DL Open Thread: Thursday, March 20, 2025
Tesla Assets ‘Appear To Have Gone Astray’. To the tune of $1.4 billion:
Tesla’s (TSLA) accounting practices are raising red flags as a new report from the Financial Times shows that $1.4 billion is missing.
Many Tesla shorts and detractors have questioned Tesla’s accounting for years, but they have never gained much traction – until now.
Today, the Financial Times has released a new report pointing to a $1.4 billion gap in assets:
Compare Tesla’s capital expenditure in the last six months of 2024 to its valuation of the assets that money was spent on, and $1.4bn appears to have gone astray.
The article points out that Tesla reports having spent $6.3 billion on “purchases of property and equipment excluding finance leases, net of sales” in the second half of 2024, while property, plant, and equipment rose by only $4.9 billion in that period.
While the SEC will no doubt look the other way, I don’t think the markets will. The Commerce Secretary will, though:
Commerce Secretary Howard Lutnick drew sharp criticism Wednesday after urging Fox News viewers to buy shares in Tesla, the electric vehicle company owned by Elon Musk.
“When people understand the things he’s building, the robots he’s building, the technology he’s building, people are going to be dreaming of today and Jesse Watters and thinking, ‘Gosh, I should have bought Elon Musk’s stock,’” said Lutnick. “I mean, who wouldn’t invest in Elon Musk? You gotta be kidding me.”
Lutnick’s boosting of Musk and his company sparked outrage online, with many accusing him of potentially violating ethics rules and the Hatch Act, which prohibits federal officials from using their positions for political or financial gain.
Time for a preemptive pardon? Looks like Tesla might need a preemptive pardon:
Tesla and Elon Musk are embroiled in a “brand tornado crisis moment” and the electric carmaker’s chief executive needs to cut back on his work for Donald Trump to stem the damage, one of the company’s biggest supporters has said.
The warning came as Tesla announced a recall of 46,000 Cybertrucks in the US on Thursday to fix an exterior panel that could detach while driving.
Dan Ives, the managing director at the US financial firm Wedbush and a self-described Tesla “core bull”, said Musk’s role leading Doge was damaging the multibillionaire’s personal reputation and the business he runs.
“The brand damage started off as limited in our view based on our initial survey work … but now has spread globally over the last few weeks into what we would characterise as a brand tornado crisis moment for Musk and Tesla,” Ives wrote in a note to investors.
A Key DOGE Intimidation Tactic:
Following up on my piece below about events at the US Institute of Peace you can see Kate Riga’s late follow-up based on the court hearing today.
I want to draw out a critical element of what happened on Monday and which we learned today. DOGE went to the private security contractor working for USIP and essentially said, you don’t have a clear legal or ethical ability to do this. But if you don’t want to lose all your federal contracts, you have to. And they did.
The critical point is this: There are a lot of very large federal security contractors who wield violence and force on behalf of the US government. In theory, they do it under the state’s monopoly over the legitimate use of violence and under law. But those contractors are also extremely vulnerable to DOGE because DOGE can make contracts disappear, absent any kind of review process, beyond the reach of the clout of stakeholders within any one agency, anywhere in the government. So the basic transition that occurred here has many potential applications. Maybe DOGE says to a policing contractor. Look, it’s not pretty. But if you don’t want to lose your contracts you’re going to have to break up that protest. Or maybe you need to take the mayor into custody. Simple point: lot of capacity of state violence and a lot of cash. And DOGE operates front to back across the transaction.
The U of D Is Newark’s Biggest Deadbeat. Legislation could help change that:
City officials argue that the university’s presence, with around 24,000 students and its large domain of tax-exempt property, significantly impacts the city. Tom Coleman, city manager for Newark, says it has contributed to rising rent prices, lower vacancy rates, and higher taxes for residents.
The bill, which was originally introduced last spring by Rep. Cyndie Romer (D-Newark) and re-proposed early this year, would authorize a charter change allowing the city to tax the University of Delaware up to $50 per student, per semester, for those taking classes at the Newark campus.
The University of Delaware became tax-exempt in 1915, meaning from that point forward, any property owned by the school was not subject to property taxes or property assessments.
To account for its growth and impact on the city, the university began making annual payments of $120,000 to Newark in 1965. In 2001, it added a yearly $60,000 contribution to support public safety efforts.
Neither of those amounts has changed since.
During the committee meeting, Coleman highlighted the Chrysler Newark Plant and University Courtyard apartments, both bought by the university in the last 15 years and removed from the city’s tax rolls. Over that same period, property taxes for residents rose by 13% to 16%.
“It’s hard to ignore the correlation,” Coleman added.
Because of the land acquired by the school, Newark is missing out on about $5.8 million in property taxes, which Coleman said is a misleading figure, since many of UD’s buildings haven’t even been assessed.
The bill deserves to pass if, for no other reason, to let the leaders of the university know that acting like arrogant pricks will no longer be tolerated.
What do you want to talk about?
