Three Things (1/3)

Tesla’s sales shift

EV wars … For the first time in over a decade, Tesla (TSLA) global vehicle deliveries fell, slipping 1% to 1.79 million vehicles in 2024 compared to 2023. The decline marks a shift for the EV pioneer, which has long boasted year-over-year growth. Analysts anticipated stronger fourth-quarter sales, but promotions like interest-free financing failed to boost deliveries to the expected 515,000, capping the year below prior highs.

Tesla’s competitive edge is under pressure. Chinese rival BYD posted a 12% sales increase in 2024, edging closer to Tesla’s numbers. Traditional automakers like Ford (F), GM (GM), and international players Hyundai and Volkswagen are also biting into Tesla’s market share with lower-priced and aggressively marketed EVs.

Relatedly, Elon Musk’s growing political ambitions are changing the makeup of Tesla’s traditional customer base. The percentage of Democrat-leaning buyers dropped sharply in 2024, while Republican interest surged. The brand’s favorability among Democrats plummeted from 39% to 16% during Musk’s political campaigning.

A June 2024 Pew Research Center survey found that 41% of Democrats are likely to consider purchasing an EV, compared to 23% of Republicans.

Hindenburg hits Carvana

Fighting words … Hindenburg Research, the infamous short-seller, has launched its latest salvo at online used car retailer Carvana (CVNA), accusing the company of propping up a shaky turnaround with accounting tricks and risky loan practices. In a scathing report titled “Carvana: A Father-Son Accounting Grift for the Ages,” Hindenburg alleges the company has inflated its results by selling loans to related parties, skirting financial norms, and masking delinquencies with loan extensions.

Hindenburg claims to have uncovered $800 million in questionable loan sales tied to a trust linked to Carvana’s largest shareholder, Ernie Garcia II, the father of CEO Ernie Garcia III. The report also scrutinizes Carvana’s dependence on subprime and deep subprime loans, a segment riddled with delinquencies.

Carvana, founded in 2012 and often dubbed the “Amazon of cars,” went public in 2017. It has weathered bankruptcy scares and stock plummets, only to see a meteoric rise in 2024, with shares surging over 280%. Hindenburg contends this surge is illusory, pointing to a history of alleged insider trading—most notably Garcia II’s $3.6 billion in stock sales between 2020 and 2021, followed by another $1.4 billion in 2024.

Carvana has not commented on the allegations, which echo earlier criticisms of its governance and related-party dealings. Hindenburg’s track record, which includes exposing fraud at Nikola and Adani Group, lends weight to these claims. Shares dropped 3% following the report’s release on Thursday.

Silicon Valley goes digging

Billionaire boost … KoBold Metals, the AI-driven mining company, just raised $537 million in its Series C funding round. Among its prominent backers are Bill Gates, Jeff Bezos, and Marc Andreessen, who are betting big on the Silicon Valley-based firm. The funding boosts KoBold’s valuation to nearly $3 billion and underscores its mission to tackle global supply chain vulnerabilities in critical minerals.

KoBold combines AI with geology to locate essential resources like copper and lithium. These minerals are pivotal to powering electric vehicles, renewable energy solutions, and the rapidly growing infrastructure supporting artificial intelligence. The approach is already proving successful; in 2023, KoBold announced a major copper discovery in Zambia, described as one of the highest-grade deposits globally.

The link between AI and mining runs deeper than software. AI’s explosive growth requires data centers and devices reliant on minerals like lithium for batteries, copper for wiring, and rare earth elements for semiconductors. As global AI adoption surges, demand for these materials is expected to soar. Mining firms like KoBold aim to meet these needs while challenging China’s dominance in the supply chain, a key focus of recent U.S. trade policies.

One more thing: Bernie Madoff’s victims are receiving a final $131 million payout, bringing their total recovery to 94% of losses from his record-breaking Ponzi scheme. Over a decade, the Madoff Victim Fund has distributed more than $4 billion to nearly 41,000 swindled investors worldwide.