Tesla Is About to Face Tough Competition
Jim Chanos roasted Tesla Motors Inc (NASDAQ:TSLA) over its acquisition of SolarCity Corp (NASDAQ:SCTY) during the program. Chanos thinks that the deal comes at a time when Tesla should be focusing on production and added that he will be “dumbfounded” if the deal goes through given that Tesla’s board denied lending money to SolarCity in the summer, which suggests that they were not confident taking on some of the risks associated with the company and given their own position. Chanos called the deal “perplexing” and thinks Tesla is trying to grow into an unnecessary business, as SolarCity is not a high-tech company. He also said that Tesla will double its cash burn due to the buyout. The investor also claimed that there were insider conflicts in the Tesla/SolarCity deal.
Mr. Chanos added that Tesla Motors Inc (NASDAQ:TSLA) is about to face tough competition, as several companies are readying to start production of electric cars in 2017 and 2018. According to him, the company is in a “dogfight”, and deals like SolarCity are a distraction. Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital owns 60 million shares of Tesla Motors Inc (NASDAQ:TSLA) as of the end of the June quarter.