Elon Musk Sued By SEC, Tesla Stock Tumbles: Here Is The Full Complaint

In the aftermath of the “funding secured” tweet, the investing public had been split into two camps: the first, and more cynical, said that the SEC would never pursue what was a clear case of securities fraud and stock manipulation – after all, Elon Musk is “too big” of a visionary to pursue; and then there were the die hard Tesla skeptics who believed that no matter what, Musk would – or should – be punished.

Moments ago the latter group won, when the SEC filed a lawsuit against Elon Musk in New York Southern District court.

Here are the highlights:

This case involves a series of false and misleading statements made by Elon Musk, the Chief Executive Officer of Tesla, Inc. (“Tesla”), on August 7, 2018, regarding taking Tesla, a publicly traded company, private. Musk’s statements, disseminated via Twitter, falsely indicated that, should he so choose, it was virtually certain that he could take Tesla private at a purchase price that reflected a substantial premium over Tesla stock’s then-current share price, that funding for this multi-billion dollar transaction had been secured, and that the only contingency was a shareholder vote. In truth and in fact, Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source.

Musk knew or was reckless in not knowing that each of these statements was false and/or misleading because he did not have an adequate basis in fact for his assertions. When he made these statements, Musk knew that he had never discussed a going-private transaction at $420 per share with any potential funding source, had done nothing to investigate whether it would be possible for all current investors to remain with Tesla as a private company via a “special purpose fund,” and had not confirmed support of Tesla’s investors for a potential going-private transaction. He also knew that he had not satisfied numerous additional contingencies, the resolution of which was highly uncertain, when he unequivocally declared, “Only reason why this is not certain is that it’s contingent on a shareholder vote.” Musk’s public statements and omissions created the misleading impression that taking Tesla private was subject only to Musk choosing to do so and a shareholder vote.

….

Musk’s false and misleading public statements and omissions caused significant confusion and disruption in the market for Tesla’s stock and resulting harm to investors

….

By engaging in the conduct alleged in this Complaint, Musk violated, and unless restrained and enjoined will violate again, Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5 [17 C.F.R. § 240.10b-5] thereunder

The stock tumbled 5% on the news:

We have a feeling Musk won’t be tweeting much going forward:

US Traffic Volume Declines For The First Time In 4 Years

Trump’s fears that rising gasoline prices will impact consumer behavior have come true.

The volume of traffic on U.S. highways has stopped growing, alongside gasoline consumption, as rising prices are starting to curb driving behavior, a new analysis by Reuters’ energy analyst John Kemp shows. Traffic volumes in July were 0.3% lower than a year earlier, after seasonal adjustments, the latest Federal Highway Administration data showed.

Traffic growth has been negative in two months so far this year, the first readings sub-zero prints since the start of 2014.  Meanwhile volumes were up by less than 0.3% in the three months from May to July compared with the same period a year earlier, down from annual growth of 2-3% throughout 2015 and 2016.

It will come as no surprise that there has been a correlation between traffic volumes and the cyclical rise and fall in oil and gasoline prices since at least the early 1990s. While traffic volume dropped in 2013 and again in mid-2014, the sharp decline in oil prices between the middle of 2014 and early 2016 provided a tremendous boost to vehicle use.

But as oil prices have recovered over the last 30 months, that stimulus has faded and traffic growth has once again slowed to a crawl, and in fact turned negative. The reason: the average cost of gasoline purchased by U.S. motorists surged by more than 55% between February 2016 and September 2018.

Separate data on gasoline consumption showed a similar plateau as higher prices encourage motorists to limit fuel use. Gasoline consumption rose by just 18,000 barrels per day in the first half of 2018 compared with the same period a year earlier, despite strong economic growth and substantial job creation.

Looking ahead, and assuming no material change in gas prices, the U.S. Energy Information Administration predicts consumption will decline by around 10,000 barrels per day this year.

Meanwhile, if oil prices continue to rise over the next 12 months, as many traders and hedge funds expect, traffic volumes and gasoline consumption are both likely to turn increasingly negative.

