EV manufacturers were supposed to harken in a new age of industry, environmentally responsible stewardship, and forward-thinking business practices, but as investors clamored on board, billionaires were created, bank accounts bloated and valuations rocketed out of control. Yet shareholders and owners hung on every word of their chosen ‘visionaries’, repeating the party line, espousing the products and the respective company’s potential. Why? Well, the narrative has always been about the ‘little guy’ fighting big bad traditional automakers, but has anything changed? Are the sector’s proverbial Davids any better than Goliath?
Heroes or villains?
Nikola (NKLA) founder, Trevor Milton, resigned as chairman of the company, when Hindenburg Research, a short-selling firm, released their report on the EV manufacturer accusing them of numerous false claims concerning the company’s technology and production timeline.
Finding the sector replete with fodder, Hindenburg Research penned another report focusing on SPAC-powered EV manufacturer, Lordstown Motors (RIDE.Q) in 2021. Lordstown was accused of misleading investors regarding both demand and production capabilities for the company’s flagship EV truck.
Even though Lordstown CEO, Steve Burns, claimed his reservation numbers were based on “very serious orders”, the contracts were non-binding and had no deposit requirements. Burns, in fact, was accused of paying consultants for every truck pre-order as early as 2016 while he was serving as CEO to Workhorse Group (WKHS.Q).
Speaking of which, Workhorse got itself in a mess of trouble when Fuzzy Panda Research, another short selling firm, put out a report that the fleet EV manufacturer was under SEC investigation for fraudulently misreporting order backlog figures as well as revenue recognition fraud.
Besides accounting issues, the company’s products were deemed as “garbage” by UPS drivers with over 90% of their purchased Workhorse fleet out of service.
There was sector-wide EV subsidy fraud in China when the CCP reported an unspecified portion of Bejing’s 33.4-billion-yuan payout was collected by companies which had inflated manufacturing numbers. One offender, Gemsea Bus Manufacturing Co., collected 261 million yuan of government money when it hadn’t produced even one bus.
The unjustified fever in the EV space is largely powered by the beaver-toothed fraudulent braggart that named himself Technoking of Tesla (TSLA). Elon Musk is well-known for shooting from the hip with little regard for decorum, corporate protocol, or regulatory limitations.
Elon’s carefully crafted maverick persona rests upon an endless string of arrogant hyperbole that would have benched other CEOs, however Musk’s following of sycophantic investors and lunatic analysts like Cathie Wood, continue to drown out critical thought.
Even the attention of the SEC does little to dissuade Musk from market manipulation, exaggerated claims, and unethical business practices. His board has no control over Elon’s Twitter rants which are basically the official news outlet of Tesla since he dissolved the company’s PR department.
But let’s move past his social media antics like calling people pedophiles, using juvenile acronyms to signify parts of the female anatomy or even supporting white supremacist-influenced anti-vax movements in Canada (see below) and stick with Tesla itself.
Oh, here’s a lovely email for those arguing there aren’t antisemitic tones. pic.twitter.com/p1fn8O5ZnP
— Abigail Bimman (@AbigailBimman) February 2, 2022
- August 7, 2018 – Musk claimed on Twitter he had secured funding to take Tesla private at $420 per share. No funding was in place and Musk claimed the $420 figure was a joke related to marijuana. However, stock went from $69.09 per share on the 6th to a high of $77.49 on the 7th. The SEC fined Musk $20.0 million for the offense.
- Early 2019 – Musk announced projected a yearly production estimate that was higher than what had been officially reported in company documentation
- July 29, 2019 – Musk once again tweeted ‘optimistic’ production numbers for solar roof installations.
- May 2020 – Musk tweeted, “Tesla’s stock price is too high imo”. Shares in the company plunged 10% during trading after his public speculation.
- May 2021 – Musk tweeted that Tesla had diamond hands after China announced its crackdown on cryptocurrency stemming bitcoin’s loss and pushing it back to $39,500. Tesla of course has a sizeable bitcoin holding.
- According to an article in The Guardian published in 2017, reporters found that ambulances were called more than 100 times in 2014 for employees who experienced fainting spells, dizziness, seizures, abnormal breathing, and chest pains, while hundreds more were called for injuries and other medical issues.
