
A crowd-sourced social media swarm that is betting Tesla will crash - freerobby
https://www.latimes.com/business/autos/la-fi-hy-tesla-short-sellers-musk-20190408-story.html
======
ozmaverick72
I'm am conflicted over the whole tesla thing. The model S is a truly great car
but I can't stand Elon's hype about self driving cars etc, etc. The model 3
got off to a rocky start but it sounds like the quality issues are improving.
On the one hand I want them to succeed as they have been real innovators but
by the same token when musk goes around hyping things up to create interest
and bump up the stock price I would be happy to see them crash and burn.

~~~
meekstro
The question no-one asked.

How difficult is it for BYD to clone his autopilot chip and will that stop the
Chinese from exporting knockoffs because I'm certain they can close the data
and software gap instantly by swapping out a harddrive or 10.

I think he's got 10 years before the chinese chip fabs catch up.

Musk's question how did Tesla build the best AI chip for driving in the world
without being a chip designer was the far more interesting yet overlooked
question.

Musk has a talent for framing problems appropriately so that optimum solutions
emerge with a minimum deployment of capital. And he's not secretive about it,
he applies his training in physics and phenomenal knowledge to make good bets
and eventually identifies and acknowledges his mistakes.

Tesla doesn't have an advertising budget. Musk couldn't care less about it's
shareprice but I think he will be a bit perturbed if identical technology
emerges faster than he foresaw as was Apple when the Android ecosystem
emerged.

As it stands with his chip and data it is game set and match for autonomous
driving which is a software game and the leader takes all the data and a fully
autonomous vehicle is worth significantly more than non-autonomous vehicle and
if you are data scientist you probably want to work for the company with the
best data-set and highest remuneration.

The data is the gold and Tesla owns it and no-one can steal it and use it for
at least 10 years by which point battery vehicles will be cheaper than petrol
vehicles which is the major problem with the model 3. It is currently
uneconomic against a toyota corolla but gains ground with every piece of
battery and energy storage research that musk does not pay for.

~~~
threeseed
1) It isn't the best AI chip in the world. And Tesla doesn't have the most
advanced self driving program around.

2) I can't remember a CEO who has complained more about the stock price in
particular those shorting the stock. And worst of all then go on to illegally
manipulate the market to target them.

3) You have that completely backwards. Musk is the worst at solving problems
with the least capital. Look at the way his manufacturing processes work or
the decision to build out the Supercharger network/Gigafactory. There are
definitely cheaper ways to do those. Better probably not. Cheaper yes.

4) I have worked with more Data Scientists than most and I assure you that
they are just like everyone else. They care most about: company reputation,
work environment, money, challenging problems etc. It's not just whether there
is a great dataset or not.

~~~
curyous
Can you name a better AI chip, especially in terms of TFLOPs per Watt?

~~~
threeseed
You're moving the goalposts.

It was about the best AI chip in general not based on some arbitrary
efficiency number.

~~~
zaroth
TOPS per Watt is a highly meaningful metric that matters a lot in the real
world. It’s a valid definition of “best”.

No one cares how many TOPS your 500watt non-redundant monster can run, because
it’s not being put in an EV.

~~~
threeseed
It does matter how the best AI chip performs irrespective of efficiency.

Because self driving cars are a multi-year journey and those platforms will
likely become more efficient.

~~~
zaroth
Not really, because the problem is embarrassingly parallelizable, so “best”
can always be obtained by stacking additional chips with greater total power
draw.

Remember we’re talking about systems made of multiple chips. It’s like asking
“what’s the best Bitcoin mining rig?” The question is one of hashrate per
joule. If someone asked if you should buy a 1000watt box that did 10TH/s
versus a 200watt box that did 5TH/s, which is better?

They maxed out their available power envelope (~70 watts) and the resulting
performance is about 20x what they were getting from their prior nVidia
platform. In other words, they will always make the chip big enough to pull
~70 watts, at the highest efficiency possible.

My limited understanding of the hardware design is that once you have figured
out the specific architecture you can scale up and down the power consumption
almost linearly with the die size. Obviously plus or minus various hard limits
(e.g. oversizing compute for the available memory bandwidth)

Tesla has already been working on their next chip for over a year. This chip
they just started shipping finished design 1.5 years ago. This will not be the
last AP hardware they ever ship.

I fully expect that as we delve further into “FSD” there will be functionality
on the fringes that will need even more horsepower.

It’s easy to think in the present that there’s a logical “end” where
development will be “complete” but that’s almost never actually the case. So
there will be a Gen4/5/6, specifically what features they will unlock is very
hard for me to predict. I think this is actually the type of thing Elon sees
right through like it’s obvious.

Like how he sees a path to colonizing Mars which includes launching a global
satellite internet company.

------
torpfactory
I think the general tone about Tesla on HN is a bit strange. On the one hand,
Musk is certainly guilty of creating "hype" around Tesla. He has a showman's
aesthetic, and deploys it to great effect generating interest in his products.
His timelines are always ambitious (or insane), and I never take them at face
value. He boasts about capabilities that are presently out of reach and sound
impossible.

On the other hand, what other company has yet brought such compelling EVs to
market? Would Porsche have invested in the Taycan as soon/at all if not for
Tesla? I think the years ahead will be filled with fantastic EVs, but Tesla
should be given credit for showing what was possible. It's not like they've
stop innovating, either. They just upped the range on the Model S to 370
miles.

A lot of the hand wringing on HN these days has to do with Tesla's self
driving efforts and Musk's controversial statements about timeline and
technology. I think it remains to be seen if he is correct that (1) Lidar is
not required and (2) if his timeline is even remotely reasonable. On the other
hand, which other car company is shipping a product as capable as the current
'navigate-on-autopilot' feature? Google is doing pretty limited testing in
Arizona, Uber is doing so in Pittsburgh. GM has their cruise division. But
none of these offerings are in customer hands. I really doubt there will be L4
self driving in a Tesla by the end of this year, but sometime next year? I
don't think that is out of the question.

