Mark Spiegel’s Stanphyl Capital on its short Tesla Motors Inc (NASDAQ:TSLA) positions from its September letter to investors

The debate over active versus passive management continues as trends show the ongoing shift from active into passive funds. Q2 2020 hedge fund letters, conferences and more At the Morningstar Investment Conference, Michael Mauboussin of Counterpoint Global argued that the rise of index funds has made it more difficult to be an active manager. Drawing Read More

Assuming Tesla spends the $1.1 billion in Q4 capex it projects and normalizes its accounts payable, I estimate that Q4 should be free cash flow negative to the tune of approximately $1.5 billion

But wait a second! After the May 2016 raise didn’t Musk say he’d never need to raise capital again? Well actually he first said that in February…

and were built expressly for the purposes of being sold as discounted brand new inventory

In September

multiple car makers introduced electric vehicles at the Paris auto show

while General Motors

announced

that its new

Bolt EV

(at dealers in November), will have a surprisingly high

EPA-rated

range of 238 miles, handily topping the

210-miles

of the cheapest Tesla Model S (which is $30,000 pricier) while

matching its 94 cubic feet of interior passenger space

and posting a zippy

0-60

time of 6.5 seconds. Seeing as studies show that 15% of Tesla buyers come from a Prius and many others come from other inexpensive

“eco-favorable”

cars, I expect the Bolt to grab back a significant number of

them—what

I call the “stretch buyers” who paid up for a Tesla because they wanted an electric car with 200+ miles of range; those people can instead now choose the much less expensive/easier to park Bolt over the current Model S, probably at least two years before Tesla’s

so-called

“mass market” Model 3 can be in true mass production (late 2018 vs Tesla’s claim of 2017) at a base price (as discussed later in this letter) I estimate will have to be approximately $10,000 higher than the $37,000 Bolt. The first full reviews of the Bolt came out in late October and in

a direct comparison test

between the Bolt and the Tesla S 60 “Motor Trend” magazine concluded: