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Tesla: China Hardware Issue A Bad Look

Mar. 05, 2020 1:40 PM ETTesla, Inc. (TSLA)197 Comments
Bill Maurer profile picture
Bill Maurer


  • China customers are upset about some delivered Shanghai made Model 3 vehicles containing an older version of Tesla's self-driving hardware.
  • Supply chain reasoning doesn't add up.
  • Management's responses seem a little problematic and entire situation could have been handled better.

When investors look at buying a stock, trust in management has to be a key consideration. If you cannot trust the leaders of the company to do the right thing, why should you put your money into the name? Electric vehicle maker Tesla (NASDAQ:TSLA) has had its issues over time, primarily thanks to a number of predictions and guidance items that never came close to reality. The funding secured tweet from CEO Elon Musk that got the name in hot water with regulators is probably the best example of this, and the head of the company is preparing to go to court over the SolarCity acquisition. Unfortunately, the company continues to act in bad faith with consumers, and management's response to critics only makes the situation worse.

Just in the past six weeks, Elon Musk and Tesla management have been all over the place with their actions. Company leaders said there was no need to raise capital on the Q4 conference call, then just about two weeks later there was a massive capital raise. Elon Musk has also dismissed the coronavirus as being just like a cold, but it likely will be a major excuse for the firm if sales don't come in as expected for Q1 2020. This week, things took another interesting turn in this story, based on the following Global Times tweet:

Tesla has never publicly stated that the coronavirus was causing any major supply chain issues, especially in China. The company has had plenty of opportunities to speak to investors about this, primarily at the recent capital raise, but management made it seem as if all was well. The following shouldn't even be an issue considering Elon Musk has previously stated that hardware 2.5 was phased out in 2019. Why is the company using old technology

This article was written by

Bill Maurer profile picture
I am a market enthusiast and part-time trader. I started writing for Seeking Alpha in 2011, and it has been a tremendous opportunity and learning experience. I have been interested in the markets since elementary school, and hope to pursue a career in the investment management industry. I have been active in the markets for several years, and am primarily focused on long/short equities. I hold a Bachelor of Science Degree from Lehigh University, where I double majored in Finance and Accounting, with a minor in History. My major track focused on Investments and Financial Analysis. While at Lehigh, I was the Head Portfolio Manager of the Investment Management Group, a student group that manages three portfolios, one long/short and two long only. I have had two internships, one a summer internship at a large bank, and another helping to manage the Lehigh University Endowment for nearly a year. Disclaimer: Bill reminds investors to always do their own due diligence on any investment, and to consult their own financial adviser or representative when necessary. Any material provided is intended as general information only, and should not be considered or relied upon as a formal investment recommendation.

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