~~~
6gvONxR4sf7o
I don't like the narrative that they are responsible for what other companies
are doing. My grandpa had an electric car back in the 90s. A toyota, I think,
so it's not small no-name companies. People have been working on this since
before tesla, and are still working on it outside tesla. But the time is right
for the technology to take off now, so it is. Attributing that to tesla seems
like a misguided belief in "great man theory" where it's usually just that the
environment was finally right for an idea. If tesla hadn't, someone else
would.

I get frustrated by instances of great man theory in general, though. It's not
unique to tesla.

------
vgchh
It’s unfortunate that the crowd sourced mobs can be unleashed the way they are
being unleashed. Internet appears to be commoditizing takedowns and toxicity.

While Tesla deserves criticism, instead they are currently being bombarded
with hate and FUD. It’s hard to tell who these people are and what are their
motives.

FWIW - I recently bought a Model 3. And one thing you realize living with it
is that it’s like living in the future. Some people don’t like the interior.
That’s fine. I personally love the lack of all the buttons. FSD is another
controversial topic. But it’s worth noting that people are getting real value
out of Auto Pilot and NOA TODAY. It’s a very iterative delivery approach,
which I find is quite practical vs the Big Bang delivery of 100% working FSD.

Lastly, you can tell that Tesla is no fraud simply by looking at Model 3
hardware and software. Yes there are some rough edges, but those are minor.
You can tell it’s being executed by extremely capable people and at extreme
speed.

------
no1youknowz
I dont have any shares, but if I had the money I would purchase a boat load of
them.

1) He has a fleet of cars which is giving him a lot of data and edge cases. Of
which is growing with every new car purchased and on the road.

2) He has a team developing the software, refining it with each new release
and it's just getting better and better with more data.

3) He has a team developing the hardware, on the investor day he said that
another chip will come out in 2 years and be 3x more capable. Going from
memory on that one, so feel free to correct. But this point still stands. They
aren't standing still. I do believe that vision trumps lidar and they'll get
to level 5 automation with much more precision than waymo and get there a hell
of a lot faster than uber.

4) It seems with every car that rolls off the assembly line, they are
consistently making modifications and improving the battery tech and drive
train. Again, they have the data to keep on improving their cars.

5) With the maxwell purchase I'm sure they'll start to develop their own
batteries and get even better performance due to optimising the whole car.

So, Tesla owns the:

1) Data

2) Self Driving Software

3) Self Driving Hardware

4) Drive Train

5) Battery Tech

6) Power Grid Network

Also don't forget that the grid and charging stations keep improving over
time. Imagine if we get to 5 minute charging, faster than the current
paradigm? Game changer.

Can anyone suggest another vendor getting close to this? Once Telsa put out
the robo-taxis it really is game set and match. They own the whole stack, end
to end.

He even mentioned that the price could go down. Can you imagine a $25k robo-
taxi and does 1k miles? The other car makers should be very afraid of this
prospect.

~~~
codexon
This is assuming that level 5 automation is possible any time soon, while a
growing number of people believe it isn't. If it turns out that we need
another 2-3 decades to get there, Tesla will run out of money long before
then.

------
personjerry
There's always a ton of sentiment analysis to be done on "crowds" i.e. on
twitter towards companies. If they worked well we'd see 10x numbers from the
funds that figured out the methods, but we don't. The crowd means little
beyond technical analysis.

Tesla is the most shorted company in the world, of course people are going to
try to use whatever they can as evidence to prove it sucks; They have a vested
interest in doing so, and Tesla rightly fights back against these kinds of
claims, because it's in their shareholders interests.

This article provides some examples of people talking about speculative
evidence that Tesla isn't doing well, but you can find that for almost any
company. That's what a lot of investment articles are, actually. So it seems
like mostly fluff to me.

------
neonate
[http://archive.is/4b42M](http://archive.is/4b42M)

------
tschellenbach
It seems like they are a few moves away from checkmate on the car market.
Electric SUV, with better self driving than the competition could do really
well.

------
ShorsHammer
With enough money could you short a profitable company into bankruptcy?

