Road Safety

Sydney Harbour Bridge is falling down?

CM is no construction engineer but this bridge expansion joint on the right (under the south side of the Cahill Expressway 100~150m before it veers left across Circular Quay) is looking rather sickly. While the top has a ball joint and the bottom leading edge looks to have a beveled surface to allow some flex/give to the structure above, it looks as if it has been sitting in that position for quite some time. Simple physics around force distribution at odd angles and metal fatigue data on a 60yr old part might be worth checking.

Averaging 30,000-40,000 cars a day and a dedicated bus lane means it gets a regular pounding. NSW RMS Minister Melinda Pavey has been informed of it.

Musk channels the Black Knight?

It has become apparent that the SEC & Musk had a deal which would see him removed from Tesla yet his lawyers have rejected it at the last minute because he’d rather fight the charges. One could argue in favour of his bravery to appeal against what looks to be a very open and shut case about breaching probably the most basic of errors in standard reporting to the exchange to ensure fairness.

Maybe he feels that he is only going to get a slap on the wrist? In the 63 odd charges laid out against individuals by the SEC for reporting violations in 2018, the average fine has been $75,000. Hardly a ripple to Musk’s net worth.

The bigger risk for Tesla shareholders if Musk loses in court against the SEC and is forced out (to be honest his board should demand it) will be losing a figurehead who at the very least has managed to make a company with no profits, monster debts and questionable actions worth more than Ford, FCA & GM combined. Betting against Musk has been a dangerous game. He may well be teflon coated but it remains questionable whether he can strap himself to his reusable rockets and escape the fraud charges.

Two diplomats and the bloke who said what everyone else was thinking

Yesterday CM wrote about the terrible sportsmanship of Romano Fenati who tried to cause a competitor to crash by grabbing his front brake during a race. Race winner Andrea Dovisioso and reigning world champ Marc Marquez gave diplomatic answers as to what punishment fits the crime but 3rd place getter Brit Cal Crutchlow told the refreshing truth – that Fenati’s team should have immediately fired him. Race Direction handed out a pithy 2 race ban. Fenati’s team agreed with Crutchlow.

Fenati’s team said,

Here we are. Now we can communicate that the Marinelli Snipers Team shall terminate the contract with the rider Romano Fenati, from now on, for his unsporting, dangerous and damaging conduct for the image of all. With extreme regret, we have to note that his irresponsible act endangered the life of another rider and can’t be apologised for in any way. The rider, from this moment, will not participate in any more races with the Marinelli Snipers team. The team, Marinelli Cucine, Rivacold and all the other sponsors and the people that always supported him, apologised to all the World Championship fans.

Indian Motorcycles upbeat on 2018 outlook at 2Q stage

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Indian Motorcycles – owned by Polaris Industries –  saw a mid single digit bump in unit sales in 2Q18. Gross profit was up 17% in the m/cycles segment although some funnies in the like for likes with the wind down of the Victory brand. Slingshot soft. Polaris Off Road Vehicles strong. Group 2Q ahead of market expectations, even factoring in the buyback and retirement of around 2.2% of outstanding shares in 2Q.

Exciting new launches like the Indian FTR1200 flat tracker next year will keep the registers ticking over. Scout series continues to do well. Heavier Indians finding it tougher going which is in line with market trends. Doing well with limited editions.

Polaris see the Indian brand performing strongly in international markets and expect momentum to improve over the year. Indian market share growing in domestic (at the expense of H-D) and international markets including Europe. Expect a $40mn impact from tariffs across all Polaris lines.

Share Buyback Activity: During the second quarter of 2018, Polaris repurchased and retired 1,429,000 shares of its common stock for $177 million. Year-to-date through June 30, 2018, it has repurchased and retired 1,562,000 shares of its common stock for $192 million. As of June 30, 2018, the company has authorization from its Board of Directors to repurchase up to an additional 4.9 million shares of Polaris common stock equivalent to c.10% of outstanding.

Indian had a contrasting set of results vs Harley. Both complaining of sluggish domestic market in big bikes but Indian remaining the more agile of the two with innovation. FTR1200 will hit it out of the park.

Harley-Davidson Shinjuku declares bankruptcy after revenues fall 85%. Changes ownership.

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Yahoo Japan reports Harley-Davidson Shinjuku, a central Tokyo dealer for the motorcycle brand has gone out of business after almost 70 years in the trade.  Established in August 1953 before Harley Davidson Japan became the domestic agency, it ran a parallel imports business of the iconic brand. In the fiscal year ended July 1992, the annual turnover was estimated to be about 2,426 million yen. However, as the motorcycle market contracted, annual sales in the fiscal year ended July 2017 fell 85% to about 376 million yen. Even after closing the Yokohama, Hachioji stores, losses continued every year.

