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Richard Connor: Is Tesla the next big thing or just the next DeLorean?

🕐 5 min read

Nothing like the joy of a new car.

Even for a multimillionaire.

That would be the guy who with great pride invited me to ride in his Tesla, back when there were only about 1,000 on the road.

It was red and it was sure enough sleek and oozing with cool. It was rocket fast. It also cost a minimum of $100,000.

My fascination with the Tesla ebbed faster than the tide along the coast where we drove. Learning how often you had to stop to recharge it left me, how shall I say, with a lack of energy.

Estimates of how far a Tesla can be driven at an average speed of 40 miles per hour range from 200 to 400 miles. Most folks on the new I-35 here are driving 80 to 90 miles an hour, which means you’d have trouble getting to Oklahoma City from Fort Worth on a single charge.

Besides, it seemed like a pain to have to plot out a trip based on the available charging stations.

About the time I was thinking that this was just a nice sports car you could drive fast but not far my friend wanted to show me how the car could back up and “parallel park itself.”

It quickly became apparent that either the car could not park itself or the driver did not know how to use the system. But even if it worked, I thought, so what? My Ford 150 pickup had similar technology.

As the other features were explained to me, I realized I also had most of those on my truck and on a Volvo I had owned. The cost of those vehicles was far below $100,000.

I refrained from the inviting and obvious: “Oh. My truck can do that, too.”

By the way, I now own a dynamite Jeep that can do all of these things as well as drive through a swamp, a blizzard, and up and down mountains. The recently deceased Sergio Marchionne is credited with making the Jeep the centerpiece of Fiat/Chrysler when he took the reins of the once troubled automaker. The new Jeep is his legacy and a testament to his foresight.

All of this has come into focus in the last couple of weeks as Tesla founder Elon Musk is trying to talk his way out of a rogue tweet about taking his company private with backing secured when in fact it was not true.

Short sellers of Tesla’s stock, betting on a drop in the stock price and on Tesla’s failure, made $1 billion on their bet a week after the text as the stock spiraled downward. Makes it difficult to raise new capital.

I am not in the crowd that wishes failure for Tesla. Starting a car company these days takes daring and boldness, creativity and brains. I’d like to see Musk win.

But it’s easy to recall John DeLorean and the cool car that bore his name. The late DeLorean had the looks of a movie star, was charismatic, bold and brash. He could sell.

The car looked great but was a bust.

From a dependability standpoint I’d rather buy a car or truck from a company that has made them for decades, preferably one that makes over 8 million a year such as General Motors or Ford. They have experience. Tesla now has only an estimated 200,000 vehicles on the road and is making just over 100,000 a year.

If you were choosing a heart surgeon you would look for one who has done more operations than the others. Time and grade matter.

Musk was one of the founders of PayPal and he’s financing a rocket ship to take regular folks to the moon. There is no question he must be a smart guy despite his recent erratic behavior. But, so far, he’s no Henry Ford.

The truth is, being good at one thing doesn’t always (or usually, for that matter) mean you will be good at everything. Building cars may be a bridge too far for Musk.

He agreed to an Aug. 16 interview with The New York Times that made him look as though he is mentally at loose ends. Among other things, he said he can’t sleep without Ambien.

Arianna Huffington sent him a note that essentially advised: Get some rest and eat better.

Thanks, Mom, but Musk said he did not have the time.

Not so hidden in all this drama are financial facts that boggle the mind of the average person and particularly the small businessman or woman who is an entrepreneur.

Tesla has severe financial and organizational problems. It has cut its workforce by 9 percent and has 24-hour production. Remaining workers will get tired and sloppy. The company has cut its budget for capital expenditures, which are necessary to work out kinks and fix defects and improve the car’s performance and safety.

Cash is now in the category of going, going, gone.

In the first six months of the year Tesla spent $1.8 billion of its cash nest egg and had only $2.2 billion remaining. The company will not last long at that burn rate.

The company also has $10 billion of total debt and $23 billion of total liabilities.

I doubt that more sleep and a better diet will help lessen these problems.

We may be looking at a future where you can buy a collector’s Tesla on eBay and cement the deal with PayPal.

Richard Connor is president and publisher of the Fort Worth Business Press. Contact him at rconnor@bizpress.net

Richard Connor
Richard Connor is the owner and CEO/Publisher of DRC Media, the parent company of the Fort Worth Business Press. he also owns newspapers in Virginia. Mr. Connor held a number of corporate media executive positions before founding his own company. He is an award-winning columnist and at one time wrote a weekly column on national politics for CQ Politics, the online version of Washington, D.C.-based Congressional Quarterly.

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