Can Tesla Motors Inc (NASDAQ:TSLA) keep up with the competition? The electric car market has been dominated for quite sometime by the American carmaker but this will not be the case in just a few short years, according to Mark Spiegel of Stanphyl Capital on Monday’s edition of “Closing Bell.”
Spiegel said, Tesla bulls who say that the company is going to “rule the world of electric cars” are not doing their homework and that the company has “absolutely nothing sustainably proprietary, nothing yet it is losing a massive amount of money with zero direct long-range electric car competition.”
He added that soon, every carmaker in the industry would become a direct competitor for every product Tesla has, from charging, to Autopilot, to battery technology to cars.
“Starting in just a few months and into 2018 it’s going to be swarmed with long-range electric car competition. By 2021 every single manufacturer will have” an electric car. Tesla will go from zero direct competitors to 40 direct competitors.”
The veteran analysts noted that by 2018 or 2019, Mercedes-Benz would introduce four new electric car models while sports car maker Porsche and Audi will roll out two of their own. Meanwhile, other luxury carmakers, such as Jaguar and Bentley, will reportedly introduce their own electric cars.
On the mass market end, Ford (NYSE:F) is expected to launch two new electric car models while Volkswagen will roll out five. Spiegel said that other automakers, such as Hyundai and Toyota would release even more affordable electric cars.
Spiegel added that the comparisons made by Tesla bulls to other tech companies like Amazon.com (NASDAQ:AMZN) do not fit because “Amazon financed all of its expansion through internal cash flow during the early days of the company.”
In contrast, he said, “All Elon Musk knows how to do is incinerate cash.” Spiegel is referring to the Tesla CEO’s controversial megadeals and acquisitions, something that even investors are wary about.
“Tesla lost last quarter as a GAAP number, around $20,000 for every Model 3 it sold with a base price of $70,000. Even, when accounting for some capital expenditure and research and development figures, it still lost thousands of dollars per car. There is no way in the world they can build the Model 3 for a cost of anything less than maybe $45,000-high $40,000s,” Spiegel noted.
He finished by calling Musk, “the most deceptive CEO I have ever seen. The one credible thing he does say is he doesn’t care if Tesla stays in business, if he can electrify the world of cars.”
The analyst added that there is no practical way Tesla can continue on its spending spree, especially when it is trying to penetrate the mass car market, with the amount of money it loses for the production of a Model 3 car. Can’t say Spiegel does not have some really valid points.