By Peter M. DeLorenzo

Detroit. Once in a while the swirling maelstrom starts to swallow this industry whole. It’s always a slow, almost imperceptible buildup, but as it gains speed, things – and people – start to lose their focus, and when that happens, watch out.

The Drill goes something like this: As counteracting forces push and pull, this business starts to reel from a cacophony made up of a particularly virulent strain of self-generated white noise, competing interests and entrenched fiefdoms, hidden agendas, a fog of delusional thinking made up of one part hubris and two parts arrogance, and a large dollop of the ever-present unmitigated bullshit thrown in for good measure.

And it’s a lethal cocktail. Why? Because every day unrealistic expectations are set, promises are made that can’t even remotely be kept and the business twists and turns on the latest pronouncements, rumors and conjecture. What is real gets lost in the shuffle, of course, and reacting instead of acting becomes a cottage industry. And it all contributes to the overall industry din as if it’s part and parcel of standard industry procedure because, well, this just in: It is.

I don’t have to go far to expose the usual suspects who are the hard-core contributors to the din. Let’s take Elon Musk, for instance. Please. Yes, he has cemented his role as this country’s resident blue-sky visionary, but shooting off rockets and talking about tunnels that will never be built is one thing; actually being able to build cars profitably is quite another.

When Musk started beating the drum for the Model 3, I said loudly that everything about the car – including the ridiculous production numbers that Musk promised – would not happen. In fact, it would be a complete disaster. Why? Because the company has demonstrated repeatedly that it a.) can’t make money building and selling cars and b.) can’t build automobiles with even a modicum of consistent quality.

And this week, we found out that the Model 3 was a pipe dream. And a handbuilt pipe dream, to make things worse. The hand-wringing in the media about Tesla missing the production targets for the Model 3 by a mile has been humorous to say the least, as if everyone has been living under a rock for a couple of years and is simply shocked. Not only is Tesla unable to produce the Model 3 with any appreciable volume, the cars being built are being assembled by hand because they’re still trying to figure out prototype parts. Remember when Musk stated emphatically that Tesla would sell 500,000 Model 3s by the end of 2018?

There wasn't even a remote possibility that Musk would reach the super-inflated – and overhyped – production targets for the Model 3. And this just in, he never will. That didn’t stop him from shouting it from the rooftops and pounding it into his adoring acolytes in the media and on Wall Street. It was a portrait of sheer fantasy fueled by Musk’s unbridled delusions of grandeur. 

Charley Grant, in The Wall Street Journal, wrote last week: "Still, Tesla’s persistent inability to forecast its results should raise concerns. Tesla issued the forecast of 1,500 cars just two months ago and missed it by over 80%. Monday’s announcement marked the third time since January that Tesla has cited production issues as a reason for a missed forecast, yet Tesla is no startup—the company has been in business since 2003." 

Raise concerns? That’s one way of putting it. And what about those cheerleaders on Wall Street? You know, the relentless hacks who were single-handedly responsible for the egregious overrun on Tesla stock? They’re now backpedaling faster than an all-pro defensive back, preparing to hide under their desks as the valuation of Tesla – which was criminally unrealistic from the get-go – makes like a giant hubris-filled balloon about to deflate at a furious rate.

But then Wall Street has been wrong about Tesla from the beginning, so I can’t generate any sympathy for those greed merchants now. The run-up in Tesla stock was partially based on Wall Street’s fundamental and unflagging hatred for anything to do with Detroit and this country’s domestic auto industry. These so-called analysts bought everything Elon Musk was spewing hook, line and sinker, figuring Silicon Valley would transform the auto industry and Detroit would finally get its much-deserved comeuppance for oh, I don’t know, building machines that were actually efficient and affordable for a wide spectrum of buyers?

The unrelenting fact about Tesla is that the company has never made dollar one designing, building and selling luxury cars. It’s simply not possible. Tesla lives on energy credits sold to other companies, and it has taken what was once one of the most efficient and high-quality automobile plants in the world (the NUMMI plant formerly owned by Toyota) and turned it into a cesspool of gross inefficiency and poor quality. And there is no way in hell that Tesla can sell a mainstream automobile at the volumes or the price point promised. Tesla will be lucky to build 100,000 Model 3s total by the end of 2019, and trust me, even that will be a stretch. But I can assure you of one thing – the company will not be able to do it profitably. Not even remotely close, in fact.

There is no doubt whatsoever that Musk has contributed to the relentless din in this business. He may be a visionary, but his short attention span doesn’t count for much in an industry based on precision mass production and efficient, disciplined processes. That kind of detailed discipline may bore Musk to death, but by not embracing the task it will mean the death knell for Tesla. Real live automobile companies that know all about mass-producing complicated machines profitably are about to hand Musk’s ass to him. Musk will move on to other pipe dreams, of course, but not before blaming the “recalcitrant” U.S. auto manufacturers, the U.S. government and the “rigged” system for his predicament. When in reality, he’ll only need to take a good long look in his special shape-shifting, ego-enhancing mirror.

As I said last week, Tesla's day in the sun is coming to an end, but it wasn't fun while it lasted.

And what about the complicit denizens of Wall Street? There is simply no excuse for their reprehensible conduct in blowing up the valuation of Tesla beyond all reasonable expectations. And a lot of people are going to get burned because of it, big time. But then again that’s the way the wolves of Wall Street roll. It’s not about the efficacy of the investments or the financial needs of small investors, it’s about their own private little Idaho and don’t you ever forget it.

But guess what? It seems that the home of America’s greed merchants is just getting warmed up. This week, after GM announced that it would offer two new all-electric vehicles based off “learnings” from the Chevrolet Bolt EV in the next eighteen months, and that those vehicles would be the first of at least 20 new all-electric vehicles to be launched by 2023, Wall Street ran up GM’s stock as if it was turning on a “buy now!” light switch.

Wait a minute, that's all it took?  A purposely-vague pronouncement that amounted to a giant “we’re working on it”? And all of a sudden it was okay to like GM now that it was talking about a partial fleet of electric cars that was at least six years away? Maybe GM and Ford should announce flying cars by 2030 if they really want to see their respective stocks skyrocket.
 
It’s clear that Wall Street was completely brainwashed about America’s electric future by Elon Musk, and it’s also clear that they haven’t learned one damn thing on their own about the automobile or the future of transportation. Because if they had, they’d know that all-electric fleets from automakers are a good 20 years away (in fact we may never reach “all-electric” for every conceivable application), and in the meantime they would also understand that the internal combustion engine has a long, long way to go.

A glimpse through the industry kaleidoscope can be flat-out frightening, because what is perceived as real is usually anything but.

But then again, it's not called the swirling maelstrom for nothing.

And that’s the High-Octane Truth for this week.