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Short sellers are getting steamrolled by the rally in Tesla

The company's shares have soared more than 40% since the company closed on its acquisition of SolarCity. Traders who bet against the stock have been saddled with a loss of 31%, or $2.3 billion when taking into account financing costs, according to S3 Partners, a financial analytics firm.

Bets against Tesla surged since the beginning of November as investors like Greenlight Capital's David Einhorn have targeted the company for "years of under-promising and over-delivering." 

In the weeks following the January 3 announcement that Tesla missed its 2016 deliveries targetshort interest climbed to more than 35% of the float, or shares available to the public. But the stock kept rallying, and the shorts continued to pile in. As of Tuesday, short interest totaled $9.2 billion, its highest on record, S3 says.  

"Having weathered over $2.3 billion of losses in three months, it might take a large price move to squeeze out these shorts, but if they begin to cover their positions there would be several billion dollars of buy to covers hitting the tape providing quite a tailwind to Tesla’s stock price," S3 said. 

Tesla is scheduled to report its fourth-quarter results on February 22. Wall Street is currently expecting a loss of $0.75 per share on revenue of $2.09 billion. 

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Reuters’ reports that Japan’s biggest automaker, Toyota, is struggling to overcome development challenges with solid-state batteries, a high-capacity energy storage technology set not only to replace lithium-ion batteries but also revolutionize the electric-car industry by offering greater range, better safety, and crucially, a recharge time of just a few minutes.

Current batteries for use in electric vehicles (EVs) use liquid electrolytes, substances which by their very nature present fire safety issues. Solid-state batteries on the other hand, and as the name suggests, use solid electrolytes (sodium instead of lithium) to transport ions between negative and positive sides, a material with less overheating or causing-fire tendencies. Furthermore, the energy density aspect in solid electrolytes – the amount of electricity that can be contained in a given volume – is much higher, meaning longer-range, faster accelerating EVs with smaller, lighter battery packs.

But despite the potential this next-generation technology offers, solid-state batteries, besides remaining extremely expensive in terms of cell-fabrication on a mass scale (successful commercialization means the cost of producing a kilowatt hour of electricity must fall from a little under $200/kWh that is today, to around $100/kWh), are still largely unproven from a practical application standpoint that seems limited at the present stage. And that means, Toyota, whose goal is to put solid-state batteries into production by the mid-2020s, still has a long way to go before it can become the first automaker to adopt the benefits of this new tech.


“We are scrambling to finish developing this technology, but a few issues still remain as we try to mass produce this,” Takeshi Uchiyamada, Toyota’s chairman said in an interview with Reuters at the 2017 Tokyo Motor Show.

Toyota certainly won’t be a success market-share-wise with a limited lifespan battery. The competition in this newly developing arena that also targets the very lucrative mobile applications market, is getting cutthroat by the hour with dozens of companies including Tesla (NASDAQ:TSLA), Volkswagen, Bosch and Dysonare collectively pouring billions of dollars of R&D funding to come up with lifespan battery strategies that can produce safer higher volumetric energy density devices that have enough charging capacity to really compete with petrol engines.

Toyota however, seems undeterred from its goal of commercializing a solid-state battery breakthrough during the first half of the 2020s. The company said it plans to continue developing fuel cells while at the same time increasing production of hydrogen-powered cars tenfold over the next few years. It should be noted, the automaker has faced numerous issues with the high cost and slow rollout of its hydrogen infrastructure which includes plans (make that ‘bold plans) to have 200,000 Mirai hydrogen fuel cell cars on Japanese roads by 2025, and 800,000 by 2030-with a fleet-serving expansive network of 900 fueling stations.

Whether Toyota will succeed in achieving its lofty goals remains to be seen. In the meantime, they believe that both electric-battery cars and hydrogen fuel-cell technologies (Japan is currently the largest market for hydrogen vehicles) will be needed to ultimately replace gasoline cars.

elon musk

Dubai is buying 200 Tesla vehicles as it looks to become a leader in the self-driving-car space.

Tesla will supply 200 Model S and Model X vehicles to the Dubai Taxi Corporation's fleet, according to The National, a UAE-owned, English-language newspaper. Tesla CEO Elon Musk inked the deal with the Roads and Transport Authority at the World Government Summit in Dubai on Monday. 

The deal is part of the Dubai Future Foundation's goal of making 25% of car trips autonomous by 2030. The agreement was signed the same day Tesla began selling its electric cars in Dubai, marking its first foray into the Middle East.

The Tesla vehicles will come equipped with the company's second-generation hardware suite that improves Tesla's Autopilot capabilities. The hardware will allow the cars to achieve full autonomy, pending further software approval, Tesla has said.

Tesla did not immediately return Business Insider's request for comment regarding the timeline of the new taxi deal.

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Tesla started 2016 as an electric-car maker that had branched out into energy storage.

