AutoNation CEO Says Tesla Is Either A “Ponzi Scheme” Or “It’ll Work Out”

Tesla

APR 13 2017 BY STEVEN LOVEDAY 23

Tesla

AutoNation CEO Mike Jackson (Image Credit: flickr via NADA)

It’s interesting that some media coverage of AutoNation CEO Mike Jackson’s recent comments at the New York Auto Show claim that he “attacked” Tesla, and accused the company of being a Ponzi scheme …

In fact, Jackson did say Tesla is:

either one of the great Ponzi schemes of all time or it’s gonna work out.

He also said of CEO Elon Musk:

“You have to tip your hat that he’s created a brand that has a strong, cult-like following.”

The upcoming Model 3 will be the “proof in the pudding” for the electric automaker’s success … or lack thereof.

And it’s those cult-like reporters that are assuring that his words seem extremely harsh. Really, this is surprisingly mild coming from the CEO of biggest automotive dealer chain in the U.S., publicly speaking to the National Automobile Dealers Association. Dealers are surely not big fans of Tesla’s direct sales approach, and … Jackson doesn’t exactly have a reputation for making nice. It could have been much more of an “attack” to say the least.

Jackson did have to throw in some words about Tesla’s losses, but that’s only partly true at this point. Jackson commented:

“Selling vehicles at a profit would be very impressive. Giving away vehicles at below what it cost you to make them is not very exciting.”

Tesla’s cars are priced at more than it costs to make them, and the company has recently turned a profit. Being that it’s a startup, and has to catch up from a history in which profit was unattainable, it will be awhile before Tesla is out of the red.

To Jackson’s credit, Tesla lost ~$900 million in 2015, and ~$800 million in 2016. However, the automaker had a whopping $8 billion in revenue last year. GM made a $9.4 billion profit in 2016, and sold 10 million vehicles. Tesla sold 76,230.

So, Jackson has some valid and verifiiable points, among some of his misconceptions. He went on to say:

“Clearly General Motors is undervalued and Tesla is overvalued. Anybody can see that.”

This is an argument for another article. It all depends on how you view the market, or which analyst you believe. But the fact of the matter is that Tesla’s stock price escalated to record highs, and its market cap did, in fact, surpass that of GM. There’s no debate there. It happened.

Why did it happen? Again, another post would suffice. The nuts and bolts of it, though, come down to investors believing in the Silicon Valley automaker and its visionary leader, Elon Musk. The recent historic surge followed Alex Potter’s (Piper Jaffray analyst) target upgrade to $368, from his prior forecast of $223. Potter explained:

“More so than any stock we’ve covered, Tesla engenders optimism, freedom, defiance, and a host of other emotions that, in our view, other companies cannot replicate. As they scramble to catch up, we think Tesla’s competitors only make themselves appear more desperate.”

Source: USA Today

Categories: Tesla

Tags: , ,

Leave a Reply

23 Comments on "AutoNation CEO Says Tesla Is Either A “Ponzi Scheme” Or “It’ll Work Out”"

newest oldest most voted
Robert

WoW this goes back to what I was taught as a child ” If you don`t have anything nice to say DON`T say anything then”.

“Either he’s a crook or he’s not”

Loveday was far too kind in his assessment of Jackson’s reckless and irresponsible characterization of the most innovative and consequential leaders in the history of the automobile industry.

Cars are being produced. I drive one of them. Anyone can go see the factory, the showrooms, drive the cars. Buy a car.

A Ponzi scheme produces nothing but false accounting reports.

Tesla is an investment and a grand experiment that may or not work out.

Any comparisons to financial fraud are not just unkind and unjust, but petty and reveal the fear that runs deep in the heart of Jackson and every other competitor that relies on an outdated method of operation.

When I hear comment’s like Jackson’s, I wonder if retail car sales is whistling past the graveyard or already has has one foot in the grave.

Roy_H

+1

Basically, he’s saying Tesla is like US social security program, or it’ll work out. Since SS has been going for 70 years and probably another 10 or 20 years at least, Tesla will be just fine either way. That’s a resounding endorsement from anti-competition, anti-capitalism shill. No wonder Tesla stock price has been going nuts.

arne-nl

A true Ponzi scheme it cannot be, at that insinuates malicious intent. That seems to be too far fetched.

Michael

That’s all bulls*** ’cause Tesla is definitely NOT selling Model S and X without a margin. They are just sold with a loss if you allocate the fixed costs such as development, research, Administration and so on.

The higher turnover grows, the fewer this fixed costs are for every sold car.

I guess that moron knows this, but plays with phrases just for bashing Tesla.

William

AutoNation should take any all their extra business capitol and Short Tesla Shares on Wall Street. This would be an interesting paired trade for their business. Hope putting his money where is mouth is works out for AutoNation.

ffbj

Auto dealers are seriously worried and pulling out all the stops to attack Tesla, whom they view as the biggest shark in the pack circling the dying whale that is the legacy auto industry.

Bob Lutz, the old warhorse, has been trotted out, once again, to dis Tesla. Every commentator refers to Tesla loosing money, while the legacy makers continue to make money. Though no one can explain why their stocks are so undervalued, according to them.

