Making Sense of the Tesla Chaos
Vol 81
This newsletter aims to separate the signal from the noise for investment in all things sustainable transportation: Electrification, mode shift, active and public transit, and mobility aggregation, across both people and goods movement.
In this week’s Deep Dive, we’ll look at all the crazy stuff happening at Tesla and hazard a guess why. Next issue, I plan to have part 3 of the 3 things I want to talk to you about.
🌱STARTUP WATCH: Sustainable mobility startups (pre-seed or seed) to keep an eye on
Advanced Rail and Transit Solutions (New Jersey, USA): IoT telematics with LiDAR to optimize charging for EV transit fleets
AIWaysion (Washington, USA): Digital curb monitoring hardware and software
CargoB (Massachusetts, USA): E-cargo bike-sharing network
Chargitect (Norway): Optimized operation of heavy-duty EV fleets
DroneAdair (Wisconsin, USA): Mission management software for drone operators
GoTogether (Washington DC, USA): Transportation SaaS for school districts and parents
Minimal (United Kingdom): E-cargo bike delivery platform
Open Energy (Singapore): EV fleet with battery swap and energy storage solution
Quantum Qool (Nebraska, USA): Thermal management solutions for batteries
UrbanLink Air Mobility (Florida, USA): Startup airline focused on electric air taxis (eVTOL)
💰FUNDING: Capital raises from startups previously featured in Startup Watch
Torev (Vol 40) and Natrion (Vol 48) were two of the four winners of the Global Automotive & Mobility Innovation Challenge (GAMIC), which includes cash awards
Moment Energy (Vol 48) was awarded a $6M tax credit to build a battery recycling center
Enjoying this newsletter? Share it with 3 people…
📰QUICK HITS: Notable news from the last two weeks
👩🏽⚖️Government, Policies & Cities
Venice, Italy is testing a 5 EUR entry fee for tourists to manage overcrowding. It’s like congestion pricing, but for pedestrians.
Birmingham, Alabama has abolished parking minimums for businesses. American cities, both liberal and conservative, are slowly swearing off excessive parking.
New York City has committed to building 500 secure bike parking facilities by 2029. Credit to Oonee’s Shabazz Stuart, who has steadfastly demonstrated the benefit of helping bike riders park without worry.
What happens if NYC isn’t able to go forward with congestion pricing at the end of next month? Basically, many subway projects grind to a halt.
The US Treasury Department has clarified that corn ethanol is eligible for the new Sustainable Aviation Fuel tax credit and that temporarily exempted graphite requirements for the battery tax credit. In an era where more cars are going electric, Iowa farmers needed somewhere to ship all that corn ethanol.
The Biden Administration may quadruple the tariff on Chinese EVs. Biden and Trump are polar opposites, but they share a deep concern about the risk that China’s EV prowess poses to American auto manufacturing competitiveness.
An upcoming leadership election for the International Seabed Authority could change the face of mining materials for batteries. Whether we should be mining the seabed is still a deeply controversial topic.
Not yet a subscriber?
🏭 Corporates & Later Stage
In testimony before the French Senate, the CEO of French oil giant Total threw doubt on the company’s heavy-duty hydrogen network, noting “I think electric will win out in the end.” Not a ringing endorsement for hydrogen in heavy-duty trucks.
Speaking of, Total and Shell are both considering listing in the US, in part to boost their valuations. Americans are more forgiving of the oil industry than Europeans.
Zeekr, yet another EV company from China’s Geely, had a strong IPO on the New York Stock Exchange. For American investors worried about Tesla, Zeekr is a great way to invest in China’s EV story.
Rivian’s Q1 earnings were mostly underwhelming, but the company managed to snag a new COO from Volvo Trucks. Rivian’s cash burn situation likely won’t improve until a new model is launched.
Amazon has taken delivery of almost 50 Volvo heavy-duty electric trucks. Volvo Trucks has delivered more than 5,000 heavy-duty electric trucks. Meanwhile, Tesla has only delivered approximately 140 (with one being tested by Walmart);
Hyundai’s Motional unit is pausing its robotaxi business until it can figure out how to make money. The company has cut about 40% of its staff.
Nissan has agreed to distribute Silence electric minicars in Europe. It probably doesn’t hurt that Silence EVs are built in a factory that Nissan abandoned.
Gogoro’s newest electric scooter is breaking sales records. It’s not every day that a micromobility company has an enterprise value of over $700M.
Boeing may have at least 10 new whistleblowers to contend with. For a reminder of the climate impacts of this one, see Vol 76.
🐣 Startups & Early Stage
Tier-Dott has spun off its German B2G-focused bike-sharing network nextbike to private equity firm STAR Capital. It’s not every day that a micromobility company has enough value to be a private equity target.
American high-speed rail startup Brightline notched 200% revenue growth vs March of last year. Now that Miami-Orlando route is live, the operator is discouraging short-haul ridership (e.g., Miami to West Palm Beach) to snag lucrative long-haul fares.
TechCrunch ran a profile of Bloom, a startup to watch from Vol. 69.
Enjoying this newsletter? Share it with 3 people…
DEEP DIVE: Making Sense of the Tesla Chaos
There’s no sugarcoating it: 2024 is filled with bad news for Tesla. The company is neck and neck with Boeing for one of the worst performers in the S&P 500 so far this year. And it’s not that the EV sector is tanking; global EV volumes were up 19% in March of this year.
Everywhere you look at Tesla, there are signs of chaos. Just in the last few weeks alone:
The Justice Department reportedly began investigating whether Tesla committed securities fraud or mail fraud in promoting Autopilot and Full Self-Driving as autonomous driving systems.
Tesla profit margins shrank by half in Q1, putting its profitability solidly below industry norms.
Tesla laid off at least 10% of the company, including firing the 500-person Supercharger team without explanation.
Spontaneous resignations of execs are spiking, with the most glaring being from the head of product launches, whose LinkedIn announcement went so far as to say “The recent layoffs that are rocking the company and its morale have thrown…harmony out of balance and it's hard to see the long-game.”
So is CEO Elon Musk asleep at the wheel or is this part of some master plan? Is the board ready to step up and see whether an outsider like John Krafcik, Alicia Boler Davis, or Joe Hinrichs should be recruited from outside?
Perhaps it’s a bit early for speculation on that, but what is clear is that June 13th will be yet another make-or-break moment for Elon vs Tesla. Shareholders will vote on two measures that day:
Moving the company’s domicile from Delaware to Texas, prompted by Musk’s frustration with the Delaware legal system.
Re-approving or rejecting Musk’s 2018 $50 billion exec pay package, which was voided by a Delaware judge who ruled that the board didn’t exercise independence in setting his compensation.
The second item is key to Musk’s recently announced desire to have at least 25% voting control of Tesla. His ownership today is 13%, but exercising the options in the $50 billion pay package gets him to about 20%.
Per Musk, AI and robotics are the future and if the board wants him to build that future in the walls of Tesla, they need to give him more ownership. Otherwise, he’s threatening to take his toys elsewhere. Is it better for the board to opt for the devil they know or the devil they don’t know?
What this comes down to, once again, is whether Tesla is a car company or a tech company. But it’s awfully hard to build a tech company on top of a car company when the wheels are falling off.
Not yet a subscriber?