Missed Production Goal, Crash Test Woes Weigh On Tesla Stock

The conventional wisdom on Wall Street is that the stock market responds to only two things — fear and greed. That certainly seems to be the case with Tesla stock, which lately has been on a roller coaster ride of epic proportions. A few weeks ago, shares in Tesla were selling for more than $380, making the company worth more than Chrysler, Ford, General Motors, and BMW. Since then, the stock has tumbled down to $310 a share.

Tesla Stock Drops Like A Rock

Yesterday Tesla stock dipped below $330 a share on news that the company delivered a few thousand fewer cars in the second quarter than expected. Adding fuel to the Tesla fire was a new report from David Tamberrino, an analyst at Goldman Sachs, who lowered his projection for Tesla from $190 to $180 a share. Tamberrino cited increased competition from legacy automakers (Volvo announced yesterday all its cars will have a battery and an electric motor by 2019) and a belief that demand for the company’s premium offerings — the Model S and Model X — is softening.

“We remain sell rated on shares of TSLA where we see potential for downside as the Model 3 launch curve undershoots the company’s production targets and as 2H17 margins likely disappoint,” Tamberrino wrote in a note to clients Wednesday, reports CNBC. “This comes as demand for TSLA’s established products (Model S and Model X) appear to be plateauing slightly below a 100k annual run rate.”

Tesla Stock; The Yo-Yo Effect

For the record, what an analyst has to say may or may not have any relationship to reality. Right now, stock analysts at Cowen peg the stock as being worth $155 a share. Berenberg projects its value as $464 per share. I am no professional investor, but I know this much: If you are invested in Tesla and are selling your shares because it missed its target by a few cars or because some guy in New York says he can predict the future better than anyone else, you have no business dabbling in the stock market. Buy lottery tickets instead.

If you buy into Elon Musk’s dream of the future, buy what shares you can and check back every year or so to see how your investment is doing. Letting yourself get caught up in the Tesla yo-yo effect is foolish.

IIHS Crash Test News

Tesla also got some less than spectacular news from the Insurance Institute for Highway Safety this week. IIHS says the Tesla Model S did not perform as well as some other similar cars in its small overlap frontal collision test. It says a driver’s head could slam against the steering wheel in such a collision. As a result, it rated the car as “Acceptable.” The highest rating is “Good.” The Mercedes S-Class and Toyota Avalon — two large luxury cars similar to the Model S — received “Good” ratings in the same testing.

IIHS says 25% of all automobile fatalities occur in collisions the small overlay frontal collision test is meant to simulate. Tesla’s “Acceptable” rating in that category kept it from being an IIHS Top Safety Pick. The Chevy Bolt just received that accolade, a fact that must be particularly galling to the Silicon Valley company. Tesla fired back at the IIHS findings, in effect pulling a “Fake News” stunt similar to how the cretin in the White House responds to any unfavorable publicity.

A statement by Tesla to Business Insider reads, “While IIHS and dozens of other private industry groups around the world have methods and motivations that suit their own subjective purposes, the most objective and accurate independent testing of vehicle safety is currently done by the U.S. Government, which found Model S and Model X to be the two cars with the lowest probability of injury of any cars that it has ever tested, making them the safest cars in history.”

So, apparently, IIHS has an agenda and is inherently biased against Tesla. Such defensive posturing is typical of The Donald but is beneath Tesla, which really should rethink its public relations strategy. The truth is that the IIHS crash tests and the tests conducted by the federal government differ in their testing protocols, especially in the area of how the partial offset front end collision procedure is conducted. Dissing IIHS hardly seems an appropriate response, although it is indicative of the “anybody who disagrees with me is a total jerk” ethos that defines social, business, and political discourse in America at present.

Chevy Bolt Is IIHS Top Safety Pick

The Insurance Institute for Highway Safety (IIHS) has awarded the Chevrolet Bolt a 2017 Top Safety Pick rating. It is the first all electric car to claim that distinction. Bear in mind that the IIHS is a private organization and should not be confused with the National Highway Transportation Safety Administration (NHTSA), a government agency that awarded its highest rating to the Tesla Model X last week. The NHTSA website says the Chevy Bolt has not yet been rated.

The Bolt received good ratings in all five IIHS crashworthiness tests — small overlap front, moderate overlap front, side, roof strength and head restraints. The Chevy Bolt also has an optional front crash prevention system otherwise known as automatic emergency braking. That system is tested at speeds of 12 miles per hour and 25 miles per hour. IIHS gave it a superior rating. To qualify for a Top Safety Pick award, the system must receive either an advanced or superior rating.

The only quibble the IIHS had with the Bolt was its headlights, which it rated poor. It says they do a fine job of lighting the road ahead but produce too much glare for oncoming drivers. Sounds more like an adjustment problem rather than a structural issue.

Chevrolet is making the Bolt available nationwide about a month sooner than originally planned. Dealers across America are now accepting orders, which Chevrolet says will lead to cars being delivered to dealers in all 50 states by late August. Chevrolet has also begun a national advertising campaign for the Bolt. Full page ads in the Washington Post and the New York Times appeared for the first time last Sunday.

Chevrolet says its advertising campaign will be carefully targeted to reach people who are likely Bolt owners. Darin Gesse, marketing director for the Chevy Volt and Chevy Bolt told the press last year that customers for both cars “are not typical Chevy customers” because they arrive at showrooms well informed about the cars because of the research they have done online beforehand. Digital and social media campaigns are more likely than television ads. “our customers don’t really watch television,” Gesse said.

Chevrolet says it has video taped sales people who are successful at selling electric cars and using those videos to train others. Selling cars that run on electrons instead of molecules requires a more consultative process than many sales people are used to. Complaints about clueless dealers and sales personnel have been common among electric car shoppers for years. Chevrolet has little direct control over how its franchise dealers operate, but is trying to address those complaints through education.

Source: Electric Cars Report         Photo credit: Green Car Report