Elon Musk's First Payload To Mars: His "Midnight Cherry Tesla Roadster Playing Space Oddity"

In late November, we reported on Elon Musk’s desperate attempt to boost market confidence with a shock and awe performance unveiling Tesla’s new semi-truck and roadster. While the event was a thriller, it appears the laws of physics may have finally caught up with Tesla’s stock - now in a bear-market from September highs.

Musk is undeniably the greatest snake oil salesman modern financial markets have ever seen, and that is why he is planning the next spectacular event before a further correction.

On Friday evening, Musk tweeted what the payload of the Falcon Heavy would be— his “midnight cherry Tesla Roadster playing Space Oddity”.

But the story gets better, because the powerful Falcon Heavy rocket will launch his Tesla into the orbit around Mars. Musk added, the Tesla “will be in deep space for a billion years or so if it doesn’t blow up on ascent.”

As Musk would say, the show must go on with the Falcon Heavy launch expected “next month” (January 2018) from Pad 39A at Kennedy Space Center in Florida. According to ARS Techinca, “a static fire test of the rocket’s three cores, and 27 engines, on the launch pad this month.”

In simplest terms, the Falcon Heavy is three of the company’s Falcon 9 rockets strapped together. It will then create enough lift as proposed by Musk to propel his Tesla out of low Earth orbit onto a trajectory to Mars. When it comes to timing— don’t take the company seriously. Musk has pushed back Falcon Heavy’s maiden flight more than once: it was originally planned for a summer launch but moved to November and now to January 2018.

Musk said, at a press conference in July, that the Falcon Heavy might not even make it to orbit on its first attempt to leave the atmosphere. That means the upcoming event could turn into a very expensive firework showing.

While the practical use for a Tesla roadster on Mars is still unknown, it would buy Musk some time to keep the stock elevated for perhaps a few more secondly offerings. If Musk is successful in this latest endeavor, it would signal that NASA’s ambitions to Mars could be fulfilled by a Falcon Heavy. So far, no private company has launched a rocket beyond low-Earth orbit, nevertheless to another plant.

Phil Larson, an assistant dean at the University of Colorado, and a former SpaceX official said, “the launch of the biggest rocket since the U.S. Moon booster is a game changer for our country’s space exploration future and for national security. The fact that development of such a capability is coming from U.S. industry is a very positive sign for our economic competitiveness.”

As we have highlighted before, the short thesis for Tesla (see: Jim Chanos Adds To Tesla Short, Sees Musk Stepping Down) explains the financial circumstances of why Musk is attempting to conduct the great show ever known to man through SpaceX, as it means the cross promotion would keep his scheme alive. In the mean time, the short theses build:

1. Negative Cash Flows

“If you can’t make money selling a $100,000 car to rich people, how are you going to make money selling a $45,000 car to normal people?” Rocker told The Times. He was referring to the upcoming mass-market Model 3. “I’m saying they’re going to lose money on every Model 3 they build and sell,” Spiegel said. Based on Tesla’s Q4 2016 earnings report, he figured the combined average selling price for non-leased Model S and X is about $104,000 and the combined average cost of building them about $82,000.


2. Competition from the Big Guys

Electric vehicles are still only a tiny fraction of total new vehicle sales in the US. Tesla sold about half of them. In March, according to Autodata, Tesla sold 4,050 vehicles in the US, similar to Porsche. All automakers combined sold 1.56 million new vehicles. This gave Tesla a market share of 0.26%. “Tesla faces a formidable set of competitors, and they’re coming in with guns blazing,” Wahlman told The Times. “Once the market is flooded with electric vehicles from manufacturers who can cross-subsidize them with profits from their conventional cars, somewhere around 2020 or 2021, Tesla will be driven into bankruptcy,” Spiegel said.


3. Tesla’s vanishing tax credits

The federal tax credit of $7,500 that EV buyers currently get is limited to 200,000 vehicles for each automaker. Once that automaker hits that point, tax credits are reduced and then phased out. Of all automakers, Tesla is closest to the 200,000 mark. Under its current production goals, the tax credits for its cars could start declining in 2018. This would give competitors, whose customers still get the full tax credit, a major advantage. About 370,000 folks put down a refundable $1,000 deposit on Tesla’s Model 3, perhaps figuring they’d get the $7,500 tax credit. But as it stands, many won’t. Rocker thinks that this is going to be an issue. The refundable deposit “commits them to nothing,” he said. Those that don’t get the tax credit may just ask for their money back and buy an EV that is still eligible for the credit.


4. The Question of patent protection

Tesla has made its patents available to all comers, thus lowering its patent protections against competitors. Also, the key part of an EV, the battery, is produced by suppliers; they, and not Tesla, own the intellectual property. This is true for all automakers. But Tesla might still be closely guarding crucial trade secrets that are not patented.


5. Musk’s distractions from his day job

Musk has a lot of irons in the fire: Tesla, SpaceX (with which he wants to build a colony on Mars or something), solar-panel installer SolarCity which Tesla bailed out last year; projects ranging from artificial intelligence to tunnel digging; venture capital activities…. “He’s all over the map, from tunneling to flights to Mars to solar roof tiles,” Rocker said. These announcements have the effect of boosting Tesla’s stock: “It’s ‘Let’s get the acolytes excited. Implant in the brain! Let’s buy Tesla stock!’”