But what is most worrisome, is that the flattening of U.S. gasoline consumption resembles the run up to oil price peaks in 2007/08, 2011/12 and the first half of 2014.

And while it would be difficult to extrapolate broad economic conclusions from these observations, John Kemp points out that in each case, the flattening of U.S. gasoline consumption preceded a sharp downward move in international oil prices after the market overheated.

Considering that many analysts and trader are increasingly open to the idea of a $100/barrel superspike in prices if the bulk of Iran oil exports are taken off the market, a sudden spike in gasoline prices may be just the straw that breaks the camel’s back of the US consumer, who while extremely confident, is increasingly forced to pick between filling up the car and spending money on other discretionary, or staple, purchases.

Hospital ER reports 160 percent spike in visits involving e-scooters

Published 

As injured electric scooter riders pour into emergency departments around the country, doctors have scrambled to document a trend that many view as a growing public safety crisis.

A detailed statistical portrait of that crisis won’t be available for another year, emergency physicians say, but some early samples are beginning to emerge.

In Salt Lake City — where dockless e-scooters have been on city streets since June — one hospital says it has seen a 161 percent increase in the number of visits involving scooters after comparing its latest statistics with the same three-month period a year earlier.

Between June and September 2017, physicians at University of Utah Health’s emergency room treated eight patients injured by scooters, though each of those were likely people’s personal devices and not the electric fleet vehicles owned by companies like Bird, Lime and Skip.

During the same period this year, that number had climbed to 21, according to Dr. Troy Madsen, who practices at the University of Utah Health’s Emergency Department.

“Most of the patients with these injuries specifically reported that they were riding an e-scooter or a rental scooter,” Madsen said, noting that they ranged in age from 20 to 50 years old and were often injured attempting to catch themselves in a fall. “Interestingly, more than 80 percent of the injuries this year happened between Aug. 15 and Sept. 15, which would correspond with the increasing popularity and availability of the e-scooters.”

“It’s worth noting that these were only emergency department visits,” he added. “Patients with more minor injuries may have gone to an urgent care, and the patients we saw were likely those with more significant injuries who required a higher level of care in an emergency department.”

The hospital reported that nearly half of this year’s injuries were fractures and dislocations of ankles, wrists, elbows and shoulders, as well as several cases of sprains and lacerations. Emergency physicians also treated several head injuries, and multiple patients told doctors they were intoxicated when they were injured and not wearing a helmet.

Emergency physicians noted that their statistics may represent a fraction of Salt Lake City’s e-scooter injuries. University of Utah Health’s Utah emergency department is “fairly close to the downtown area,” where most rentable scooters are located, but there are other emergency departments even closer, Madsen said.

Emergency physicians in a dozen cities around the country have told The Post that they are seeing a spike in scooter accidents. In seven cities, those physicians are regularly seeing “severe” injuries – including head traumas – that were sustained from scooters malfunctioning or flipping over on uneven surfaces as well as riders being hit by cars or colliding with pedestrians.

Some safety experts have raised questions about the gig economy workforce companies like Bird rely on to maintain their growing fleets. The company has posted ads on Craigslist seeking mechanics that say experience is not necessary in addition to providing training for new hires via YouTube videos. Videos posted online show Bird scooters with accelerators stuck in place and with wobbly handlebars and loose brakes.

“I just signed up to be a Bird mechanic,” one mechanic says on camera. “I realized there are a very large amount of scooters with problems.”

Last week, The Dallas County Medical Examiner’s Office revealed that a 24-year-old man who fell of a Lime scooter on his way home for work this month was killed by blunt force injuries to the head.

Hours after Jacoby Stoneking’s death has been ruled an accident — likely making him the first person to due riding one of the electric mobility devices sweeping the nation in recent months — a 20-year-old man in Washington, D.C., was struck by an SUV while riding a Lime scooter on Friday. Firefighters worked to free Carlos Sanchez-Martin, of Silver Spring, Maryland, was dragged about 20 yards and pinned under the silver SUV.