~~~
basetop
No for two reasons.

1\. Share price has nothing to do with bankruptcy. Bankruptcy happens when a
company can't meet its obligations and debts. If a company is profitable, then
by definition, it met its obligations and debts so it cannot go into
bankruptcy. You go to bankruptcy protection to ward off creditors. If you are
profitable, you paid off your creditors and made money on top of that so there
is nothing to protect you from.

2\. Shorting involves borrowing shares. There are a finite number of shares
that you can borrow. So you could have an infinite supply of money but your
broker only allows X amount of shares available to short.

Shorting doesn't cause bankruptcy. It's a method of profiting when companies
veer towards bankruptcy of their own accord.

Think of it as surfing. The surfer doesn't cause the wave, he just rides the
wave.

~~~
raiyu
Depending on how their debt is structured if it's linked to stock price then
it's possible to force a liquidity event on outstanding debt through depleting
the share price.

I think the recent $960MM debt payment was actually linked to not hitting
specific share price hurdles.

Given the massive amount of debt they have outstanding versus capital on hand
you could technically do that. However shares have to be available for
shorting in order to achieve that.

~~~
AnthonyMouse
> However shares have to be available for shorting in order to achieve that.

Is this a real barrier? Lending shares to short sellers at interest is
basically free money to anyone who would be holding them regardless.

~~~
mcguire
The last time I looked, I thought setting up a margin account made shares
available for borrowing, but I've never received interest from borrowed
shares. The interest goes to the broker?

~~~
optimiz3
Yes. However better brokers will give you a cut of the interest.

------
seem_2211
I was originally very pro Tesla, until about 18 months ago when a friend who
works in finance gave me the heads up on TSLAQ,

Here's a few datapoints on what's convincing me that this is not a healthy
company:

• Musk is constantly promising things that don't happen (full self driving,
robotaxis, Model Y, Tesla Semi truck, Tesla Roadster, car with a rocket motor,
10k/wk production). This week it's an electric leafblower. Seems like
everytime there's bad news, there's a distraction ready to go.

• The entire cult of Musk working 100 hours a week yet he shitposts more than
I do.

• Funding secured, followed by funding not secured is a bit of a joke, but
also, if the CEO of General Electric, or Chevron tried that, they'd be fired.

• The reports of people waiting months and months to get simple repairs done.
If Vinod Khosla (1) can't have his car repaired quickly, where does that leave
the average joe on the street?

• Enormous price decreases. The price of a Model S decreased $12k a few weeks
ago, and the Model X decreased by $18k. This is horrific for your margins,
especially if you're short on cash.

• Batteries exploding (2), and people dying in car accidents that they should
have walked away in - the example here is someone who couldn't get out because
the door handles didn't work (3).

• Enormous Health & Safety violations at the Freemont factory (4). Before we
even get into the nonsense that was the factory operation (compare to say the
efficiencies and tight tolerances of the Nissan operations in the UK).

• Simple errors meaning the Tesla factory is enormously inefficient by North
American standards (the consensus being that Tesla made the same mistakes
other American firms made in the 1980s)

• Panasonic freezing investment in Nevada and China (6)

But finally, the biggest thing that makes me skeptical is that none of what
I've said matters. Because this isn't about facts, it's about faith. And I
think Tesla is a fraud and that Elon Musk could give Elizabeth Homes a run for
her money, which is a real shame because the Model S is a nice enough car, and
electric cars are clearly something we'll have in the future. You can fudge
the numbers a bit if you're a VC backed startup. You can't do that if you run
a publicly traded company.

