Business Insider's Linette Lopez asked famed short seller Jim Chanos about his ongoing Tesla short, and he shared "the biggest whopper" the company's CEO, Elon Musk has told the market.
"...he said that truck will be out in 2019," Chanos said. "And if that's the case, those production lines have to be up now. That factory has to be up now. And where is that? I mean, what factory line is going to be making a truck in 2019 and a roadster sports car that he unveiled in 2020? You can't simply say things like that without having some evidence to back them up. You're a public company's CEO."
Following is a transcript of the video.
Linette Lopez: Back to your 20s, back then your nemesis was a CEO named Morley Thompson, the CEO of Baldwin Piano. That was your first big short. Now it seems like you've set your sights on another CEO. His name is Elon Musk. He's got this little company called Tesla.
Jim Chanos: I've heard of it.
Lopez: Yeah, what's wrong with Tesla?
Chanos: Well, I mean, first of all, Morley Thompson who ran Baldwin United had to be the greatest salesman of all time. He started out selling pianos door-to-door.
Lopez: That sounds difficult.
Chanos: And anybody that can do that and then rise to CEO, you know, had to be able to sell pretty much anything. And that I think is Elon's greatest quality. He's a pretty good salesman. He's always pitching the next great idea. The problem is, is that the execution of the current ideas is falling short. And that's where I think it's problematic. And on top of that, I think — increasingly — he's making promises that he knows he cannot keep. And I think that's a much more ominous turn.
Lopez: What is the most recent promise that he's made that he can't keep?
Chanos: Well, I think the biggest whopper that I've seen — and we have a spreadsheet of Elon's whoppers — along with a longer spreadsheet of all the executive departures at Tesla. But I think the latest one that kind of stunned me was when he unveiled the semitruck — EV.
Lopez: But he hasn't really even given us a regular car. The $30,000 (R350,000) car that he promised everyone.
Chanos: Well, forgetting that, he said that truck will be out in 2019. And if that's the case, those production lines have to be up now. That factory has to be up now. And where is that? I mean, what factory line is going to be making a truck in 2019 and a roadster sports car that he unveiled in 2020? You can't simply say things like that without having some evidence to back them up. You're a public company's CEO. And, you know, I'd want some clarification on where exactly this truck is going to be built to be out in 2019. But, you know, he's missed production estimate after production estimate. He thought there'd be 10,000 Model 3s a week by the end of '17.
Lopez: Isn't it 5,000?
Chanos: Now it's 5,000, by June. I think even worse is that people have thought they were getting a car for what amounted to $27,500 (R321,000) — the $35,000 (R408,000) base plus the federal tax credit. Now they're realizing that the federal tax credit's going to, basically, be over by this year. And every manufacturer has a limit.
Lopez: So then it's a $60,000 (R700,000) car?
Chanos: Well, the Model 3s he's delivering now are $50,000 (R583 000) base pretty much. And with delivery charges and sales tax they're probably closer to $55,000 (R642,000). So they're almost twice what he promised people. And the car for $55,000 is not a particularly great car in our view. It might be for $27,500. But it competes against basically luxury cars at $55,000. And that's a pretty competitive area and going to get more competitive.