Police said Sanchez-Martin later died after being transported to a local hospital.

Scooter companies have repeatedly maintained that safety is a top priority. They say their apps and labels on the scooters contain basic safety information, as well as training instructions. Bird requires users to upload a driver’s license and confirm they’re at least 18 years old.

Lime, Bird and Skip have programs that give helmets to riders who request them, and Lime notes that riders must go through an “in-app tutorial” on helmet safety to unlock one of the company’s scooters for the first time.

“Helmets are recommended for use of the e-scooters, and I would reinforce this after seeing some of the cases of head injuries that we’ve treated in our emergency department,” Madsen said.

Repo 105

Branded a Villain, Lehman’s Dick Fuld Chases Redemption

Wall Street veteran, pilloried over bank’s collapse, has said his firm didn’t have to die. A new book agrees. – Wall Street Journal (September 6, 2018)

Every time Dick Fuld’s publicists succeed in getting a “redemption story” published in the Wall Street Journal or New York Times, I’m going to write an Epsilon Theory brief about Repo 105, the fraudulent scheme that Lehman Brothers ran for years to hide its deteriorating financial condition from investors and regulators alike.

Here’s what makes the world go round: you can borrow more money than you have in liquid assets.

That’s what a mortgage or an auto loan or a college loan is. You don’t have enough cash to buy that house or car or college tuition all at once, so the bank gives you the cash to make the purchase. But by the same token, banks are by necessity lending out more cash than they actually have deposited with them. This is both the gasoline and the oil for the modern economic engine, and if you and I didn’t go into debt and the banks didn’t lend more than they have in deposits, the engine would seize up and our entire economy would come to a screeching halt. This is, in fact, what causes Depressions.

But in exactly the same way that you or I might be in trouble if we borrowed a lot more money than we have stashed away in a bank account somewhere, a bank might be in trouble if it lends out a lot more money than its underlying customer deposits or invested capital or otherwise loan-supporting reserves warrant. And in exactly the same way that the banks review our financial records before giving us a loan to make sure we’re not borrowing too much money for the bank’s standards, so does the government review a bank’s financial records to make sure they’re not lending too much money for the government’s standards. And by government standards I mean laws.

Repo 105 was a multiyear scheme by Lehman to defraud the government and its own investors by falsifying the actual amount of loans it had on the books, making Lehman look safer than it actually was.

It worked like this. A few days before the end of the calendar quarter, Lehman would “sell” billions of dollars worth of loans to another bank. I put “sell” in quotation marks, because Lehman ALSO had an agreement with these other banks to buy the loans back a few days after the quarter ended for the same price as they were sold, plus enough money to cover whatever the going interest rate was on that cash for the few days it was in Lehman’s hands. This is what’s called a repurchase agreement, or repo, hence the name Repo 105 (the 105 refers to the 5% overcollateralization that counterparty banks required to lend the cash to Lehman even for a few days – theyknew Lehman was in trouble). Since financial reporting happens at the end of the quarter, Lehman’s books would look like they had more cash and fewer loans than they actually did.

Surely, you say, no law firm would bless this blatant attempt to cook the books? And I say, don’t call me Shirley. I say, well … no US law firm would bless this, so naturally Lehman found a UK firm, Linklaters, to say that this was, in fact, technically a “true sale”. Even then, to pull this off Lehman had to run Repo 105 through their offshore subsidiaries, not through their US-chartered entities. It was really expensive for Lehman to run Repo 105. But also entirely necessary, or else the entire house of cards that WAS Lehman would have collapsed well before September, 2008.

What about Lehman’s auditors, you ask, surely no auditor would go along with this scheme? Again … Shirley. Again, Lehman found that Ernst & Young would indeed sign off on the program, in exchange, of course, for a sharp increase in fees. The state of New York filed civil fraud charges against Ernst & Young over Repo 105 in December, 2010. I believe they paid a (small) fine.