6. Execution risk

“Investing is all about possibility and probability,” Yusko said. “Is it possible that Tesla will produce 500,000 cars in the next two or three years? Yes. Is it probable? No.” Tesla has missed many deadlines and goals, and quality problems cropped up in early production models. As Tesla is trying to make the transition to a mass-market automaker, execution risk will grow since mass-market customers are less forgiving.


7. Investor fatigue

Having lost money in every one of its 10 years of existence, Tesla asks investors regularly for more money to fill the new holes. In March, it got $1.2 billion. In May last year, it got $1.5 billion. Tesla will need many more billions to scale up production and to digest the losses. Tesla has been ingenious in this department. But when will investors get tired of it? “We’re awfully close to the point where people wake up and realize these guys are seriously diluting our equity” with new stock and convertible bond issues, Yusko said. According to The Times, Yusko “is looking for the moment when the true believers begin to lose faith.”



8. Emerging solid-state battery technology

Musk has invested a lot into his Gigafactory and technology producing lithium-ion batteries. The EV game is all about the best battery technology and a new threat has emerged using solid-state technology. If Tesla does not adopt to these new battery trends consumers would likely gravitate to EVs who posses such technology, because of the longer distance and shorter charge time.



a Smudge by an… TahoeBilly2012 Sun, 12/03/2017 - 22:37 Permalink

Wow this made me do a double take. There was this native american superhero called Red-X. I think he was Algonquinn. He would cruise around fighting evil in his invisible flying red Cadillac. If it's invisible how do you know it's red? Typical indian brain teaser. But I kinda imagined it looking something like this pic.No further equivalency exists between Elon and Red-X.

In reply to by TahoeBilly2012

Milton Keynes Sun, 12/03/2017 - 22:13 Permalink

I'm not a fan boy but let's discuss the questions1) Tesla burns a lot of cash developing new product, so, they are expected to be in a Cash Burn mode.Now as battery gets cheaper, the cars get cheaper.  2) Competition is good. More competitors means more validation.  3) Tax credits don't matter much at the high end.4)  Patents aren't the only barrier. R&D, Design, Factory, Dealers, these are all part of the investment. 5) Yeah, he's distractied.6) Execution matters.7)  So Far the investors believe in the future growth story.8) The tesla battery is easily swapped.

3-fingered_chemist Milton Keynes Sun, 12/03/2017 - 23:29 Permalink

Their cars would already be cheaper if they didn't try to put a lot of unnecessary tech into the vehicle that has nothing to do with the battery system. This is why the Big Auto will eat Tesla for lunch rather soon. Big Autos aren't gonna be worried about the high end customer because they know there are so few. They are going to mass market their cars straight to the average buyer of their vehicle which will give them more sales and profit. Musk's biggest mistake was trying to make a Tesla into a Porsche when it should have been a Chevy. The other issue is that the necessary battery tech to really make EVs viable doesn't even exist yet. Tesla has invested billions into a factory that will likely be obsolete in a matter of years anyway. Tesla should have been a battery company not a car company. 

In reply to by Milton Keynes

lechiffre10 Sun, 12/03/2017 - 22:17 Permalink

What's with the constant hate with Elon Musk on this board? If you're that convinced he's a fraud and his ventures will go bankrupt then put your money where your mouth is and make the same bet John Mcafee made regarding Bitcoin. Like any of you morons would refuse government money for a startup that you bleed time and personal money into. Also, you idiots should read his autobiography and see that he actually DID put his own personal money on the line for Tesla and Space X and that's how he actually convinced other investors to follow suit. But you know, keep trashing the guy instead of reserving that hate towards actual crooks in the financial system

Utopia Planitia lechiffre10 Sun, 12/03/2017 - 22:27 Permalink

If you want to pour your own money into Musky Scent have at it. It remains a fact, however, that the vast majority of money that created his empire came from the government (i.e., taxes).  Since when did the US govt become a venture capital entitiy?  Is that what I am paying taxes out the ass for?  So Oblamo can hand out $$billions$$ to his sicko-phants?Use your own money to fund these things, not hard-earned dollars that the rest of us were forced to hand over.

In reply to by lechiffre10

Clowns on Acid lechiffre10 Sun, 12/03/2017 - 22:41 Permalink

leechfire...STFU....Musk is a fraud. The SEC and Inv Banks love this guy because he creates volume and capital raises. The milenial fucks that are now anal_ysts for Morgan Stanley, RBS and others are just non white cucks from Univ Berkeley touting thei caste based, socialized solutions on socieities.Never seen so many Indians (dot not casino) flee the turmoil in India but then spout the typical caste based socialized "We are the World" BS in the US.   

In reply to by lechiffre10

koan Sun, 12/03/2017 - 22:23 Permalink

Surprised they let him do this, even the slightest chance of Mars being contaminated with Earth organisms should have NASA pulling the plug on this stunt.

Bemused Observer koan Sun, 12/03/2017 - 23:43 Permalink

How would they 'pull the plug' on it? They don't own Mars, and they don't own space. And by the time they get their shit together and manage to send an actual astronaut to Mars, there'll already be a McDonald's there and the place will be littered with plastic bottles and cigarette butts.

In reply to by koan