Tesla Isn't Just Getting Bad Reviews From Consumer Reports, The SEC Also Isn't Happy With Its Creative Accounting

Tesla Fans: Please skip over this post. Nothing but aggravation here for you
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This is not news. Not in the true sense of it being new. Financial analysts have expressed "serious concern" over Tesla Motors for several years. Specifically, Tesla is bleeding red ink all over the place, loses thousands of dollars per vehicle sold, is borrowing and spending like a madman, and is making statements that make unknowing investors feels good while leaving financiers scratching their heads.

Examples include:

... We didn't include "on transit" vehicles in our X sales (News Flash: NOBODY does, so why mention it? You missed your self-imposed sales targets. Again.)

... We're showing a paper loss only because we're investing so much in our infrastructure like our car factory and the battery gigafactory (News Flash: That "paper loss" is a real loss. Capital Investments, such as buildings, expansion, and such, affect cash flow, but NOT profit. In other words, you'd be no more profitable had you not made those expenditures. Profit does not magically appear when you borrow money, but don't spend it. (For non-accountants: Borrowed money is a liability, or a debt. It hurts your Balance Sheet's bottom line, stating you have less equity, but it does not affect profit.)).


Note that the SEC's issues with Tesla's accounting have serious ramifications, in that Tesla's "creative accounting" prevents investors and lenders from seeing the true, and arguably dire state of the company's finances. This obviously works in Tesla's favor when it comes to borrow more money or when they turn to capital markets for more operating capital.

Also note that Tesla is not the only company who has strayed from GAAP, or Generally Accepted Accounting Principles. It's becoming far too prevalent nowadays :-(

Whatever you think about the outcome of the Presidential election results - there is subtle reminder in front of TV viewers every day about how hard these high-flying auto entrepreneurs can fall and how virtually impossible it is to create a new car company from scratch.

Have you seen President Elect Trump greeting mucky-mucks, dignitaries and job seekers at the door of his "Trump National Golf Links Bedminster, NJ"? Do you know who he bought it from?

The fancy wood front door Donald likes to pretend is at "#10 Downing Street" is actually John Z. DeLorean's front door! John DeLorean owned the home (now Trump Country Club's Clubhouse) and the 80+ acres (now a golf course) and Trump bought the home from the Southern District of NY Bankruptcy Court Trustee.

Hopefully Elon Musk won't be selling any drugs to keep his company afloat - but the heavy government dependence (DeLorean - N Ireland/UK and Trump - Obama Checkbook), relentless PR nonsense, near-frantic fan-boys/girls - both "new" motor companies are eerily similar.

Make your own mind up whether or not you should buy, sell, hold, or not buy Tesla/SolarShi**y stock - but if you want to drive a Tesla, be sure to lease it.

"Creative accounting" usually means criminal wrongdoing. I will laugh so hard when Elon fails...and he will.

I have already said that I do not like his sales model - which will only work in a market without competition. The longer it takes for Tesla to actually deliver the cars they promise - the MORE competition he will have in the market place (I could see GM producing another from their Bolt platform -for instance - as a Buick). Trying to "set" prices by being a single source - is ANTI competition - but you can bet that the other manufacturers will compete on price. It is one thing to bring a product to market when you control the technology - but when the technology is freely available - being in competition with Gm, Ford, VW, Toyota - the Koreans - and the Germans - will be far beyond his ability to control the market. - So yes - I agree that Tesla Motors will eventually fail. However - I believe his space based business has a better chance.

Truth is CR gave the Tesla S with its highest ever road test rating, it was reliability that removed the recommended mark. In addition MB cannot manage to outperform Tesla in reliability.