Dick Fuld claims that he knew nothing about the Repo 105 program. The only possible answer to this, and here I’ll apologize in advance for my language, but it’s really the best possible word – bullshit. Did I mention that Repo 105 was a really expensive program to run? Did I mention that Dick Fuld’s nickname was The Gorilla, that he was infamous for controlling everyone and everything at Lehman? Did I mention that Repo 105 was concealing existential risk for Lehman?

If you or I did what Lehman did with Repo 105, we would be charged and convicted of bank fraud. Happens all the time. It’s pretty much what Paul Manafort just got convicted on. This is a crime. It is not a minor crime. It’s an absolute slam-dunk case for any prosecutor in any jurisdiction in the country. And yet, with the exception of the civil fraud charges brought against Ernst & Young, no other charges – civil or criminal – were ever filed by the SEC or the Justice Department in connection with Repo 105. 

When was I radicalized?

When Dick Fuld walked away scot-free from the wreckage of Lehman after getting half a billion dollars in cash comp and stock sales during his tenure.

Never forget.

Bankrupt Philadelphia Plunders Its Property-Owners For Cash

Like a lot of major cities in the United States, Philadelphia is in pretty rough financial condition.

One of the city’s biggest problems is its woefully underfunded public pension, which has a multi-billion dollar funding gap.

In 2001, Philadelphia’s pension fund was still in decent shape with a funding level of 77%, meaning that it had sufficient assets to meet 77% of its long-term obligations.

By 2017 the funding level had dropped to less than 50%.

Part of this is just blatant mismanagement; while most of the market soared in 2016, for example, Philadelphia’s pension fund lost about $150 million on its investments, roughly 3.17% of its capital.

It’s interesting that, along the way, the city has actually tried to fix the problem. Between 2001 and 2017, the amount of money that the city contributed to the pension fund actually increased by 230%.

Yet despite increasing contributions to the fund, the fund’s solvency level keeps shrinking.

Mayor Jim Kenny summed up the grim situation in his budget address last year:

The City’s annual pension contribution has grown by over 230 percent since fiscal year 2001. . . These increasing pension costs have caused us to cut important public services while the pension fund’s health has grown weaker. In fact, our pension fund has actually dropped from 77 percent funded to less than 50 percent funded during the same time our contributions were so rapidly increasing.

So, desperate for revenue, the local government has been relying on an old tactic to get their hands on every spare penny they can.

The city of Philadelphia owns the local gas company – Philadelphia Gas Works (PGW). It’s essentially a local government monopoly.

And over the last few years, PGW developed an automated system to comb its billing records, find delinquent accounts, and file a lien on those properties.

If you’re not familiar with real estate law, a ‘lien’ is a formally-registered security interest in which your property serves as collateral for a debt.

When you borrow money from the bank to buy a home, for example, the bank registers a lien over your home for the value of the mortgage.

The lien prevents you from selling the home until you satisfy the debt. It also means that if you don’t pay the debt, the lienholder (the bank, or the gas company) can seize the property.

In PGW’s case, the gas company is filing liens over people’s properties due to unpaid gas bills for as little as $300.

There is essentially zero due process here.

It’s not like the gas company has to go in front a jury and prove that there’s an unsatisfied debt.

They just have their automated system file some papers, and, poof, the lien is registered.

So someone could have their home encumbered for a $300 late bill that ended up being an administrative error.

More importantly, it’s curious why the gas company is filing a lien against the property… because it’s entirely possible that the delinquent customer isn’t even the property owner.

Let’s say you’re a landlord and renting out your investment property to a tenant… and the tenant doesn’t pay his gas bill: PGW will put a lien on your property, even though it’s not your bill.

Even worse, you wouldn’t even know about it, because PGW would be sending the late notices to the tenant… not to you.

At that point it turns into a total bureaucratic nightmare.

If you’re lucky enough to even find out about it, you call PGW to try and get the lien removed.

But (according to court documents), PGW tells angry landlords that they have no control over the lien process, and tell people to file a complaint with the Pennsylvania Public Utility Commission.

But then the Pennsylvania Public Utility Commission tells you that they have no jurisdiction over liens in Philadelphia, and that you should talk to the utility company.