By the end of the year, Elon Musk's company has become an automaker, an energy company, the builder of a massive battery factory in Nevada, and a solar company through its merger with SolarCity.

Tesla is also on track to delivery about 80,000 vehicles in 2016, more than ever before.

So it was a big year. But 2017 will be even bigger.

Here are the major things that Tesla has in store:

The launch of the Model 3

Tesla's mass-market vehicle, which will be priced at around $30,000 after tax breaks and serve up 200 miles of range on a single charge, is scheduled to launch in late 2017. There's skepticism about whether Tesla will be able to meet that goal, but the Model 3 should be far easier to build than the delayed Model X SUV was.

Make no mistake — this is Tesla most important execution point of the entire year. Bringing in the Model 3 on time will vindicate Musk's promises, vision, and ambitions. The vehicle will also enable Tesla to start fulfilling the nearly 400,000 preorders that have come in for the vehicle. Interested buyers put down $1,000 each to reserve a Model 3.

The arrival of Tesla's solar roof

The first important product from the Tesla-SolarCity tie-up will be the solar roof. Effectively, it will turn an entire roof into a giant, durable solar panel. It will also likely be an expensive product. But it will feed into Tesla's other products — and provide Tesla with a way to free SolarCity from its current leasing model, moving toward selling solar solutions rather than loaning them out.

Tesla Solar RoofTesla and SolarCity CEO Elon Musk unveils the solar roof.Screenshot via Tesla

The development of the Tesla Network

Musk has done a complete 180 on car sharing, likely compelled by Uber's success and by the advent of ride-sharing and car-sharing schemes from traditional automakers. Up to this point, he's talked a good game about enabling owners to make money off their Teslas when they'd otherwise be sitting in the driveway — while perhaps not really expecting that the owner of a $100,000 luxury car would want to lend it out and have it come back with a few dents and a bunch of McDonald's wrappers in the backseat.

But now Tesla will likely start to build out a network, leveraging its vehicles' software and Tesla Autopilot suite of self-driving features. So look for the Tesla Network to be discussed far more in 2017.

Even more Superchargers

Tesla is changing the way it manages its Supercharger network. It eliminated free access for new owners in 2016, and it introduced an idle fee for owners who leave their vehicles parked too long at a Supercharger station after fully recharging.

The objective is to make the Superchargers the standard for long-distance trips while encouraging owners to do their regular recharges are home. Tesla is likely to expand its worldwide Supercharger network, especially in China, where the company has at times struggled to convince prospective owners that "range anxiety" isn't a problem with Teslas.

A Tesla Model S charges at a Tesla Supercharger station in Cabazon, California, U.S. May 18, 2016.   REUTERS/Sam Mircovich/File PhotoA Tesla Model S charges at a Tesla Supercharger.Thomson Reuters

A joint venture in China

Speaking of China, it's one of Tesla's largest potential new markets. But at the moment, the carmaker has to import all its vehicles, which cuts into profitability.

The way to change that is to set up local manufacturing, which in China can be done only through a joint venture with a Chinese firm. Some might worry that this would compromise Tesla's technology, but the company has already open-sourced its patents, so it's not much of a concern.

Look for Tesla to get aggressive about a Chinese joint venture in 2017.

The 'alien dreadnought' factory and doubling of production

Earlier in 2016, Musk addressed questions about Tesla's uneven production capabilities by saying he wanted to focus on being one of the best manufacturers in the world. Part of that plan appears to be a radical reinvention of what's known as "vertical integration" — in essence, a manufacturer making everything that goes into its products.

Henry Ford built his business with this approach, but for the past four decades, vertical integration has been replaced in the auto industry by "just in time," or "lean," production, with a manufacturer managing a complex supply chain and running minimal inventories. Toyota pioneered this approach, and it's been widely emulated.

Musk seems to want to go back to vertical integration. His idea is to transform Tesla's factory in California so significantly that you wouldn't recognize it — it would resemble an "alien dreadnought." Musk thinks that to achieve Tesla's bold target of 500,000 vehicles delivered annually by 2018, a lot more automation will have to enter the picture.

He's kept his ideas about this under the radar, but expect them to burst into view in 2017.

Tesla FactoryTesla's factory in California.Benjamin Zhang/Business Insider

More Autopilot

Autopilot was being improved mainly through software updates, but in 2016, Tesla began to push the envelope on hardware.

The company now thinks of hardware and software releases as being similarly iterative, with "Hardware 2" now being installed in new Teslas.

As the big story in the car business has shifted from electric cars to self-driving vehicles, we can expect Tesla to double down on its Autopilot advantage, even as it continues to deal with the aftermath of a fatal Autopilot-related Tesla crash in May 2016.

A new Roadster

Tesla has been hinting that it will update its first vehicle, the no-longer-available Roadster, with a new model. I'd expect 2017 would be a good year to begin showcasing some possible designs. This would energize the Tesla base and, for what it's worth, add a proper sports car to the lineup — which, if all goes according to plan in 2017, will include the Model X SUV, the Model S sedan, and the Model 3 in a sedan and maybe a crossover version.

