See Notorious Short-Seller’s Take on Tesla and SolarCity; Do Hedge Funds Agree with Him?

Chanos is bullish on the installation of solar, and thinks that the segment will continue to grow and that costs will decline more. However, he said that this is “All the more reason to be bearish on the residential installers,” because they are selling power at a higher cost than the average in the U.S.

“So they’ve got to get that rate down. Solar is slightly more competitive than utilities in California for SolarCity. But it’s not cheaper than other solar providers. And that’s the crux. Other solar providers can get it to you cheaper than residentially leasing it from SolarCity.”

Even though Chanos did not disclose his position in Tesla Motors Inc (NASDAQ:TSLA), he said that he doesn’t like the company and considers it overpriced. He said that other car companies, specifically BMW, sold about the same number of electric cars in the U.S in September as Tesla did. While he believes that Tesla’s vehicles represent a great product, one of his main problems with the company is its scale.

“[…] what Tesla had is innovation and a head start in this market that other companies are now catching up to. And they have to become a car manufacturer. And becoming a car manufacturer is a lot more difficult than becoming a high tech darling,” Chanos said.

When we look at the data from the last round of 13F filings (even the last several rounds) we can see that most hedge funds think that Tesla Motors Inc (NASDAQ:TSLA) is overvalued. Only 26 funds held long positions that amassed around 4% of the company at the end of June, while many disclosed holding ‘Put’ options underlying shares of the company. Among the holders of ‘Put’ options are Ken Griffin’s Citadel Investment Group, Paul J. Isaac’s Arbiter Partners Capital Management, and Daniel S. Och’s OZ Management. The largest long position was held by Daniel Benton’s Andor Capital Management, which disclosed ownership of 1.0 million shares in its latest 13F filing.

Chanos added that another problem is that most of the technology that Tesla uses belongs to other companies. “The battery technology is Panasonic’s,” he stated. Also, to support the fact that Tesla Motors Inc (NASDAQ:TSLA) is overvalued, Chanos again compared it to BMW, which has a market cap only double compared to Tesla, but sells 2.0 million cars a year, compared to Tesla’s figures of around 50,000 cars.

Disclosure: None