More Trouble for Tesla
More trouble for Tesla... Prepare for the 'electric car blitz'... Musk falls a 'little' short again... More great news for one of our most-promising 'Big Pharma' recommendations... 'There has never been an Alzheimer's drug with such efficacy'...
Longtime readers know we aren't fond of Tesla and its 'visionary' founder Elon Musk...
As we've explained many times, it's not that we have a problem with the electric carmaker's products. Rather, it's Musk's questionable ethics, and the fact that it's simply a terrible business.
Tesla (TSLA) has missed virtually every manufacturing deadline and sales target it has ever set. It loses money on every car it sells, despite forcing taxpayers to subsidize a huge portion of the cost. It has burned through nearly $10 billion since 2012... holds another $10 billion in debt... and has never turned a profit. And yet, somehow, we're supposed to believe the company is worth more than $56 billion today.
Of course, you've likely heard all this before. But if you thought Tesla had problems now, just wait... A virtual tsunami of new competition is coming soon. As Bloomberg reported yesterday...
In North America alone, the number of electric vehicles [EVs] will soar to 47 by the first quarter of 2022 from 24 in the third quarter of this year, according to data from Bloomberg New Energy Finance. China's EV market will go to 80 from 61, and European buyers will have 58 electric choices, up from 31. Globally, there will be 136 EVs on the market by the end of that year, and that doesn't even include the hybrid models or fuel cells.
That will make for a very crowded field in a nascent zero-emission car market that most consumers have yet to embrace and where financial losses loom large. In the U.S., electric car sales were less than 1% of the market last year, according to the International Energy Agency. They were 1.4% in China and in the U.K.
"Companies are committed to electric cars, but there is little evidence that there is a lot of consumer demand for it," said Kevin Tynan, senior analyst with Bloomberg Intelligence.
This last point is important...
Economics 101 tells us surging supply combined with tepid demand is a recipe for lower prices. This isn't great news for any electric carmaker, but it's especially bad for Tesla. The company's already large losses could grow even bigger as competition ramps up.
Worse, more competitors are now targeting the luxury segment of the market where Tesla largely operates. More from Bloomberg...
Volkswagen's Audi brand will start building the E-tron Quattro, a luxury SUV, in 2018, followed by the Sportback coupe in 2019 and a third, unnamed vehicle by 2020.
Porsche will sell a production version of its Mission E sports sedan concept car starting in 2019.
In addition to BMW's current electric i3 compact and i8 sports car, the German automaker will have an electric Mini in 2019, an X3 compact SUV in 2020 and 10 others by 2025, Chairman Harald Krueger said in a speech in September.
Daimler's Mercedes-Benz brand plans 10 battery-powered vehicles in its EQ sub-brand through 2022, while Volvo Car, which is owned by China's Geely Automobile, has said any new models launched in 2019 or later will be offered only as hybrid, plug-in hybrid or all-electric versions.
If the company can't make money with practically no competition today, what hope will it have when the competition really gets going?
In the meantime, Tesla continues to fall short of Musk's lofty goals...
When the company launched its new, lower-cost Model 3 sedan in July, Musk promised the company would ramp up production quickly.
He said it would produce 100 units in August, 1,500 in September, and a huge 20,000 per month by December. From there, Musk said production would really take off... He said the company plans to make 500,000 Model 3s in 2018, and 1 million in 2020.
So how is his big plan coming along? As Bloomberg reported yesterday (emphasis added)...
The automaker built only 260 Model 3s during the quarter ended in September, less than a fifth of its 1,500-unit forecast. Output of the sedan that starts at $35,000 – roughly half the cost of the least expensive Model S – was lower than expected because of unspecified "bottlenecks," according to the company.
Musk has engendered enthusiasm about the future of electric cars and has automakers including Volkswagen, General Motors, and Daimler lining up to compete.
But what Tesla hasn't done is prove itself as a mass manufacturer. The slow start for Model 3, which was designed for easier assembly, reignites concern that the company will struggle to reach the lofty production targets set by its CEO.
You'd be a fool to believe Tesla will produce 1 million Model 3s per year anytime soon...
According to Karl Brauer, executive publisher for Kelley Blue Book and Autotrader, that ramp-up rate is unprecedented among experienced, high-volume automakers. (Tesla is neither.)
But Musk couldn't even meet the first of these projections. Worse, Tesla produced just 25,336 total vehicles across all its models last quarter. This is less than it produced in the three months ending in June.
In other words, Tesla is actually producing fewer cars just as it has promised to begin making exponentially more.
Maybe Musk is on to something... After all, when you're losing money on every vehicle you produce, making fewer cars doesn't sound so bad.
Longtime Digest readers know Porter and senior technology analyst Dave Lashmet have been closely following biotech giant Biogen (BIIB) – and its revolutionary Alzheimer's drug, BIIB-037, or aducanumab – for more than a year. As Porter explained in the December 9 Digest...