Classic government bureaucracy. You just get bounced around between various departments and nothing ever gets resolved from a problem that you didn’t even create.

Well, a bunch of landlords finally had enough of this nonsense, so they got together and sued the city in federal court.

It seemed like a slam dunk case. Why should property owners be held liable for the actions of their tenants?

If tenants don’t pay for their own gas, the tenants should be held responsible… not the property owners.

Common sense, right?

Wrong. The landlords lost the case.

Two weeks ago the US District Court for the Eastern District of Pennsylvania ruled that the City of Philadelphia was well within its rights to hold property owners responsible… and to file a lien on the property without even notifying the owner to begin with.

This is a pretty strong reminder of how low governments will sink when they become financially desperate.

CO2 Emissions Hit 67-Year Low, As Rest-Of-World Rises

We suspect you won’t hear too much about this from the liberal mainstream media, or the environmental movement, or even Al Gore – but, according to the  latest energy report from The Energy Information Administration (EIA)under President Trump, per-capita carbon dioxide emissions are now the lowest they’ve been in nearly seven decades.

Even more interesting is the fact that US carbon emissions dropped while emissions from energy consumption for the rest of the world increased by 1.6%, after little or no growth for the three years from 2014 to 2016.

The U.S. emitted 15.6 metric tons of CO2 per person in 1950. After rising for decades, it’s declined in recent years to 15.8 metric tons per person in 2017, the lowest measured levels in 67 years.

And as The Daily Caller reports, in the last year, U.S. emissions fell more than 0.5% while European emissions rose 2.5% (and Chinese emissions rose 1.6% along with Hong Kong’s 7.0% surge), according to BP world energy data – an ironic turn of events given Europe’s shaming of Trump for leaving the Paris climate accord.

One Bank’s Striking Admission: The Fringe Is Now In Charge Because Of Central Banks

Whereas several years ago, forecasting that central banks would unleash wars, bloodshed and social conflict was considered so preposterous, it was relegated to the domain of fringe, tinfoil hat blogs, it has gradually been “normalized” as even the mainstream realized just how clueless the world’s central planning elite truly are, and this scandalous topic has since migrated to the permitted list of items for discussion by respected, establishment institutions including banks and wealth managers, such as the UK’s Clarmond Wealth.

Last October, in a market comment note by Clarmond’s Chris Andrew and Mustafa Zaidi, the duo warned, in no uncertain terms, that “central banks are currently furnishing the excess credit that, in the past, has been followed by an orgy of blood.”

In today’s note, instead of looking at the inevitable militant outcome of failed central bank policies, they instead take on the connection between monetary policy and the rise of the “fringe” in politics, buoyed by a resentful electorate, which unable to partake in the “rise in asset prices, be they in equities, fixed income, or real estate” and where the “continued stagnation in income has only highlighted the disparity between income and asset growth”, meant that the “resentment has simmered in the electorates of the developed world.

The cost of these policies, like in Takahashi’s time, is being paid years after the event. QE and deficit spending has brought unexpected and unsavoury guests to the political dinner table, invited there by the angry electorates. In 2012 we did not know who they would be in 2012, now we do and the guest list is nearly complete.

This list of actors spawned by central bank actions include those on the edge of acceptability: “the kind of characters who have provided diversionary entertainment for decades. These are now the main guests, sitting on both the Left and Right sides of our table: Trump & Bernie, Jacob & Jeremy, the Europeans leaders of AfD, Podemos & LegaNord.”

These couplings are the costs of QE’s best intentions. These new guests bring with them their outlandish ideas to our desperate mainstream, that is struggling to find a vision of the future.

In short, “the fringe is now in charge because the centre is bankrupt of ideas.

Below we repost the full Clarmond note which just a few short years ago would have prompted scandalous outrage across the “very serious people’s” world of finance, and now is more or less considered common knowledge as to how “this” all ends, and hardly generates any reaction.

