Global Automotive Stocks/EV Focus/Event Driven, SC Capital

SC Capital

SC Capital has over 20 years' experience covering the global automotive industry both on the Sell Side (UBS & Morgan Stanley) and Buy Side (Och-Ziff), along with a wealth of industry contacts. 

Current focus is on electric vehicle stocks & their supply chains. Aim is to identify the winners and losers from a long/short perspective. This includes close coverage of legacy automakers as well.  

From time to time. we cover opportunistic events with stocks in the manufacturing sector, food & beverage, healthcare and tech, where we also have coverage experience.

Global Automotive Stocks/EV Focus/Event Driven

Tesla--2018 Could Be the Beginning of the End

Tesla--Preparing for a Diabolically Bad Q1

Tesla: Model 3 Production Suspension in Late February Should Not Come as a Surprise

Tesla to Face Stiff Competition From Jaguar's New EV

Over 22 years covering Japanese equities on both the sell side and the buy side. 

Bottom-up Japan Equities Research

Equity Bottom-Up

We recently published an insight <a href="https://www.smartkarma.com/insights/tesla-understanding-its-plight-via-8-charts" target="_blank" data-smartkarma-citation="insights:19763">Tesla--Understanding Its Plight Via 8 Charts</a> to which we received some very intelligent comments and questions from Neeraj Monga of ANTYA Investments. In this report, we respond to his comments and show just how dire Tesla's indebtedness and inefficiencies are, especially from a free cash flow perspective. We also show how much of a liability SolarCity is for Tesla. Remember that Tesla convinced shareholders--after a swimmingly good quarter that included record high ZEV credit sales in late 2016--to acquire the ailing solar panel vendor, despite any synergies with electric vehicle manufacturing.This bailed out SolarCity shareholders--including Elon Musk and his cousins, who were some of the largest--but is now coming back to haunt Tesla to the tune of $1.45bn in SolarCity debt repayments at a time when Tesla could use that money to roll-out new products like the Model Y, Tesla Semi, and the new Roadster. There are also class-action lawsuits regarding Tesla's acquisition of SolarCity which are gaining momentum in courts.We also go into detail about Tesla's production and sales efficiencies versus rivals like BMW, Benz, and Toyota. Tesla's CEO, Elon Musk, admitted on April 13th that he scrapped much of the "highly advanced" automated lines about which he boasted would lead to Tesla being more efficient at producing cars than Toyota Motor. Tesla is now hiring 400 workers a week over the next several weeks to "man" these final assembly lines. The scrapping of these highly automated lines will lead to significant impairment charges in either Q1 or Q2.We finally take a look at how profitable Tesla could become if it does indeed produce its vaunted target of 10K units/week in Model 3 production next year. We get the stock trading at 41x FY19 EPS and only generating an operating margin of 2.7%, versus the 7x PER at rivals BMW and Benz, which should generate around 9% OP margins in FY19.The charts are left in our recent report <a href="https://www.smartkarma.com/insights/tesla-understanding-its-plight-via-8-charts" target="_blank" data-smartkarma-citation="insights:19763">Tesla--Understanding Its Plight Via 8 Charts</a> but the comments and questions from our esteemed, fellow Tesla watcher Neeraj Monga are listed below with our responses to them.

We recently published an insight Tesla--Understanding Its Plight Via 8 Charts to which we received some very intelligent comments and questions from Neeraj Monga of ANTYA Investments. In this report, we respond to his comments and show just how dire Tesla's indebtedness and inefficiencies are, especially from a free cash flow perspective. We also show how much of a liability SolarCity is for Tesla. Remember that Tesla convinced shareholders--after a swimmingly good quarter that included record high ZEV credit sales in late 2016--to acquire the ailing solar panel vendor, despite any synergies with electric vehicle manufacturing.This bailed out SolarCity shareholders--including Elon Musk and his cousins, who were some of the largest--but is now coming back to haunt Tesla to the tune of $1.45bn in SolarCity debt repayments at a time when Tesla could use that money to roll-out new products like the Model Y, Tesla Semi, and the new Roadster. There are also class-action lawsuits regarding Tesla's acquisition of SolarCity which are gaining momentum in courts.We also go into detail about Tesla's production and sales efficiencies versus rivals like BMW, Benz, and Toyota. Tesla's CEO, Elon Musk, admitted on April 13th that he scrapped much of the "highly advanced" automated lines about which he boasted would lead to Tesla being more efficient at producing cars than Toyota Motor. Tesla is now hiring 400 workers a week over the next several weeks to "man" these final assembly lines. The scrapping of these highly automated lines will lead to significant impairment charges in either Q1 or Q2.We finally take a look at how profitable Tesla could become if it does indeed produce its vaunted target of 10K units/week in Model 3 production next year. We get the stock trading at 41x FY19 EPS and only generating an operating margin of 2.7%, versus the 7x PER at rivals BMW and Benz, which should generate around 9% OP margins in FY19.The charts are left in our recent report Tesla--Understanding Its Plight Via 8 Charts but the comments and questions from our esteemed, fellow Tesla watcher Neeraj Monga are listed below with our responses to them.

Tesla's Indebtedness & Inefficiencies--A Response to Comments on Our Recent Report