PERSPECTIVE HAS LEFT THE BUILDING (A SLIGHT RETURN).

Editor's Note: This week, The Autoextremist expands upon the ongoing (and seemingly never-ending) Tesla saga. We're also including last week's Rant directly below it to give you the full picture. -WG

By Peter M. DeLorenzo

Detroit. Editor-in-Chief's Note: From the latest entry in the "The Muskian Nightmare" File, comes word that Elon Musk has stepped in it yet again. I took several broadsides from St. Elon's faithful - along with some business journalists too - for my column about the Hertz-Tesla deal, to the tune of, "You're out of your fucking mind," "Wrong again" and the always predictable, "Why do Dinosaurs like you even exist?" Unlike most people who weighed in on "The Deal," I wasn't buying it. I wasn't buying the premise or the details; in fact, the efficacy of the deal just did not compute. That didn't stop the Wall Street-types who are already card-carrying members of the St. Elon Bootlickers Club from immediately canonizing Musk (aka The World's Most Obnoxious Human) - yet again - and running Tesla's valuation up to the status of a trillion-dollar company because, well, you know, everything is just so damn perfect when it comes to P.T. Musk that the carpetbagging mercenaries on Wall Street just couldn't help themselves.

That's not all. Mark Fields - the interim CEO of Hertz - basked in the glow of all the attention and the endless huzzahs that rained down on the deal. He couldn't have asked for better publicity for Hertz if he tried, given that the whole rental car category currently stinks to high heaven because of its blatant price gouging, and the fact that consumers are decidedly less-than-amused about rental cars in general. But, of course, as anything having to do with Musk tends to go - which in this Internet and Twitter age is sketchy at best -  lo and behold on Monday night, Musk opened his big Twitter mouth in response to some comments from the TwitterVerse and immediately sent the gains ginned up by the initial announcement (said to be around $300 million) into a tailspin with the following knee-jerk comment: "If any of this is based on Hertz, I’d like to emphasize that no contract has been signed yet. Tesla has far more demand than production, therefore we will only sell cars to Hertz for the same margin as to consumers. Hertz deal has zero effect on our economics." (The latest on this, as of Tuesday morning, is that Hertz is insisting that deliveries have already started; so either Hertz is making that up, or Musk is so out of the loop in Tesla's day-to-day affairs that he even has less credibility - if that's even possible - than he already has when it comes to his "remarks.")

A couple of things. 1. It's clear that Musk is far more sensitive to the idea that he signed a deal to dump Tesla Model 3s into fleet service than he cared to admit. That's exactly what this deal is about. Forget about the latest sales numbers, because the ugly reality is that demand for Tesla is, in fact, slowing. Not that the Tesla intelligentsia would even comprehend such a thing, because they couldn't possibly believe it. And 2. The idea that Tesla could produce 100,000 vehicles specifically for Hertz is a pipe dream. A Hertz spokesperson said this morning that figure is only "an initial order." Really? That's a giant "we'll see" as we like to say around here. Even if everything went absolutely perfect, which so far is a nonexistent concept when it comes to Tesla production, there is no possible way Tesla could even come close to fulfilling this deal in a reasonable amount of time. In fact, the idea is flat-out laughable.

I'm sure Mark Fields is acutely aware of all of this, but remember, in this 24/7 social media-saturated world we're immersed in, he has already won. Even if Tesla can't come through - which is highly likely to be the case - Fields has got the buzz-boost he wanted. As for all of the other ins and outs of the deal: the infrastructure build-out at Hertz locations; the major quality issues that plague Tesla vehicles (including the almost constant recalls); the rapidly increasing heat coming from NHTSA, which, as I pointed out last week, is not going to go well for Tesla and could end up costing the company billions with "B"; and the fact that the typical consumer who rents a car is not used to making allowances for charging, etc. - all of these add up to a recipe for disaster.

Not that anyone is going to comment on these realities, besides me, of course. The Muskian Acolytes embedded in Wall Street and in the automotive journalism profession - you know who you are - are too heavily invested in the Tesla Bubble to allow even a shred of negativity to creep into the proceedings. They're all-in for Tesla, even if at times there's no rhyme or reason attached to their fervor. St. Elon can do no wrong, his pronouncements carry the weight of Moses, and nary a discouraging word or thought is anywhere to be found. Well, as I said last week - in the immortal words of Samuel Goldwyn - you can include me out.

That's the High Octane/Electron Truth for this week.

PERSPECTIVE HAS LEFT THE BUILDING.