* * *

The Best Of Intentions (link)

Dear Mustafa,

In preparing for my annual pilgrimage to the wifi-free valleys of the Cevennes National Park in France I have been reviewing our old pieces to remind me on what we were thinking in the past. One piece written in November 2012 jumped out at me, we called it ’Resurrecting Reflation’.

In it we introduced Takahashi Korekiyo, finance minister of 1930s Japan. He combined massive Quantitative Easing with deficit spending to propel Japan out of its slump. The result…the equity markets tripled, employment soared, and inflation decreased. Sadly for Korekiyo he paid for this easy money with his life. The loose money went into the military and when he tried to turn this tap off the group of army thugs visited him and cut him to pieces.

In 2012 it was only Ben Bernanke who was engaging in serious QE and we suggested that we should not be surprised to experience a similar outcome. Well Draghi, Kuroda and Carney soon joined the party and what a ride we have had.

We have enjoyed a significant rise in asset prices, be they in equities, fixed income, or real estate. However, this has coincided with continued stagnation in income – and this rise in asset prices has only highlighted the disparity between income and asset growth. So resentment has simmered in the electorates of the developed world.

The cost of these policies, like in Takahashi’s time, is being paid years after the event. QE and deficit spending has brought unexpected and unsavoury guests to the political dinner table, invited there by the angry electorates. In 2012 we did not know who they would be in 2012, now we do and the guest list is nearly complete.

Our guest include those on the edge of acceptability; the kind of characters who have provided diversionary entertainment for decades. These are now the main guests, sitting on both the Left and Right sides of our table: Trump & Bernie, Jacob & Jeremy, the Europeans leaders of AfD, Podemos & LegaNord. These couplings are the costs of QE’s best intentions. These new guests bring with them their outlandish ideas to our desperate mainstream, that is struggling to find a vision of the future. The fringe is now in charge because the centre is bankrupt of ideas.

If we fast-forward another 5 years from now I only see this guest list expanding, all the while the central bankers silently attempt to skulk away. In the past both parties eventually collided, with the new guests prevailing.

Nassim Taleb Slams “These Virtue-Signaling Open-Borders Imbeciles” In 3 Short Tweets

As liberals across America continue to attempt to one-up one another with the volume of virtue they can signal, specifically on the question of ‘open borders’ – especially since ‘jenny from the bronx’ victory over the weekend, none other than Nassim Nicholas Taleb unleashed a trite 3-tweet summary of how farcical this argument is…

What intellectuals don’t get about MIGRATION is the ethical notion of SYMMETRY:

1) OPEN BORDERS work if and only if the number of pple who want to go from EU/US to Africa/LatinAmer equals Africans/Latin Amer who want to move to EU/US

2) Controlled immigration is based on the symmetry that someone brings in at least as much as he/she gets out. And the ethics of the immigrant is to defend the system as payback, not mess it up.

Uncontrolled immigration has all the attributes of invasions.

3) As a Christian Lebanese, saw the nightmare of uncontrolled immigration of Palestinians which caused the the civil war & as a part-time resident of N. Lebanon, I am seeing the effect of Syrian migration on the place.

So I despise these virtue-signaling open-borders imbeciles.

Silver Rule in #SkinInTheGame

* * *

“Words Fail Me. It’s Insanity”: Inside Tesla’s “Preposterous” Model 3 Production Tent

Bears and bulls alike following Tesla’s gripping nailbiter of a story – the company has until the end of the month to pump out 5,000 Model 3 sedans a week – both agree on one thing: the output of the company’s new “tent” structure which Musk erected recently to produce Model 3 vehicles is going to decide whether or not the company hits its production goal that it has touted over the last couple of months.

Photo Credits: Bloomberg

The tent was erected in just a matter of weeks, and came online in early June, to help the company produce more vehicles at a time when they are under the microscope. Until recently, we didn’t know the details as to when it was erected, what the timing looked like and what it is expected to produce. However, a Bloomberg article out today helped shed some light on the details of what is arguably the most important – if archaic – structure that Tesla has built yet.

