Musk Decries ‘Fascist’ Orders Putting Tesla’s Hot Streak at Risk
Elon Musk went on a profane rant during another emotiveTesla Inc. earnings call, excoriating stay-at-home orders that are putting the electric-car maker’s red-hot run at risk.
“This is fascist. This is not democratic, this is not freedom,” the chief executive officersaid after reporting Tesla’s first-ever profit to start a year. “Give people back their godd— freedom.”
Tesla is worried about being able to resume production in the San Francisco Bay area, where authorities have extended a stay-home order to theend of May. The Model 3 maker’s only assembly plant in the U.S. still produces the vast majority of the company’s cars and has beenidle since March 23.
Investors shrugged off the outburst, with Tesla shares finishing the late trading session up 8.7%. The company’s third straightquarterly profit and revenue of almost $6 billion beat analysts’ estimates, extending an advance for a stock that’s already the biggest gainer on the Nasdaq 100 Stock Index this year.
“It was vintage Elon. I wish he hadn’t done it,” Gene Munster, managing partner at Loup Ventures, said by phone. “But most investors don’t care. It doesn’t change the reality, which is that Tesla is making meaningful progress toward being a major player in the auto industry.”
Earlier: Musk Says ‘Free America Now’ in Tweets Criticizing Lockdowns
The stock surge Musk, 48, has engineered by producing and delivering more cars than expected early this year has positioned him to receive the first set of stock options from apay package that set moonshot goals two years ago.
By continuing to build up the shares, bulls are overlooking uncertainty about how soon the company will be able to resume production at its sole U.S. vehicle-assembly plant in Fremont, California, or how eager consumers will be to purchase Tesla cars once health orders are loosened and lifted.
“We are a bit worried about not being able to resume production in the Bay area, and that should be identified as a serious risk,” Musk told an analyst. He said shelter-in-place orders are “forcibly imprisoning people in their homes, against all their constitutional rights” and “breaking people’s freedoms in ways that are horrible and wrong.”
“It will cause great harm, not just to Tesla, but to many companies,” Musk added. “While Tesla will weather the storm, there are many small companies that will not. Everything people have worked for their whole life is being destroyed in real time, and we have many suppliers that are having super-hard times, especially the small ones. It’s causing a lot of strife to a lot of people.”
Read More: Carmakers Go From Shunning Electric Bets to Fueling Tesla Profit
During the debut quarter for the new Model Y crossover, automotive gross margin improved to 25.5%, the highest in a year and a half.
While Tesla stopped short of restating its January forecast for deliveries to “comfortably” exceed 500,000 vehicles this year, the company said it believes it can achieve industry-leading operating margins and profitability.
“Gross margin was mostly the thing that sticks out to me on the positive side,” Ben Kallo, an analyst at Robert W. Baird with the equivalent of a hold rating on Tesla, said by phone. “On the question-mark side, I have to wonder why they didn’t talk about demand at all.”
Related: Tesla to Cut Model 3 Price in China to Qualify for Subsidies
Tesla managed to build about 14,000 more vehicles than it handed over to customers in the quarter, despite being forced to suspend production at its factory in California late last month.Inventory build-up led the company to burn through about $895 million in cash during the period. Tesla still ended March with $8.1 billion on its balance sheet afterraising money through a stock offering in February.
Musk will postpone initial deliveries of Tesla’s Semi truck again to 2021 — roughly two years later thaninitially planned — as the company prioritizes starting output of the Model Y crossover in Shanghai and building afactory in Germany from which it aims to begin shipping cars in the middle of next year.
“Tesla investors are looking past the June quarter,” Dan Ives, a Wedbush analyst who rates the stock a hold, said by phone. “The bulls could take this and run.”
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