By Peter M DeLorenzo

Detroit. (Posted October 26, 2021) After sorting through the giddiness, the collective huzzahs! And the gushing pronouncements, it would probably be a good idea to take a step back and consider the so-called “Hertz/Tesla Deal” from a different perspective. 

The aforementioned huzzahs have been well-documented by now. In reporting for Bloomberg, Keith Naughton and Dana Hull wrote this:

“Hertz Global Holdings Inc.’s 4.2 Billion deal with Tesla Inc. is about more than just an order for 100,000 cars. It’s about vaulting electric vehicles into the mainstream. Not only does Tesla get a huge order at a premium price, it gets a way for the EV-curious masses to test-drive its Model 3. Hertz, meanwhile, gets to tap into the growing interest in EVs while aligning itself with the industry’s leader and sexiest brand. Tesla also will benefit from exposure in a splashy Hertz ad campaign starring seven-time Super Bowl Champion Tom Brady.”

Mark Fields, Hertz’s new interim chief executive officer (and a former CEO of Ford Motor Co.), said in an interview: “This is an opportunity not only to fix the business, but also to employ a strategy that allows us to play a central role in development of the modern mobility industry… One of our objectives is to lead in the adoption of electric vehicles.”

Okay, that’s a lot to chew on, but, a couple of things: First of all, if any other automobile manufacturer announced that they were shuffling off 100,000 vehicles to the rental car companies, industry analysts would immediately pounce all over the news by saying something like, “to me, this smells like a demand problem.” And guess what? It is. You can couch it any way you want to in an attempt at glossing over what is really happening, but it doesn’t wash. This is a convenient way for Tesla to book some volume and prop up its cash flow, plain and simple. 

But did the industry analysts on Wall Street cut through the Muskian fog to get at what’s really going on? No, of course not. They have their heads (most of them, anyway) so far up Elon’s ass that perspective left the building years ago when it comes to anything having to do with Tesla. In fact, they pushed Tesla’s valuation into the stratosphere on the news of the Hertz/Tesla deal, to the point that Tesla is now a Trillion-dollar company.

How wild is that? According to The Wall Street Journal, “Tesla’s valuation has soared unusually quickly. It took less than two years for Tesla’s market value to grow from $100 billion to $1 trillion, according to Dow Jones Market Data. By contrast, it took Amazon more than eight years to cover that ground.” 

Read that statement to yourselves again. I don’t know about you, but to me that is just unbridled insanity, especially for a company that’s about to come under severe scrutiny from the National Transportation Safety Board because of the safety deficiencies in its relentlessly promoted driver assistance technologies. I would be shocked if Tesla isn’t nailed for egregious malpractice over this, as it is the only auto manufacturer in the world that has allowed its customers to be the beta-testers for a system that has never worked as advertised. Trust me on this one, folks, this is not going away, and Tesla’s liability could soar into the billions.

And what about Hertz? I read all of Mark Fields’ statements on this deal, and it’s clear that he’s pushing the altruistic angle of this all the way. It gets his company off of the mat in terms of the investment community, it projects Hertz as a forward-looking company that’s helping the consumer public’s acceptance of EVs, and it give Hertz an entry into the roster of “happening” companies’ discussion, which would go a long way toward improving its image, at least that’s the plan.

And make no mistake, Hertz – like all rental companies – has a huge image problem. It’s no secret that 2020 decimated a lot of industries, and the rental car business was no exception. No travelers translated into severely reduced revenue, which caused the rental companies to cancel orders for thousands of cars, which in turn caused a major shortage of available rental cars in 2021, which caused the rental companies to employ ruthless pricing tactics in line with the laws of supply and demand. In other words, their customers got screwed, with rental prices often soaring to three and four times “normal” rates.

Needless to say, complaints from consumers about rental car prices have been loud and pervasive. Anyone who has traveled this year has experienced this, too, including me. It was a giant bowl of Not Good.

So, on top of all the other stated reasons, Mark Fields is making a grand gesture on behalf of Hertz, hoping that it will change the discussion completely. A giant “we’ll see” as I like to say. Oh, and one more thing: It’s about that $4.2 billion number being passed around, and the idea that Hertz would be paying premium prices for premium-equipped Model 3s. Let me be very clear on this: I’m not buying this for one single minute. Anyone who knows Mark Fields knows he doesn’t pay sticker for anything, so despite St. Elon’s protestations otherwise, there is no way in hell that Hertz is paying full boat for those Tesla Model 3s.

Just a reminder: perspective is out there, you just have to dig deeper for it.

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