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Elon Musk is showing signs of extreme strain

By Jacob Wolinsky. Originally published at ValueWalk.

Alameda County

Elon Musk starting up with Alameda County because he is stressed? Whitney Tilson comments on the latest saga.

Here’s my friend and former partner Glenn Tongue’s take on the latest shenanigans by Elon the Untouchable:

Elon Musk is showing signs of extreme strain.

He had a twitter meltdown this weekend involving threatening to move Tesla to Texas (moving a factory is an incredibly difficult endeavor and takes significant planning) and questioning the competence of local officials. Shortly thereafter, he filed a suit regarding the plant shutdown.

Today’s actions top that.

The day started off with Musk ignoring the Alameda county rules and opening the plant for production anyway – see: Elon Musk Says Tesla Is Restarting California Production, Defying Local Order and Tesla has already started making cars again at its California factory While locked in a battle over whether it can legally reopen.

Later, car carriers full of Teslas could be seen leaving the factory.

Then, this afternoon, CA Governor Gavin Newsom was asked about the factory during his conoronavirus press conference. His response was that the factory could open this upcoming Sunday and he supported the county’s jurisdiction on the issue.

In response, after the market closed, Musk sent out this blockbuster tweet:

Remember, the factory was already operating when he sent out this tweet.

So many questions: Should workers break the law and go to work because the boss says to? How should Alameda county respond? Fundamentally, what does the rule of law mean to the county, California and Tesla? Is it safe to return to production?

This chart (by TeslaCharts, an incredibly astute twitter participant) suggests it might not yet be time for the “all clear signal”

Of course, there must be a reason Musk is behaving desperately. I believe it is because he is desperate.

The company runs its finances with almost no excess liquidity. China sales were reported this morning to be down around 65%. There are significant payables that need to be made and the company is losing millions of dollars every day the plant is closed. The only liquidity lever left to be pulled appears to be the asset-backed line, which can’t be tapped if there is no more available collateral. I believe it is quite possible Tesla is quite close to a liquidity crisis – one so bad that Musk feels the need to fall on his sword to gain a mere five days of production (remember the Governor said there was an agreement to open this upcoming Sunday).

Never a dull moment!

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