VW

Tale of the gold coin chocolate & a warning for Tesla Disciples

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It hadn’t really hit until going back to read the conditions of Musk’s new executive compensation package but the first thing that struck me was the risk of the old adage of paying too much attention to the share price. The collection of all 12 tranches for CEO Elon Musk only kicks in when his company hits $650bn in market cap. The first thing to pop in the head was that of Japanese mobile phone retailer Hikari Tsushin back during the tech bubble. The rather eccentric CEO Yasumitsu Shigeta had gold coin chocolates made embossed with “Hikari Tsushin: Target Market Cap Y100 trillion.” One could only conclude he believed in his own BS.

It was at that moment where the only thing that crossed the mind was ‘this spells trouble’. There were magazines like Forbes touting how Shigeta was one of the richest men in the world and analysts fell hook, line and sinker for this unrealistic dream forecasting he’d be #1 before long. The only rational conclusion for the Contrarian Marketplace was to tell them that “bet he won’t be in the top 100 next year.”  Low and behold the tech bubble collapsed and Hikari Tsushin – that believed it was worth 2x the market cap of then highest valued corporation in the world, General Electric – fell over 95%.

While Musk may not yet have printed target market cap $650bn gold coin chocolates, what the incentives are saying to the market is that his company needs to be worth more than Daimler, BMW, VW, GM, Ford, Toyota, Nissan, Honda, Renault, Fiat-Chrysler Ferrari and Porsche combined. Just read that last sentence again. Do investors honestly believe that Tesla which consistently misses and is going up against companies that have been in the game for decades, seen brutal cycles, invest multiples more in technology and forgotten more than they remembered will somehow all become slaves to a company which has no technological advantages whatsoever?

Once again, this compensation package screams of gold coin chocolates in mentality. Instead of running the business and letting the share price do the talking, the mindset is focused on launching convertibles into space and distracting investors from increasingly dreadful financial results which eventually must come full circle if the results continue to miss. Broader Tesla report here.

Will Greenpeace Be arrested and charged with trespassing?

Greenpeace has disrupted a business which is already paying billions in fines. If only Greenpeace had the first clue about diesel emissions and the reality of the CO2 footprint of EVs at the production stage and charging.

VW e-volution is a PR exercise which looks like a sacrifice at the altar of the regulator

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Of course VW will tell us sweet stories of how their corporate governance has reformed and what better way to gloss over an emissions scandal (the true test of how they really feel about saving the environment) by telling the world you’ll intro 30 new electric vehicle models by 2025 which could be up to 25% of production volumes. It is smoke and mirrors but this marketing PR blitz will no doubt work with the eco-mentalists. VW knows the soft spot.

Here is the rub. Apart from the fact that EVs are not ‘eco friendly’ to manufacture and depending on the power generation mix (i.e. % of coal fired power vs nuke vs renewable) then your EV may actually be net net worse for the environment than a petrol car. HK is a prime example.

The issue is more than that. The slowdown in the global economy is going to drastically change these plans from VW. Making EVs is not affordable technology. Tesla makes massive losses. Governments have often stepped into bail out automakers because they employ so many people but car companies have to make money to employ people so in order to do that the petrol/diesel powered cars will still be the way car companies can achieve it.