Not surprisingly, opinions extend the whole gamut, with some manufacturing experts claiming the tent is “basically nuts”:

Elon Musk has six days to make good on his pledge that Tesla Inc. will be pumping out 5,000 Model 3 sedans a week by the end of the month. If he succeeds, it may be thanks to the curious structure outside the company’s factory. It’s a tent the size of two football fields that Musk calls “pretty sweet” and that manufacturing experts deride as, basically, nuts.

Inside the tent in Fremont, California, is an assembly line Musk hastily pulled together for the Model 3. That’s the electric car that is supposed to vault Tesla from niche player for the wealthy to high-volume automaker, bringing a more affordable electric vehicle to the masses.

Analysts at Bernstein are equally unimpressed. Here is a quote from Max Warburton who benchmarked auto assembly plants before his job as a financial analyst:  “Words fail me. It’s insanity,” said Max Warburton, who benchmarked auto-assembly plants around the world before becoming a financial analyst.

Ironically, Musk’s “Hail Mary” is the polar opposite of Tesla’s own vision for its future of state of the art robotics, hermetically sealed manufacturing facilities and millisecond efficiency.

To be sure, the tent is also a far cry from the automation that investors were promised during the early days of Tesla. The company‘s goal, which once was to have a state of the art factory producing vehicles, has now been reduced to a literal tent using manual labor and spare parts to put together cars. Worse, nobody seems to even know whether or not the line is up and running. Welcome to the future?

Musk announced it on Twitter on June 16, saying the company had put together an “entire new general assembly line” in three weeks with spare parts; the building permit was issued on June 13, though the company could have started working on aspects of the project before that.

Whether this new line is fully operational is unclear. Company officials declined to comment. The Tesla-obsessed users of Twitter and other internet forums have posted photos and videos and comments either praising or ridiculing the parking-lot big top. Apparently in response to the intense interest, the tent has recently been surrounded by very large trucks, which obstruct the view.

Predictably, the tent is being called a “hail mary” move by analysts, after the company finally admitted that its vision for automation and assembly – pitched as the “most sophisticated in the world” as recently as February 2018 -was  simply “not working”:

What gives manufacturing experts pause about Tesla’s tent is that it was pitched to shelter an assembly line cobbled together with scraps lying around the brick-and-mortar plant. It smacks of a Hail Mary move after months of stopping and starting production to make on-the-fly fixes to automated equipment, which Musk himself has said was a mistake.

The existing line isn’t functional, it can’t build cars as planned and there isn’t room to get people into work stations to replace the non-functioning robots,” Warburton said in an email. “So here we have it—build cars manually in the parking lot.”

As Bloomberg notes, an April admission that he erred by putting too many robots in Tesla’s plants was a humbling moment for Musk. The chief executive officer had boasted in the past that his company would build an “alien dreadnought,” sci-fi bro code for a factory so advanced and robotic, it would be incomprehensible to primitive earthlings.

During a February earnings call, Musk told analysts that Tesla had an automated-parts conveyance system that was “probably the most sophisticated in the world.” But by the spring, it had been ripped out of the factory.

“We had this crazy, complex network of conveyor belts,” Musk told CBS This Morning in April. “And it was not working, so we got rid of that whole thing.”

Analyst Dave Sullivan, who previously used to supervise Ford factories and now works at AutoPacific, chimed in: “To say that it’s more efficient to build this with scrap pieces laying around means that either somebody made really bad decisions with the parts in the plant inside, or there are a lot of other problems yet to be discovered with Tesla’s efficiency.”

The article concludes with what may be the most suitable epitaph for Tesla should Musk disappoint in a few days when he reports Q2 production figures.

“It’s preposterous,” Bernstein’s Warburton said.

“I don’t think anyone’s seen anything like this outside of the military trying to service vehicles in a war zone. I pity any customer taking delivery of one of these cars. The quality will be shocking.”

Preposterous or not, the clock is ticking on Tesla.

The company has just days before it has to update investors on the current state of production and how the business is running. If the tent is any indication, expect many to voice their disappointments out in the open…