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Tesla Motors Pollutes Today for a Greener Tomorrow

Tickers in this article: TSLA

NEW YORK ( TheStreet) -- Yesterday I read the transcript of the third-quarter conference call for Tesla Motors (TSLA) and was shocked by the hubris of this quote from Elon Musk, Tesla's chairman, CEO and product architect:

"I feel Tesla was really kind of past the point of high risk. Several months ago, I said I thought that the coming several months would be really the test for Tesla. And it's the classic phrase of, going through the valley of death, and I feel as that we are through that valley at this point.

I've spent over 30 years guiding entrepreneurs through the valley of death. It's an exhilarating, treacherous and often terrifying period in the life of every business that begins with the signing of incorporation documents and ends when cumulative cash flow turns positive.

Most companies that enter the valley of death never emerge. For the fortunate few that do, the hard times last longer than anyone expected. The one trait all entrepreneurs share is unbridled optimism. The three traits all survivors share are determination, focus and fiscal restraint.

While I hate to burst young Mr. Musk's bubble, Tesla has just reached the product launch phase and is nowhere near the bottom of the valley of death.

At the risk of sounding cruel, Tesla was a bug in search of a windshield on Sept. 30. Its working capital was about $90 million in the red, and its stockholders were under water to the tune of $28 million. The only thing that saved Tesla from pre-election disaster was a last-minute offering that scored $222 million in new investor cash in early October.

Tesla's stockholders may have been blissfully unaware of their risk, but its management knows how close the headsman's ax came before they pulled working capital back up to a lofty $1.18 per share and equity up to a whopping $1.71 per share. At yesterday's closing price of $31.15 per share, Tesla's market capitalization is 94.5% blue sky, the imputed value of an electric-vehicle technology that promises a greener future for all of us.

The problem is that the claimed environmental benefits of electric drive are a bald-faced lie that ignores the undisputable reality that electric vehicles create more pollution in their manufacture than they save in their operation.

Last fall, researchers from Carnegie Mellon University published an exhaustive study titled "Valuation of plug-in vehicle life-cycle air emissions and oil displacement benefits" in the Proceedings of the National Academy of Sciences. The study relied on The Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation Model developed by Argonne National Laboratory and compares the life-cycle emissions and costs of several vehicle drivetrain options including:

A conventional vehicle, or CV, with an internal combustion engine;