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Inside this issue
U.S. Treasury Accelerates GM Exit
Fast-Rising Vehicle Pricing Puts U.S. Industry Comeback at Risk
U.S. Investigating Rear Gas Tanks Since '70s
Tesla CEO Pushes for New Car Sales Model
Are We at the Electric Car's Tipping Point?
Opinion: Tesla's Running on Empty
Click here for more auto industry news at NADAFrontPage.com. .
Top Stories
U.S. Treasury Accelerates GM Exit

The U.S. Treasury Department said Wednesday it would sell 30 million shares of General Motors Co., accelerating its exit from the auto maker it bailed out during the financial crisis. The public offering would coincide with GM's inclusion in the S&P 500 Index, which begins when markets close on Thursday. The United Auto Workers Retiree Medical Benefits Trust also will participate in the offering by selling 20 million shares, making the total offering size 50 million shares, the Treasury said. A sale "could provide a boost for the stock as investors will have greater comfort that the Treasury exit is being accelerated," Barclays auto analyst Brian Johnson said in a research note Tuesday that examined GM's return to the S&P 500. The Treasury, however, has no plans to change its current strategy of holding on to a piece of GM through 2013, a spokesman said. The Treasury has said it plans to fully exit the auto maker during the first quarter of 2014.
Source: The Wall Street Journal
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Fast-Rising Vehicle Pricing Puts U.S. Industry Comeback at Risk

New vehicles are more expensive and experts don't see a reversal in the trend, causing U.S. car buyers to jockey between segments, pursue longer loan terms and lease rather than buy. “New-vehicle prices are growing,” confirms Larry Dixon, senior manager-marketing intelligence, at the National Automobile Dealers Assn. Year-to-date average transaction prices have jumped 13% to $28,831, from $25,505 in 2008, according to J.D. Power and Associates. The rising price of cars is putting some consumers on the ropes, and unchecked it could jeopardize the U.S. industry's successful turnaround, experts say. A number of factors are driving prices upward.
Source: WardsAuto
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U.S. Investigating Rear Gas Tanks Since '70s

Chrysler Group LLC's decision to fight the U.S. government's request that it recall 2.7 million Jeep SUVs for fire risks because the fuel tank is behind the rear axle is the latest chapter in the auto safety agency's scrutiny of gas tank positioning since the late 1970s. The National Highway Traffic Safety Administration (NHTSA) has given Chrysler until June 18 to formally respond to the recall request for 1993-2004 Grand Cherokees and 2002-2007 Libertys. NHTSA says fires caused by gasoline leaking from punctured gas tanks in rear-end crashes have killed 51 people. Depending on Chrysler's response, the safety agency will then decide whether to issue a formal finding and then convene a public hearing — a final step before ordering a recall. NHTSA has repeatedly investigated gas tanks over the years.
Source: The Detroit News

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Tesla CEO Pushes for New Car Sales Model

Tesla Motors Chief Executive Elon Musk said the traditional way cars are sold in the U.S. is dampening the electric automaker's growth prospects, calling for direct-to-consumer sales. Musk suggested that traditional dealers aren't the best advocates for electric cars, adding that consumers widely support direct sales. Bill Wolters, President of the Texas Automobile Dealers Association, said dealerships are “total advocates of alternative fuel vehicles and hybrid vehicles,” as well as all-electric vehicles. When he met with Musk in Palo Alto recently, Wolters told the Tesla chief that the automaker could “have the exact retail model he wanted” even without Tesla owning dealerships. “I told him we would do anything possible to work with his company. He has a great car .... But he's going to need more than just showrooms in Austin and Houston,” Wolters said.
Source: Fox Business
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Are We at the Electric Car's Tipping Point?

"I would build a motorcar for the great multitude." That's what Henry Ford proclaimed early in his career. Ford, of course, is associated with the democratization of the automobile; the Model T was the first mass-owned car. But Ford started off as a luxury-car maker—making high-tech, impractical, very expensive vehicles for the very rich. That's how it often goes when new technologies hit the market: they're produced in small batches at a high cost. But as the companies increase production, as unit volumes rise, and as competitors enter the field and innovate further, the cost of the products falls, and falls, and falls again—to the point where the middle class can afford them. A century after the Model T took the nation by storm, could the same process be happening with electric cars? Well, maybe.
Source: The Daily Beast

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Opinion: Tesla's Running on Empty
By Robert Weinstein

The cars may be stylish but the stock isn't very attractive

As an active trader, I enjoy watching volatile stocks and Tesla tops the list lately. I've written about Tesla on The Street recently, but these articles aren't about trading. Traders watch charts to make decisions; fundamental information, including price-to-earnings ratios and profitability, play little or no role. If you're an investor with a buy-and-hold strategy, I'm talking to you because you care about profitability and return on investment. There is nothing magical about lines and circles on a stock chart until you take it to the next level and use the information to gauge market sentiment in relation to other information, such as short interest and forward earnings estimates. Few, if any bought Tesla stock because of its earnings report. Operationally, the company once again lost money, and that's with a massive $7,500 effective price-tag reduction, courtesy of the tax payer. It wasn't enough, and it's not likely to be enough in 2013 to raise the automaker into the land of profitability from selling its product. Yes, people were buying shares like crazy after the earnings report. That's called a short squeeze, and it's not going to last for long.
Source: The Street

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Quotable
"... too many writers were tripping over themselves to report that Tesla made a profit. Unfortunately for many readers, the alleged stock gurus trumpeting Tesla's illustrious story were either too lazy to read, didn't understand what they read, or didn't care what the earnings report and future guidance stated." 

      --- Robert Weinstein of The Street, suggesting that Tesla's dramatic stock price increase may be a bubble about to burst, June 5

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