Elon’s First Fraud Suit, by Eric Peters

Tesla’s undoing may ultimately be that Elon Musk is not a car guy. From Eric Peters at theburningplatform.com:

Elon Musk is being accused of fraud – but not over his cars.

Not yet.

This fraud suit alleges financial flim-flam. That Elon’s very public musings about taking Tesla off the stock market as a publicly traded company were meant to temporarily inflate the value of Tesla stock as a way to generate more Desperation Money (but not by selling cars or making an honest profit) to stave off the inevitable collapse.

The lawsuit – a class-action lawsuit filed in Federal court –  alleges that Musk’s Aug. 7 statements had the effect of “completely decimating” short sellers, people who bet against a rise in the value of  Tesla’s stock.

The SEC is looking into things.

Other things being looked into include sketchy practices to meet Elon’s publicly promised production numbers for the Model 3, the “affordable” Tesla Elon has been touting but failing to deliver for years. Not yet being looked into officially – but arguably ought to be – are Musk’s promises to the thousands of people who put down deposits on the “affordable” Model 3 – the one with the promised $35,000 MSRP – which isn’t being produced.

The Model 3 which is being produced is the much-less-affordable $40,000 model – which has a larger, more powerful battery and more range than the $35k model. But the $5,000 difference makes all the difference to people who cannot afford a $40,000 car – electric or not.

Especially now that the federal tax incentives Elon relied upon to get people to buy his cars are on the verge of going away. This will mean that buying a $40,000 Tesla means paying the full $40,000 – not $40,000 minus whatever the federal government kicks back to the buyer.

But Elon’s biggest sin may not be fraud.

It is incompetence seasoned with a puckish, childish arrogance.

Musk is not a car guy and has no experience in the car business – outside Tesla. Yet he presumed he could teach the car industry a great lesson – with the help of Uncle.

He would show them.

But unlike car guys who do know the car business, Elon made a number of critical mistakes – which have nothing to do with his cars being electric. That just added salt to the wound.

The biggest mistake he made is focusing on sedans at precisely the moment when the market isn’t just moving away from them – it is virtually abandoning them in favor of crossover SUVs. These are now outselling cars and particularly sedans.

To continue reading: Elon’s First Fraud Suit

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