The Model Y

Speaking of a crossover Model 3, it's rumored to be called Model Y.

We already know what the Model 3 sedan will look like, and Tesla's goal all along has been for the Model 3 to be a platform on which different types of vehicles can be built. As we get close to a Model 3 launch in 2017, we will almost certainly start to see designs for, and perhaps even a prototype of, the Model Y.

The Tesla pickup

And why not? As long as we're expecting a new Roadster and the Model Y, how about a Tesla with a bed in the back?

A capital raise

Musk has said that Tesla won't need to raise new capital by selling stock in 2016, but the cost of absorbing SolarCity for more than $2 billion and taking on billions in SolarCity debt could undermine his resolve. Tesla has managed to burn less cash in 2016 than expected, but cars are a capital-intensive business, and the money won't do Tesla any good if it can't launch the Model 3 on time.

Additionally, Tesla can use and has used Wall Street like an ATM. With the stock back above $200 a share, it would be foolish for the company to avoid a capital raise in 2017 — it could use the money.

The volatility returns

Tesla has always been a volatile stock — shares have risen from around $17 after the 2010 initial public offering to over $200 at the close of 2016. But sometimes the volatility has been ... more volatile. Wild swings of $100 a share over a month or so haven't been uncommon.

That hypervolatility settled down somewhat in 2016, but with the pressure on for Tesla to hit what will probably be deliveries guidance of about 200,000 vehicles in 2017, launch the Model 3, and integrate the SolarCity financials, the stock could jump around a lot on every little bit of news.

The Trump factor

Musk has reportedly joined President-elect Donald Trump's business council, but as I've written, there are no two brains on earth that are more different.

Beyond that, however, a Trump White House and executive branch may not be all that receptive to Musk's grand vision of accelerating humanity's departure from the fossil-fuel era. It also remains to seen whether federal incentive to support electric cars will continue under Trump, not to mention clean-energy initiatives pressed forward by President Barack Obama.

'Master Plan, Part Trois'?

It took Musk 10 years to update his original "Master Plan" with last year's "Master Plan, Part Deux." But the world seems to be moving faster now — and Tesla could quintuple in size by 2018. So Musk may undertake more frequent updates.

Maximum Plaid?

When Tesla introduced Ludicrous Mode for its Model S, a feature that yields supercar-beating acceleration, Musk joked that the only thing faster would be "Maximum Plaid." Both terms are references to Mel Brooks' 1987 "Star Wars" spoof, "Spaceballs."

Ludicrous Mode keeps getting more ludicrous, so 2017 could be the year to unleash Maximum Plaid.


An automaker’s logo can and perhaps should be as recognizable as its cars, if not more.

That makes logo design a very important task.

Tesla’s logo is certainly not anonymous, but it turns out there’s more to it than may be immediately apparent.

What looks like simply a stylized “T” is actually a reference to the company’s products, Tesla CEO Elon Musk said in a recent tweet (via Motor1).

The Tesla logo is intended to represent the cross-section of an electric motor, Musk explained to a querying Twitter follower.

Musk seemed to be referring to the main body of the “T” as representing one of the poles that stick out of a motor’s rotor, with the second line on top representing a section of the stator.

A Tesla logo adorns a 'Model S' car in the dealership in Berlin, Germany, November 18, 2015.

Above: A Tesla logo adorns a ‘Model S’ car in the dealership in Berlin, Germany, November 18, 2015.

Image Credit: REUTERS/Hannibal Hanschke

Repeating the Tesla logo in a circle, with the top of each “T” facing outward, does indeed create a reasonable facsimile of an electric-motor cross-section. (Motor architectures can vary considerably, so take this as a simplified explanation.)

In this respect, it matches the logo of SpaceX, another of Musk’s ventures—which in this case designs and builds rockets, and contracts to send payloads into orbit.

The stylized “X” in the SpaceX logo is meant to represent a rocket trajectory, Musk said in his tweets.

Both logos were designed by RO-Studio, a design firm based in New Jersey.

Compared to those of Tesla and SpaceX, the logo of Musk’s third major venture is relatively straightforward.

SolarCity’s logo includes a sun graphic, representing the power source for the company’s solar panels.

Musk negotiated Tesla’s purchase of SolarCity last year, citing anticipated synergies between solar energy and Tesla’s energy-storage battery business.

SolarCity was previously controlled by Musk and members of his family, but had been a separate corporate entity from Tesla.

The SolarCity acquisition is the latest indication that Musk views Tesla as more than just an automaker.

Recently, the company officially re-branded itself as simply “Tesla Inc.,” rather than the previous “Tesla Motors.”

Last year, it acquired the rights to the domain name “” after roughly 10 years of trying, and has since adopted it as the domain for its website.

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