It’s because they just lay there, hardly moving, like the bloated, blubber filled behemoth that they are.

Though if you want dividend income they are worth buying, imo, since it will a long slow death.

States legislatures, bought and paid for, with officials & courts also attacking, with reckless abandon, Tesla’s right to sell to customers in their states.

And yet Tesla, the 2nd oldest American car company, continues to move forward, though it is being attacked on many fronts.

http://www.zerohedge.com/news/2017-01-27/us-auto-industry-crisis-amid-inventory-bubble

ffbj

Credible? No.

Salty Bob

Stephen Hodges

I think the whale image is rather hard on whales

Ron M

The ex CEO of GM was making similar comments. Since starting Tesla it’s already producing the vest EV on the planet. It has a factory building cars, a factory building solar panels and a factory building batteries. There also is competition among states and countries to build new Tesla battery and car factories’

Four Electrics

If Tesla included R&D costs in their gross margin, like other automakers, he’d have less of a point. But that would also make the car unprofitable.

Pushmi-Pullyu

There you go playing semantic games again.

The Model S and the Model X are quite profitable, thank you very much. Tesla’s gross profit margin is significantly higher than the average for the industry, altho perhaps not higher than average for an auto maker that makes only “premium” or luxury cars.

The fact that Tesla continues to plow all its profits back into growing the company, and continues to borrow more money to sustain its rapid growth, doesn’t in any way magically cause those profits to disappear. That’s like saying if you put some weights on the opposite end of the balance scale, it causes the weights on the other side to disappear.

Counterbalanced does not equal vanished.

Lou Grinzo

BREAKING: Dinosaur whines about rise of furry little mammals.

AlphaEdge

Dinosaur: I keep on trying to stomp on them, but they are too fast!

Someone out there

You could argue that TSLA is a bad or very risky investment but I don’t see how it is a ponzi scheme. TSLA is certainly overvalued, they would need to sell helluva more cars for the valuation to make sense. I guess the expected success of the model 3 is built into the price but that is what makes it very risky. I’m sure that Tesla will sell a fair amount of model 3’s, I’m not convinced it will be a raging success compared to the auto business as a whole. I think quite a few reservation holders will cancel without buying once it’s out, for varying reasons.

The problem is that Tesla’s window of opportunity isn’t that wide open anymore. The established auto business has woken up and come 2020 Tesla will have a lot of competition. Even with the model Y I think Tesla will still be small fish at that time. I don’t buy for a second that Tesla will be selling 1 million cars in 2020

Hauerh

This is a beautiful example of a person representing this dealershipstuff. Absolutely fine that EM does not want tonwork with that species at all.

mxs

The AutoNation guy is an idiot … but for some Tesla fans here even this is not acceptable … “Tesla is an investment and a grand experiment that may or not work out.” … for them to admit that Tesla is not scrutinized like other manufacturers are. The honeymoon and seemingly endless capital injections will dry up at some point. If not, than I guess they can endlessly experiment in the future …

Pushmi-Pullyu

Tesla Inc. isn’t scrutinized? Just go to Google News and search on Tesla, and you’ll see it gets plenty of scrutiny; far more than most companies.

Tesla’s stock has a price which is quite inflated as compared to traditional evaluating methods, but let us please not make the mistake of confusing TSLA, the stock, with Tesla Inc., the company.

Mister G

Folks Tesla is now a data storage facility with billions of digitized real world miles of roads and highways…and they happen to make BEVs and solar panels.

Loboc

Mister G has it mostly right.

Here is the issue: Tesla is not only a car maker. Tesla is a conglomerate and Musk is a CEO of more than a mere car company.

The Tesla hive mind (all of their deployed cars)is a powerful advantage. GM had to delay their Super-Cruise introduction several years because they needed to map all the roads first. Tesla is doing that in real-time and in parallel.

Pushmi-Pullyu
“either one of the great Ponzi schemes of all time or it’s gonna work out.“ Actually, there was (perhaps still is) an electric car Ponzi scheme: ZAP Motors, according to a Wired tell-all article, is a multi-level marketing scheme where the victim is those who agree to open a franchise for the car. But looking at Tesla Inc. from a purely logical, objective standpoint, I fail to see how the company can actually be a Ponzi scheme in the literal sense. Perhaps the term “Ponzi scheme” is now being used to suggest any kind of financial shenanigans? I note the Nevada State Treasurer called Faraday Future a “Ponzi scheme”, but again I don’t see how that can be literally possible. Some industry watchers have noted the prevalence of peer-to-peer lending in China, and there is a lot of fraud involved in that; so perhaps the Treasurer is suggesting Faraday Future is a front for a peer-to-peer lending scam in China, as the entrepreneur behind FF lives there. It’s even harder for me to see how Tesla Inc. could possibly be a fraud. Is the company not making and selling tens of thousands of cars which are among the best-reviewed cars… Read more »
CLIVE

Auto Nation stores are everywhere.

They might be lucky if I ever buy another gas car from them

Plugin at best