Morgan Stanley’s Adam Jonas concedes that Tesla is just a poorly-run automaker, signalling an end to its run as a momentum “story stock”.
What Jonas is saying here is that Wall Street has pumped cash into Tesla as if its sales would keep growing forever, and they simply aren’t anymore. This creates the kind of situation that has caused the majority of auto manufacturer bankruptcies: overinvestment in production capacity without the ability to sell profitably at the same rate. “They’ve built this hulking physical infrastructure to supply more like a million cars a year, not 350,000 cars a year,” he said. “And that’s what’s creating this bleeding.”
But in reality, this is really only part of the story. Sure, Tesla’s inability to profitably build Model 3s at the projected base price of $35,000 means that sales volumes will inevitably fall short of projections but that’s not really featured into the debates between Tesla bears and bulls. Instead, Tesla’s boosters like Jonas framed the fundamentals of its auto manufacturing business as a distraction from the real story: its disruption of the energy sector, its autonomous mobility plans, its transformation of the car into a software platform, even the possibility of merging with Musk’s SpaceX. What Jonas is saying is the exact opposite of what he told DeBord in 2017: Tesla’s ability to profitably make and sell “machines for people to own” is the factor on which its disruptive potential rests….