passengers from a typical aircraft. Not to mention the fact that there is no easy way to do switching and a return trip requires a second parallel track. All to reach speeds perhaps 20% higher than air travel.
Sure, I can be wrong. For example, if the hyperloop handled grades better than a train, that would reduce costs somewhat. But why does no one seem to ask obvious questions like this? It's like Musk exudes some sort of skepticism dampening field around him (look at Tesla: the company is fraught with issues and the stock price was falling until Musk did one of his hand-waving presentation specials at SXSW and the stock goes back up 30 points). But if you read carefully, most of the hyperloop progress in the article linked is for getting handouts from government (something Musk excels at) including money for scoping studies of lines that will never exist and money for new buildings and workshops.
