Content adapted from this Zerohedge.com article : Source
Mark Zuckerberg is not the only billionaire having a rough week.
Elon Musk is enduring a crash car, missed production targets, autonomous deaths, and a liquidity crisis. Now we can add a recall to the list of struggles for the well known CEO.
After the market closed, Tesla announced the recall of 123,000 Model S cars.
The recall is related to a power steering problem.
The recall covers all Model S sedans built before April of 2016.
Three bolts holding the power steering motor in place can corrode and either come loose or break, possibly causing a loss of power steering. Manual steering would still work.
Tesla says the problem happens infrequently in places where salt is used to clear snow and ice from roads. It's recalling all the cars even in warm-weather states just in case.
No crashes or injuries have been reported.
Service centers will replace the bolts with ones that are more corrosion-resistant. Owners will be notified Thursday by email. Tesla says replacement parts will be available first in cold-weather areas, then in warmer climates.
It is no surprise that investors did not like what was happening.
Ouch.
Good thing for Elon that tomorrow is Friday.
Non-adapted content found at zerohedge.com: Source
Good thing the market is closed tomorrow for Good Friday. There was an article in the Wall Street Journal today saying that Tesla will soon need more cash, which will not be nearly as easy for Tesla to raise as it has been. And that article was published before the recall was announced.
Some hedge fund managers like Mark Yusko think Telsa is doomed and is an easy short.
More info from Stansberry Research:
"According to noted Tesla bear John Thompson – CEO of Vilas Capital Management – the company may not even survive the summer. As he wrote in his latest letter to investors last week...
"I think Tesla is going to crash in the next 3-6 months.
"[This is] partially due to their incompetence in making and delivering the Model 3, partially due to falling demand for the Model S and X... partially due to the extreme valuation... partially due to their horrendous finances that will imminently require a huge capital raise... partially due to a likely downgrade of their credit rating by Moody's from B- to CCC (default likely) which should scare their parts suppliers into requiring cash on delivery (a death knell)... partially due to the market's recent falling appetite for risk... and partially due to our suspicions of fraudulent accounting activities, evidenced by 85 SEC letters/investigations and two top finance people leaving in the last month.
"We are doubtful that they can raise a meaningful sum in the face of these material issues... Tesla, without any doubt, is on the verge of bankruptcy."
Yeah, I have been seeing tons of articles lately about Tesla being doomed. All markets are getting slaughtered at the moment, and it seems Tesla is hanging on by a thread at the moment. If markets continue to fall dramatically, Tesla could be in some big trouble!
Ouch, i hope Tesla can get things back on track. It's my favorite car company. Doing things that any other car company could have taken on but started from scratch to dominate the electric car market as well as autonomous vehicles.
123,000 cars... the largest recall ever voluntarily over faulty Model S steering is going to affect the company's sales and reputation to some extent but this is in the best interest of the public. The graphs above are evident the recall is already lowering the shares in the company which I believe is a result of the loss of interest by some shareholders and customers. I believe these implications will be short term though since the company has enough resources to withstand the effects.
Too bad for Zuckerberg and Elon. Let's hope this short Easter holiday will be a relief to them.
I have the worst timing ever! The stock was doing decent a few weeks ago, and I put a few thousands in it. Three days after it started tanking with no end in sight :(
Thanks for this information
Sure really a good thing that tomorrow is Friday. That trend on the chart doesn't look good at all.
All automakers go through ups and downs. All get sued. All have to find a way to persevere or die out.
this is so pathetic to see...i think good one come back soon..so much informative post.
@resteem done
thats sad moment..but it is informative post
@resteem done
Market settlements are awesome opportunity to rake in attractive shares at a very interesting price.
That being said I wish them all the best, hope they will recover.
Great American company leading the way not copying anyone else like a monkey.
Of course this is America and you miss a deadline u're toast. What ever happened to take a little more time to do a good job instead of rushing to meet a stupid deadline or forecast.
PS: Some automakers already use steer-by-wire. If something happens to this system there is no manual steering because there is no mechanical connection between the steering wheel and steering rack which actually steer the wheels... so it COULD be worse.
And I thought my week was bad
Tesla makes big news with this but other car manufacturers have had way bigger recalls in the past, millions of cars. It's only making big news because of the Tesla name. I bet the stocks recover and keep going up
I really like Elon Musk. I know he is burning through som cash right now, he has a great product. The media could help by not looking at him constantly. 🐓🐓
I've been watching channels of many long-time Tesla owners and enthusiasts and have seen where several have noted a change in quality over time as the generations of various models moved forward. They seemed to indicate a QC issue was on the uptick, but overall that they have been pleased with the product.
I think it was probably about time that this recall happened. It was bound to happen- they are a car company, this is pretty much what happens as you grow. I'm still looking forward to everything they do in the future, but hope that they do pay attention to quality since what seems minor could damage them in say 50 years when they aren't the only high-tech car kid on the block.
Did "zero" hedge mention the credibility crisis associated with falsifying space missions? If not, should we call it "some" hedge? Hedge "needs trimming"?