1:
[https://twitter.com/vkhosla/status/1085931446542290944?s=20](https://twitter.com/vkhosla/status/1085931446542290944?s=20)

2: [https://www.asiatimes.com/2019/04/article/teslas-china-
inroa...](https://www.asiatimes.com/2019/04/article/teslas-china-inroads-hit-
by-car-explosion/)

3: [https://futurism.com/tesla-driver-killed-burning-
model-s](https://futurism.com/tesla-driver-killed-burning-model-s)

4: [https://www.forbes.com/sites/alanohnsman/2019/03/01/tesla-
sa...](https://www.forbes.com/sites/alanohnsman/2019/03/01/tesla-safety-
violations-dwarf-big-us-auto-plants-in-aftermath-of-musks-
model-3-push/#1e941ac354ce)

5: [https://arstechnica.com/cars/2018/04/experts-say-tesla-
has-r...](https://arstechnica.com/cars/2018/04/experts-say-tesla-has-repeated-
car-industry-mistakes-from-the-1980s/)

6: [https://asia.nikkei.com/Business/Companies/Tesla-and-
Panason...](https://asia.nikkei.com/Business/Companies/Tesla-and-Panasonic-
freeze-spending-on-4.5bn-Gigafactory)

~~~
hef19898
Totally agree, especially on production and servicing. All German
manufacturers, I personally would never buy a car from by the way, are relying
a lot on the corporate leasing business. In that market customers don't wait
months to get a car repaired. Even more so if the customer is not just leasing
them for employees but operating a business with these cars, e.g. Taxis.

------
MrQuincle
If there are indeed many unsold Teslas on desolate parking lots, what would be
a legitimate reason for this?

~~~
Theodores
If you think of the perspective of these people wanting to short Tesla they
probably have no experience of how much inventory you need to sell stuff.
Stuff being anything.

Think of a typical bicycle shop and how many hundreds of bicycles they have
given the actual store footfall. They will also have a warehouse or stockroom
with a similar or larger quantity of stock. Plus a lot of sales will be
special order from the supplier. None of that inventory will be a year old and
the product is far simpler than a car. Yet there is a mountain of it. Sure
bicycles come in 3-4 sizes and that adds to the inventory requirements but
colours, trim levels and options certainly add to the inventory requirements
Tesla has.

You could look at your typical bicycle store and decide to 'short' them
somehow. If you had no idea of the practicalities of how sales works you could
assume the warehouse was full of the broken ones or the ones returned from
customers. You could also look around the showroom and find that quite a few
were dusty and not setup correctly. There would be no confirmed buyer for any
of them.

You could go back a week later and still see pretty much the same. Yet if you
didn't work there you would not realise a huge amount had made it to
customers. This is the problem of the information these Tesla short people are
working with, they don't understand how the business really works and they
jump to conclusions.

~~~
ethagknight
I recently had this realization experience with large TVs at Bestbuy. I went
to purchase a 65" tv after Christmas hoping to score a great deal. I tried
haggling with a few 'important looking' staffers, and they basically said 'ok
let me know which one you want, and we will grab it for you.' No give on
price. I asked if they had a certain tv in stock, and the young man walked to
the back of house area, and I peaked inside. Huge shelves totally full of TVs.
I had the 'Tesla Short' thought process of, oh wow, they have a ton of TVs to
unload. Moreover, I thought I should be able to strike a deep discount.

When the rep returned, I asked if they were backed up with TVs, to which he
replied, "no, this is pretty typical, we will move most of those in a week." I
gave up my haggle (after an hour of grilling the sales guys on difference and
tv trends and crap). they didnt budge. While I was waiting in line to pay and
get someone to load my tv into my car, I watched TV after TV roll out the
front door.

A huge stockpile of vehicle inventory could mean a major sales collapse. It
could also mean $45mm ready to flow into the Tesla bank account in the next
week. The stockpile information by itself doesn't tell you much beyond that
there are loads of cars sitting at the dock.

EDIT: I mean, just look at the staggering number of vehicles at Hyundai's
Georgia Plant (MOBIS). They even have cars parked in the grass! Tesla's
Fremont plant doesn't really have finished product storage at this scale.

[https://www.google.com/maps/place/MOBIS+Alabama,+LLC+-+Georg...](https://www.google.com/maps/place/MOBIS+Alabama,+LLC+-+Georgia+Plant/@32.9160073,-85.1294347,2019m/data=!3m1!1e3!4m5!3m4!1s0x888ca615b1e9d277:0x5849b0bcf49a3410!8m2!3d32.9142448!4d-85.1241106)

~~~
Nicholas_C
I think you could test this hypothesis by comparing Tesla’s inventory dollar
amount per average units sold to other car manufacturers. You would need to
adjust for the higher price of Tesla models. Maybe dividing total inventory
dollars by average model price then dividing that by average units sold would
get us there.

------
doctoboggan
I can throw my additional anecdote into the mix: I live in the boston area and
have noticed a ton more Tesla cars on the street. I remember previously
thinking it was cool Tesla car every now and then, but now I see multiple a
day.

------
h2odragon
I wonder how many people the established auto industry pays to write negative
Tesla opinions. I can't help but think my kids will look on this like I do
Tuckers' efforts.

------
mml
Call me when any of this stuff works in snow.

