Prominent short-seller Jim Chanos has called into question a potential $400 million government contract for Tesla Inc.’s armored Cybertrucks. This criticism comes as Elon Musk, CEO of Tesla, has recently been appointed to lead government efficiency initiatives.
What Happened
Chanos expressed his concerns on social media, stating: “While we’re looking for wasteful government spending, how about we start with the recent $400M contract with Tesla for armored Cybertrucks?! Are they really necessary?” This comment was made in reference to the Department of Government Efficiency (DOGE) program.
Details of the Contract
A Department of State procurement forecast for fiscal year 2025 lists a five-year, $400 million requirement for “Armored Electric Vehicles.” Although it does not specifically mention Tesla’s Cybertruck, the timing of this contract is notable. Donald Trump, the President, has recently been seen with a Cybertruck in his motorcade during a visit to SpaceX’s Starbase facility in Texas.
Concerns Over Government Spending
The inclusion of the Cybertruck in the presidential convoy has sparked speculation about potential government contracts. Chanos’ criticism highlights the need for efficient government spending, especially considering Musk’s role in leading these initiatives.
Response from Analysts
Dan Ives, an analyst at Wedbush Securities, has addressed concerns about Musk’s government role, stating: “The worry of the Street around Tesla is Musk dedicating so much time to DOGE takes away from TSLA and causes brand deterioration.” However, Ives believes these concerns are overstated.
Impact on Tesla’s Stock
Tesla’s stock has declined 20.64% since January 21, after Trump’s inauguration. Some analysts attribute this drop to Musk’s divided attention between Tesla and his new government efficiency role. According to reports, Musk plans to dedicate the next four months to DOGE initiatives, including ambitious plans to cut $2 trillion from the budget.
Key Points to Consider
- The $400 million contract for armored Cybertrucks is under scrutiny due to concerns over inefficient government spending.
- Elon Musk’s role in leading government efficiency initiatives has raised questions about his divided attention between Tesla and DOGE.
- Tesla’s stock has declined significantly since January 21, with some analysts attributing this drop to Musk’s government role.
- The effectiveness of the Cybertruck’s materials in withstanding gunfire remains unproven.