- Attempted to undermine unionization efforts at the Fremont factory after an unhappy employee wrote a blog post on Medium calling for Tesla to change its ways.
- After backroom machinations to subvert union efforts, Musk tweeted on May 20, 2018,” Nothing stopping Tesla team at our car plant from voting union. Could do so tmrw if they wanted. But why pay union dues & give up stock options for nothing? Our safety record is 2X better than when plant was UAW & everybody already gets healthcare.” The National Labor Relations Board considered this tweet an illegal threat as it said unionization would lose stock options. In the end, the judge overseeing the matter found that Tesla had violated Labor Law in 12 different ways.
- August 2020 – workers at the Fremont Factory were told they were going to be working six days a week for a 60-hour week.
- During the 2020 wildfires in California, employees were forced to work when the air quality index was still considered “hazardous”.
- March 25, 2021 – The National Labor Relations Board upheld its 2019 ruling and ordered Tesla to bring back a worker it fired for their unionization efforts. The board also found that the company unlawfully interrogated workers over suspected unionization involvement while disciplining another worker for union-related activity. Musk was ordered to remove the 2018 tweet, threatening loss of stock options. It hasn’t been removed.
Musk’s aim has always been making as many vehicles as physically possible, preventing the common practice of stopping the production line to correct assembly issues. This resulted in continued poor dependability ratings that according to a February 2021 JD Power & Associates report, ranks Tesla as 30th in a list of 33 auto manufacturers. What about recalls? Here is a list of the latest:
- 2014-2021 Tesla Model S – 119,009 units for a potentially misaligned front truck latch assembly that may cause the hood to fly up on the road.
- 2017-2020 Tesla Model 3 – 356,309 units for potentially damaging rear view camera cable, rendering the camera ineffective and reducing driver’s vision.
- 2021 Model S and Model X – 7,600 units for potential ripping of driver’s side air bag when it is deployed.
- 2017-21 Model S, 3, X, and 2020-21 Model Y – 11,704 units for potential false forward collision warnings or sudden unexpected activation of the automatic emergency brake system.
- 2020-21 Model Y and 2019-21 Model 3 – 2,791 units for potentially loose lateral link fasteners of the vehicle’s front suspension.
- Model 3 and Model Y – 5,350 units because one or both fasteners that secure the front seat belt to the b-pillar may not be properly attached.
- 2019-2021 Model Y – 2,166 units for potentially improperly attached seat belt retractors.
- 2012-2018 Tesla Model S, 2016-2018 Model X – 134,951 units for potentially failing eMMC controller which could cause the loss of the rear camera, defrost/defog controls, exterior turn signaling.
- 817,000 units for a potentially faulty seat-belt reminder chime
- 54,000 units for potentially faulty ‘FSD’ software that would allow vehicles to roll through stop signs without coming to a complete halt
Since these recall numbers make up most of the vehicles produced by Tesla to date, perhaps pushing for numbers wasn’t a good call, but try telling Elon he is wrong.
Then there’s the entirely conflicted purchase of Solar City and the glaring fact the company should be broken up into its clearly separate segments. Plus, robots???
It is amusing that Elon felt his company was overvalued at $50 billion and yet has nothing to say when it has grown more than one hundred times that value without any real performance to justify the move.
What isn’t amusing, is how this has impacted the EV sector and tech in general. There isn’t a lonely genius savior just waiting to lead us into a better future, a considerable portion of the EV elite are just nihilistic ethic-free sleazebags looking to line their pockets and pad their power.
Is there any hope?
All is not lost, despite the rot that has cratered the EV market, there are still reasonable management teams making a go of the EV space, companies like GreenPower Motor Company (GPV.V), Vicinity Motor (VMC.V), and Nio (NIO) to name just a few.
That said, the markets remain rocky, and I don’t think we’ve bottomed out yet in the EV sector as illustrated by Thursday’s dip, but our conversion to EV is inevitable, so keep your eyes on the prize, don’t get caught up in the hype, do your due diligence and pick your winners for a better world. Good luck to all!