For the first time ever, we have proof that targeting plaque in the brain can stop Alzheimer's. On September 1, Biogen published results in the journal Nature that proved (having met statistical endpoints) that its monoclonal antibody can clean patients' brains of plaque within 12 months. It also proved that those patients stop declining on a cognitive scale...
Today, Biogen released the data on a supplemental dosing study for this new drug. It discovered similar results could be achieved by slowly increasing the dosage over a year, rather than just starting with a full dose. Slowly increasing the dosage helped to minimize side effects. On the news, Biogen's stock went up a little, but not much.
In our view, this drug is likely to win approval. We're still a long, long way from the end of Biogen's Phase III trials, results from which won't be known until next year. But I'm unusually optimistic because the results are highly correlated. Patients' response to the drug could be predicted by the amount they received. And these results mark the first time any drug has been proven to both remove amyloid plaque safely and stop the progression of Alzheimer's.
Biogen has yet to report interim data from the ongoing Phase III trials...
But the firm did recently report new data from a long-term extension ("LTE") of its Phase 1b trial. (It was earlier data from this trial that was published in Nature last year.)
In short, patients who completed the initial one-year study were given the option to continue treatment. Some of these patients have now been on the drug for more than three years, and the data continue to impress. We asked Dave to provide a short update on these results for Digest readers. Here's what he told us...
A majority of the patients first enrolled in the Phase I trials more than three years ago still remain on the drug today. This gives us some early insight into its long-term effects...
As expected, patients in the placebo arm lost mental function the fastest and accumulated more plaque.
Patients on the lowest 3 mg dose saw disease progress, but slower than the placebo. They also showed a measurable decline of plaque accumulation.
Patients on 6 mg doses initially progressed, then stabilized and gradually became plaque-free. It's the same for those who slowly stepped up from the 3 mg to 6 mg dose.
And those on the 10 mg dose showed below detectable levels of plaque and the least amount of disease progression.
These are impressive results. There has never been an Alzheimer's drug with such efficacy. We now know there's a long-lasting benefit to taking the drug. This bodes well for the drug's ongoing Phase III trials.
If these Phase III trials show similar results, aducanumab could become a blockbuster worth tens of billions of dollars...
As Porter has explained, this could easily push Biogen shares from about $300 today to new all-time highs of $400 or more. But Dave believes he has found an even better way to profit...
In his elite Stansberry Venture Technology advisory, Dave has discovered a way to earn at least three times higher returns than owning Biogen shares directly.
Of course, it wouldn't be fair to his subscribers to share the details here... But you can get immediate access to this research with a subscription to Stansberry Venture Technology. Click here to learn more. (And Stansberry Venture Technology subscribers can access Dave's original recommendation right here.)
It was one of the most popular presentations at this year's Stansberry Conference in Las Vegas...
Only it wasn't an official presentation at all.
You see, at 7 a.m. Pacific time – before the conference even kicked off – our friend Dr. Richard Smith hosted an impromptu talk. And though it wasn't announced in advance, it quickly became "standing-room only."
Why? Because Richard's talk addressed the one question we've heard more than any other this year...
How can you safely position yourself to profit from the end of this historic bull market... and know without a doubt when it's time to get out before the inevitable bear market begins?
Because we know many of you weren't able to join us in Vegas... and because we know you're likely asking the same question... we've asked Richard to share this same research again with all interested Stansberry Research subscribers.
This FREE event will be held this Thursday evening, October 5, at 7 p.m. Eastern time. Click here to reserve your spot and learn more.
New 52-week highs (as of 10/2/17): AbbVie (ABBV), AMETEK (AME), American Express (AXP), Allianz (AZSEY), ProShares Ultra Nasdaq Biotechnology Fund (BIB), Baidu (BIDU), Bristol-Myers Squibb (BMY), Berkshire Hathaway (BRK-B), Celgene (CELG), CME Group (CME), WisdomTree SmallCap Dividend Fund (DES), WisdomTree Japan Hedged Equity Fund (DXJ), Eaton Vance Enhanced Equity Income Fund (EOI), Huntington Ingalls Industries (HII), iShares Nasdaq Biotechnology Fund (IBB), iShares Core S&P Small-Cap Fund (IJR), Intel (INTC), ETFMG Prime Mobile Payments Fund (IPAY), iShares U.S. Aerospace and Defense Fund (ITA), iShares U.S. Home Construction Fund (ITB), JPMorgan Chase (JPM), Lockheed Martin (LMT), Monsanto (MON), Koninklijke Philips (PHG), PNC Financial Warrants (PNC-WT), ALPS Medical Breakthroughs Fund (SBIO), ProShares Ultra S&P 500 Fund (SSO), Stanley Black & Decker (SWK), ProShares Ultra Financials Fund (UYG), and Verisign (VRSN).
A quiet day in the mailbag. Did you attend our conference in Vegas, either in person or from the comfort of your home? Let us know what you thought of it at email@example.com.
October 3, 2017