Debt is approximately 146 million yen as of the end of July 2017. “Harley Davidson Shinjuku” was closed on July 11.

It has since reopened under new ownership. Customers of the dealership have been informed of the ownership change according to HD Japan. Harley had peak sales of 16,000 units in Japan and is likely to do around 9,500 units in 2018.

Tesla’s Autopilot beta testing means customers are crash test dummies

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Back in April 2016, we wrote about the dangerous legal ramifications facing Tesla due to its overzealous promotion of the auto-pilot function. What people tend to forget is the issues surrounding liability. An insurance company often covers a driver with respect to accidents – wet road, poor visibility or being hit by another driver. The insurer covers that type of damage. Yet the death of a Tesla driver in California last week was found to have had the auto pilot function on. Why should an insurer pay for damages that result from willful negligence promoted by the manufacturer itself? This is a design fault. Moreover how could Elon Musk’s legal team not suggest that he refrain from such promotion? Accidents as a result of Tesla’s auto pilot are becoming so numerous that it is hard to fathom why people put so much faith in the system, as this video highlights. They are willingly becoming crash test dummies.

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Tesla’s own website notes, “Build upon Enhanced Autopilot and order Full Self-Driving Capability on your Tesla. This doubles the number of active cameras from four to eight, enabling full self-driving in almost all circumstances, at what we believe will be a probability of safety at least twice as good as the average human driver. The system is designed to be able to conduct short and long distance trips with no action required by the person in the driver’s seat.”

The video on the autopilot webpage highlighting the autopilot function on the makes no reference to ensure drivers pay attention to the road even when the system is in use. Sounds to me like the ambulance chasers have plenty of ammunition to launch a class action. It only cost Toyota $1.2bn for the runaway accelerator issue. For a company deeply in debt with such heavy losses, rising interest rates, falling credit rating and senior departures, Tesla should be careful not to get carried away with signaling the virtues of systems that are clearly flawed.

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Tesla is trucking kidding itself

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Tesla has bagged 55 orders for the semi so far. Although it is no surprise that no major truck hauling companies have signed up. Funny that. To expect trucking companies who operate under strict cashflow constraints (afterall they’re businesses not wealthy consumers) to give Musk a $200,000 upfront deposit (aka interest free loan) per ‘founder series’ truck is to put in Tesla lexicon – ludicrous. Truck companies, as CM wrote in its 30 reasons why Tesla is likely to be a bug on a windshield, are conservative. They want to see the technology proven in the field before just forking over $150-200,000 and hoping for the best. Were the technology or charging infrastructure to come up short then the whole economic proposition would come unstuck.

The Tesla trucks are roughly 30% to 70% more expensive than diesel trucks which have up to triple the range on full tanks. Many new 2018 diesel models are available now at $120k vs Tesla’s $150k (300mi range) and $180k (500mi range).

If we used the $60,000 more expensive Tesla Semi can to recoup the difference then it will need to be driven 240,000 miles using the $.25/saving per mile vs diesel Tesla number. Some estimates suggest payback in 3-4 years.

One former trucking company planner wrote,

I was surprised when I saw this “two-year” payback period quoted by Musk last week and repeated on the website. Two years? Really? He had just gotten through showing us an operational cost savings of $.25 per mile over diesel.

Well if I am going to pay back the truck I need those savings to equal the purchase price in two years. Well $180,000 divided by $.25 is 720,000 miles or 360,000 miles per year. That is not even physically possible. A truck would have to drive non-stop for 24 hours a day, 365 days a year at an average speed of 41 mph. Subtract out recharging time of 30 minutes every six hours or two hours per day and four hours per day for loading and unloading and the truck must average 54.7 miles per hour for every mile driven. It is impossible to do.

My big trucks ran long trips moving from coast to coast or north to south. I pulled out my records just for the fun of it and my trucks averaged 13,000 miles per month in summer months and under 10,000 in winter months because of weather and tougher loading and unloading conditions. Most trucks ran about 120,000 miles per year maximum even with driver teams. This was due in many cases to operational time limits of over-sized loads (half hour before sunrise until half hour after sunset is mandatory in many states for safety reasons).“

Whether the new Tesla Roadster or Tesla Semi this new deposit scheme is actually more telling than the vehicles themselves. This can be none other than a cash grab interest free loans to keep the thing alive. I salute Musk for his pioneering spirit but playing with the big boys is never easier done than said. Can’t wait to see the cashflow numbers in Q4 reporting early next year. If we get a worsening of this chart beware.

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Perhaps we can also find some amusement in Tesla’s competitor (Nikola) tweets

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