Here's what Jim Chanos is getting wrong about Tesla

On Monday, Kynikos Associates founder Jim Chanos appeared onBloomberg TV and said that Tesla is an “overpriced car company.”

Tesla shares ended the day down over 2%, at $US216, continuing a slide that began over a week ago.

Despite being pressed several times by Bloomberg’s Stephanie Ruhle, Chanos — a noted short seller — wouldn’t confirm that he’s betting against Elon Musk’s electric-car maker.

Chanos did claim that in September BMW “sold just about as many electric cars in the US as Tesla did, about 2,000.” His point was that competition has arrived for Tesla — competition that will put pressure on the company’s business and stock price.

BMW did sell 1,892 of its i8 sports car and i3 city car in September, but there are problems with Chanos’ comparison.

First, Tesla doesn’t report monthly deliveries; it only reports quarterly deliveries. And in the third quarter, it delivered 11,580 vehicles, about the same number as in the second quarter. That means Tesla is averaging about 3,860 deliveries per month globally.

This suggests that Tesla has been selling more each month of one car, the Model S sedan, then BMW is selling of its two iSeries vehicles.

Second, the i3 and i8 models aren’t all pure electric vehicles. The i8 is a plug-in gas-electric hybrid, capable of only about 25 miles in all-electric mode.

The i3 is sold in an all-electric version with a range of about 80 miles; and a range-extended version a small gas motor that stretches that out to 150 miles. (Business Insider tested both vehicles and found the range figure to be about right.)

Tesla only makes all-electric cars, with the Model S serving up a range of between 230 and about 250 miles, depending on configuration. Sales of the Model X SUV just started — and it’s range is about 250 miles per charge.

It’s tempting to compare Tesla and BMW — both are aiming to capture luxury car buyers, as well as tech-savvy early adopters — but on the electric or semi-electric from, they’re selling very different cars. No one who might buy a Model S, which is a versatile, roomy, fairly well-appointed 4-door, is going to be swayed by an i8 because the i8 is an exotic quasi-supercar.

The i3 is more versatile, but it’s intended to be a commuter-mobile, as well as a prototype of sorts for cars whose natural stomping ground is the city, not the freeway.

The bottom line is that BMW’s iSeries isn’t actually competing with Tesla at all.

BMW may decide to compete more directly with Tesla in the future, but at the moment, the Bavarian automaker is putting its 5 Series sedans, powered by good old-fashioned gasoline, up against the Model S, and its equally gas-powered X5 SUV up against the Model X.
And here’s a topper: Chanos thinks that Tesla is simply taking Panasonic’s battery technology and sticking it in Tesla vehicles.
Tesla is partnered with Panasonic for battery cells, but Tesla designs and engineers its battery packs, which are actually one of the most innovative parts of the vehicles: they’re made up of thousands of cells, wired together and managed by software to deliver power to a Tesla vehicles electric motor.

Chanos also notes that Tesla’s market cap is half of BMW’s even though BMW sells many, many more cars.

This is true. Tesla Investors have bid up the price because they think Tesla is at the leading edge of a historic disruption of the auto industry.

Tesla’s market cap is lofty by comparison with just about any traditional car maker. On this point, Chanos is joining the bandwagon of analysts and investors who are worried that Tesla’s performance as a car maker — specifically with the task of producing and delivering cars on schedule — could fall short.

But that doesn’t mean it’s logical to compare its operations with BMW or any other auto makers. At least not yet.

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