Even if you choose to ignore the intermittency issue, the virtue of green electrons resides in their creation rather than their use. Once green electrons exist it doesn't matter whether they power a Tesla or a toaster. One will be cleaner and the other dirtier.
I've read the reviews of the Tesla Model S and have no doubt that it's a fine automobile. It is not, however, a clean automobile and pretending otherwise is deceptive. Adding renewables to the analysis merely adds another level of pollution to the power grid, a shared resource that is every bit as critical to life in an industrialized society as clean air and water.
I've read several reports over the past two days about the 2,900 new Model S reservations Tesla booked in Q3. The thing they all overlooked, however, is the number of cancellations. Tesla had 11,500 reservations at the end of Q2. It booked 2,900 new reservations in Q3 and delivered 250 cars. It ended the quarter with 13,200 reservations. That number is only possible if 950 existing reservations were canceled during the quarter. A one-in-three cancellation rate in the middle of a high-profile product launch is not an encouraging sign.
I'm willing to give Tesla the benefit of the doubt when it comes to reaching its production goal of 5,000 cars per quarter. But if you start with a reservation base of 13,000, deplete it by 5,000 deliveries per quarter and then replenish it by 1,750 reservations per quarter, the mathematical progression for 2013 will be as follows:Q1 -- 9,750 reservations Q2 -- 6,500 reservations Q3 -- 3,250 reservations Q4 -- zero reservations The art of investing is all about balancing upside potential against downside risk; weighing the possible against the likely. Tesla may be a fun stock for traders as the hype cycle runs its course, but with gaping holes in the environmental claims, yawning chasms in the economic claims and serious questions about the commitment of reservation holders, I don't see a reasonable balance between risk and reward.
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts