Tesla may need to slow down electric car production

Tesla is ramping up production of electric cars such as its Model S. But one investing strategist is worried that Tesla is boosting production too quickly.

NEW YORK (CNNMoney) -- John J. Licata is the founder and chief energy strategist for Blue Phoenix Inc., an independent research and consulting company focused on next generation energy. Neither Licata nor his firm has an investing position in Tesla Motors.

Tesla is showing that is getting the knack for making cars. At least that is what one can infer from a recent tweet by chairman and CEO Elon Musk.

Over the weekend, Musk said the luxury electric vehicle maker made 100 vehicle bodies for the first time in the company's history. I want Tesla (TSLA) to succeed but I do have concerns. How can a very young automaker, one so meticulous in its efforts to make the perfect car, actually boost production levels at such a fast rate in the next few months and still maintain its high standards?

Let's look in the review mirror. During the company's most recent earnings call, Musk said Tesla made 10 vehicles per week (40 in total). Musk also gave Wall Street some meat to chew on by declaring Tesla would dramatically increase production in the coming months. Still, Musk's, declaration via Twitter that Tesla made 100 vehicles may turn some heads. Some analysts were thinking Tesla's production would jump to only 40 vehicles a week.

Shares of Tesla were up 5% Monday morning. In addition to the production news, the stock got a lift from an upgrade by analysts at Morgan Stanley.

Looking at the road ahead though, producing 100 vehicles a week shows the company's huge ramp-up in production timetable may be happening earlier than expected. Yet more work needs to be done in short order for the company to produce enough vehicles to be above the 20,000 per year production clip the company has been aiming for. Musk has stated that by 2013, Tesla will boost production to "at least 20,000 units".

Tesla Model S review: A good first impression

In fact, to meet that goal Tesla would have to produce over 400 cars a week by the fourth quarter. At the current rate of 100 units per week, Tesla would be on a path to produce just 5,200 cars a year. So the company would have to nearly quadruple its production rate to meet the 20,000 a year goal.

Going from producing 10 cars a week to over 400 in two quarters is quite monumental for any car company, never mind an automaker that is as young as Tesla. That could mean quality control will become a sticky situation. With such a robust growth rate in store for Tesla, I think Musk would be challenged to inspect many of the cars himself (as he tries to do now) and simultaneously maintain full responsibilities as the CEO.

So Tesla may need to downshift its rapid growth rate from 5th gear if the electric car company wants to maintain high quality control standards. Musk may also want to focus more on just being Tesla's chairman and bring in a seasoned auto veteran as CEO to oversee the daily operations of the company at this stage of the company's life cycle.

With two crossovers, a more affordable sedan, second generation Roadster and the Model S planned for the next three years, Musk may have too much to handle. And investors might be getting just a little too excited given that Tesla is still losing money.

First Published: September 17, 2012: 11:01 AM ET

17 Sep, 2012

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Your smartphone will (eventually) be hacked

Smartphone attacks are on the rise, but they haven't come close to approaching the cyberattack levels seen on the PC.

NEW YORK (CNNMoney) -- Security experts have warned for years that our smartphones are due for a major cyberattack. Like PCs back in the early days -- the 1990s -- mobile phones are largely unprotected by antivirus software, and they're a treasure trove of valuable information.

So why hasn't the smartphone Armageddon happened yet?

Basic economics is one reason. Cyberthieves are making so much money attacking Windows PCs that there hasn't been much incentive to change tactics. It's hard to track down exact statistics on how much money is stolen each year through cyberattacks, but most security experts put the dollar figure in the billions. One single, recent hack that Verizon (VZ, Fortune 500) investigated -- debit card numbers stolen from merchants through secretly installed keyloggers -- resulted in a loss of $20 million.

Microsoft (MSFT, Fortune 500) Windows is still the low-hanging fruit. With 92% share of the PC market and a two-thirds share of all Internet-connected devices, Windows is the obvious target to attack if you're a hacker looking to make money.

We're about to hit a tipping point, though. Most people still do their online banking and shopping on their PCs, but those transactions are happening on mobile phones more frequently. Where money goes, cybercrooks follow.

Here are the scary numbers: Cyberattacks on mobile phones rose by a factor of six this year, according to Intel (INTC, Fortune 500) subsidiary McAfee. Four in 10 mobile users will click an unsafe link on a smartphone this year, according to Lookout Security.

Yet less than a fifth of the devices run any antivirus software, according to security research organization SANS. An RSA study shows we're much more likely to click on phishing attacks on mobile devices than we are on PCs.

Still, not even one major cyberattack has hit smartphones. What's up?

The good news is that developers learned from the industry's long history of cybersecurity debacles. Smartphone operating systems were built from scratch fairly recently -- not much legacy code here -- and were designed with strong security protections. Though it's possible, it's incredibly difficult to attack a device through one program and then own an entire phone.

Fragmentation is also an unexpected protection. With so many different varieties of Google's (GOOG, Fortune 500) Android operating system out there, it's hard to write the right code for a wide swath of devices.

Even users of Android -- the target of almost all mobile malware -- are far less susceptible to attack than PC users. The growth in mobile threats is dramatic, but the 13,000 different kinds of mobile malware McAfee has found this year is still teeny compared with the 90 million threats it detected for PCs.

Still, experts say it's just a matter of time before mobile catches up.

"The money is in mobile, and that's where they're moving," said Stu Sjouwerman, CEO of KnowBe4, a security training company. "Malware on mobile phones is going to be as prevalent as on the PC. It's inevitable, unfortunately."

Smartphones have become personal computers that travel around with us at all times. Mobile attacks are difficult, and the smartphone space may never be as homogeneous as the PC market, but crooks follow the cash. As smartphones become our primary devices, the cybercriminals' motivation for targeting them grows. All it will take is one slip up by Apple (AAPL, Fortune 500) or Google.

"What will happen is one of these smartphone makers will release a new OS or browser, and there will be a hole," said Alan Wlasuk, the managing partner of WDDInc., a software development company. "An attacker will exploit that. That's going to happen for sure."

First Published: September 17, 2012: 9:44 AM ET

17 Sep, 2012

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Stocks: Investors take a breather

Click the chart for more stock market data

NEW YORK (CNNMoney) -- U.S. stocks edged lower Monday as investors took a step back from last week's Fed-inspired rally.

Markets hit multi-year highs last week following the Federal Reserve's quantitative easing, or QE3, announcement, whereby the central bank said it would buy $40 billion of mortgage backed securities each month.

But as excitement wears off, investors will be keeping even closer tabs on economic data for any clues as to how long the central bank's easing will be needed.

With little on the docket Monday, trading is expected to be somewhat muted. The only economic report of note, the September Empire State Manufacturing Survey, indicated that manufacturing in New York continued to slip. The general business conditions index edged another five points lower to -10.4, according to the report, released ahead of the opening bell by the New York's Federal Reserve. It was also weaker than economists had expected.

Investors will get a broader view on manufacturing later in the week, when the Philadelphia Fed releases its report.

But housing data will dominate, with reports on mortgages, housing starts, building permits and existing home sales due out starting Tuesday.

Fear & Greed Index

In Europe, investor optimism over the latest moves to solve the debt crisis overseas has started to fizzle. European stocks were lower in afternoon trading. The euro eased a bit against the U.S. dollar but remained near a five-month high.

In Asia, Chinese stocks tumbled overnight, following reports that the Obama administration plans to target Chinese trade by filing a complaint to the World Trade Organization. The U.S. government alleges that China violated WTO rules by subsidizing automotive exports to the tune of $1 billion. The Shanghai Composite dropped 2.1% while the Hang Seng in Hong Kong ticked up 0.1%. Japanese markets were closed for a holiday.

Companies: Shares of LDK (LDK), a large Chinese solar products manufacturer, sank more than 4% after the company reported a second quarter loss of $92 million.

Apple (AAPL, Fortune 500) shares hit another all-time high Monday, coming within spitting distance of $700, as pre-orders for the iPhone5 sold out and people started lining up outside stores to get their hands on the latest iPhone, which doesn't hit store shelves until Friday. Early Monday, AT&T (T, Fortune 500) said the iPhone 5 was the fastest selling iPhone it has ever offered.

Commodities: Oil for October delivery rose 28 cents to $99.28 a barrel.

Gold futures for December delivery added 5 cents to $1,773.20 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury rose slightly, pushing the yield down to 1.85% from 1.87% late Friday.

First Published: September 17, 2012: 9:45 AM ET

17 Sep, 2012

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Young Americans ditch the car

NEW YORK (CNNMoney) -- America's young people just aren't buying cars like they used to.

The share of new cars purchased by those aged 18-34 dropped 30% in the last five years, according to the car shopping web site Edmunds.com.

Some say the economy is mostly to blame -- that the young aren't buying because they've been particularly hard hit by the recession.

But others say the trend could be part of larger social shifts.

One reason is demographic: The re-urbanization of America is giving more people access to public transportation. The advent of Zipcar (ZIP) and other car-on-demand businesses are eliminating the need to own and insure an expensive vehicle that often isn't driven much.

But mostly it's the explosion of social media. Car ownership just may not be as socially important as it used to be.

"What we used to do in cars, young people are now doing online," said one analyst at a recent oil conference.

The ability to meet and interact with people on the Internet is largely replacing the need to hop in a car and cruise down the strip.

Couple that with more recent restrictions on driving -- later ages for licenses, limits on how many people can be in the car, restrictions on cell phone use -- and the Internet may be surpassing the automobile in the category that gave cars so much appeal: freedom.

"When I got into a vehicle, it represented me going to meet my friends," said Craig Giffi, automotive practice leader at the consultancy Deloitte. "For them, it cuts them off from their friends."

This is particularly true for the youngest, most digitally-connected members of Generation Y. Forty-six percent of 18-24 year-olds would choose Internet access over owning a car, according to a recent Deloitte study.

Related: America's best-loved cars

It's a trend the car companies are noticing as well.

"With this generation, what owning a car means is completely different from previous generations," said Annalisa Bluhm, a spokeswoman for General Motors. "It was a right of passage. Now the right of passage is a cell phone."

With the Baby Boomers, Bluhm said three-quarters had obtained early life's five big rites of passage by the time they were 30 -- buying a car, graduating from college, getting married, buying a house and having kids. Now less than 40% of the under-30 crowd has all these things.

What's more, 30% of Baby Boomers considered themselves "car enthusiasts," said Bluhm, buying showcase vehicles like the Camaro, Corvette or Jeep. Less than 15% of Gen-Yers say the same, and they're flocking to more practical models.

"They have a number of things that validate them," Bluhm said. "The car is not their first purchase."

The real question for carmakers is whether young people will return to the showroom when the economy recovers. Many say they will.

"This is purely a matter of economics," said Michelle Krebs, an analyst at Edmunds.com.

Krebs said the drop in sales share by young people is misleading, as more of them are buying used cars or simply living at home longer and using their parents' vehicles. When the economy improves, they will be back en masse.

"We don't all live in urban areas and can get by without a car," she said.

Analysts at Ford (F, Fortune 500) seem to think so too.

Young people may defer buying cars until the economy improves or they may live out their 20s in urban areas, but at some point they will have families, move to the suburbs and need vehicles, said Erich Merkle, Ford's U.S. sales analyst.

"They might be able to hold off for a period of time," said Merkle. "But Ford takes the long-term view -- They are going to be around for a long time and they are going to purchase many, many new cars."

But as Deloitte's Giffi said, the longer these young people go without cars, the easier time they have adjusting to life without one.

First Published: September 17, 2012: 9:12 AM ET

17 Sep, 2012

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Find the best handyman for the job

Find a handyman to take on those home improvement projects you just can't seem to get to.

(Money Magazine) -- For a busy -- or simply hammerphobic -- homeowner, it sounds almost too good to be true: A hired handyman (or woman) could tackle your odd jobs for about a third of the cost, time, and hassle of a general contractor.

There are plenty of jacks-of-all-trades out there, but is it possible to find one you can really rely on? The answer is yes -- provided you know where to look and what chores to give him.

Pick the right project

"A handyman should do only things that a proficient homeowner could handle himself if he had the time," says "Handyman Fran" Carito of Watertown, Mass.

That might include installing a ceiling fan, freeing a stuck window sash, or replacing a light fixture, faucet, or cracked windowpane.

Go with a licensed tradesman instead for work inside walls, like replacing a pipe or adding an electrical circuit; specialized tasks (say, repairing a roof leak or installing tiles); and, of course, remodeling.

Tap your network

General contractors don't usually like to bother with small fix-up tasks anyway, so if you have a good working rapport with one, he might be willing to suggest one of his guys who takes side jobs.

Or ask a contact at a local school, church, or office park to recommend a staff handyman who does some moonlighting. Otherwise, check with friends for referrals.

Related: 10 ways to get yard sale deals

A long-established local sole proprietor may be the most expert and reasonably priced option. A larger company, though, is more likely to carry insurance, especially if it's part of a national franchise such as Mr. Handyman or House Doctors.

Get an estimate

Unlike contractors, who name their price upfront, handymen bill you for the materials they use and the time they spend -- typically at around $40 to $70 an hour. That's because, ironically, it's trickier to commit to a fixed price for a little job, says Madison handyman Adam Shirley.

Related: What your home is really worth

Still, ask for an estimate -- and consider setting a ceiling. For instance, you could designate a half-hour for trying to repair a dripping faucet before replacing it instead.

Start small

Just as you might audition a car mechanic with routine oil changes, test your new handyman's mettle with low-tech stuff, such as clearing clogged gutters or installing garage shelves.

It's best to combine a few of these small projects, since most pros either have a two- to four-hour minimum or impose a one-hour service charge. Then let him earn his way to bigger assignments that require craftsmanship -- and if he nails those, put his number on speed dial.

First Published: September 17, 2012: 6:52 AM ET

17 Sep, 2012

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Obama's college tuition plans face tough fight

College tuition costs keep rising

WASHINGTON (CNNMoney) -- In his re-election campaign, President Obama says he wants to cut the growth of college tuition in half over the next decade.

But he faces hurdles toward that goal over which he has little control, even if he wins Nov. 6: dire state budgets and a gridlocked Congress.

The rising cost of getting a higher degree sends millions of students into sticker shock each year, and paying off student debt has only grown tougher.

Over the past decade, average annual tuition for a year of community college has risen 40% to $3,122, according to the College Board, a nonprofit group that runs the SAT exam. At 4-year public universities, the cost has risen 68% to $7,692 a year.

While not impossible, Obama's goal of slowing tuition growth is vague on details and faces harsh realities, education experts say.

At public institutions, the big problem is cash-strapped state budgets. As homes nationwide lost value, homeowners paid less in property taxes -- or lost their homes and paid nothing.

With states from California to Wisconsin scrambling to fill giant budget gaps, education has been one of the casualties.

Related: Where to find 0% student loans

"When times are good, states are very good to higher education, and when state budgets are suffering they're harder on universities than they should be," said Terry Hartle, chief lobbyist for the American Council on Education.

An Obama campaign official said that the president would encourage states to step up with a new grant program that would promote new ideas to cut costs. The program could reward universities for things such as making it easier to transfer more affordable community-college credits toward a university degree.

But, the president would need to get Congress on board to fund such a program -- and it was all he could do to get Congress to extend lower rates on subsidized Stafford loans another year.

"If Congress wanted to prioritize higher education, there's nothing stopping them from increasing investments in a way to make college affordable and cut the costs of college for students across the country," said Rich Williams, higher education advocate for consumer group U.S. PIRG.

One controversial idea Obama proposed this year is -- for the first time -- linking higher education funding to a college's ability to hold costs down. But doing so won't be easy. Since most education funding goes directly to students, such a move would mean stopping students from using their low-interest Stafford loans or Pell Grants at certain colleges and universities.

Congress frowns on that, Hartle said.

"It would be like the federal government saying you can't use your food stamps at this grocery store," he said. "Congress said they don't like to do this, because it doesn't make sense to give students a voucher and limit the places they can spend it."

TECHNOLOGY

Technology is the big unknown that could play a major role in lowering higher education costs, and Obama has talked generally about encouraging advances to keep costs down.

Many universities already offer online courses, but they're often just as pricey as going to school in person. However, there are signs of progress: massive open online courses, or MOOCs, from Coursera and edX, in which university professors at prestigious institutions offer courses free to anyone with an Internet connection.

Right now, students taking such classes don't get credit for those classes. But if they did, the potential blow to higher education costs could get Obama toward his goal, said Andrew P. Kelly, research fellow in education policy studies at the American Enterprise Institute.

"Encourage that kind of behavior and wait until the competitive pressure of those guys starts to either compel changes to traditional university behavior or puts them out of business," Kelly said. "That's a systemic broad-based kind of approach that is likely to pay bigger dividends down the road."

First Published: September 17, 2012: 6:00 AM ET

17 Sep, 2012

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Stock poised for weak open

Click on chart for more premarkets data.

NEW YORK (CNNMoney) -- U.S. stocks were set to open lower as investors await manufacturing reports and keep an eye on the housing market.

Investors will be closely watching the housing market this week, with reports due on mortgages, new housing starts, building permits and existing home sales will be released over the next few days.

Investors will also be keeping an eye on housing stocks, which rallied last week on the Fed news. Shares of homebuilders Hovnanian (HOV), Pulte Group (PHM), Lennar (LEN)and Toll Brothers (TOL) got a boost from the Fed's announcement last week.

While housing reports are expected to boost markets, manufacturing data may drag them down. Investors will be looking at reports on Empire State manufacturing on Monday and from the Philadelphia Fed on Friday for signs of an improvement in the sector, which has continued to weigh on the economy.

Residual enthusiasm over the announcement of a new round of quantitative easing by the Federal Reserve could also boost shares Monday. U.S. stocks closed last week at multi-year highs, propelled by the Fed's announcement of more stimulus.

Fear & Greed Index

World Markets: European stocks slid in morning trading. Britain's FTSE 100 lost 0.2%, the DAX in Germany shed 0.1% and France's CAC 40 fell 0.4%.

Asian markets ended mixed. The Shanghai Composite dropped 2.1% while the Hang Seng in Hong Kong ticked up 0.1%. Japanese markets were closed for holiday.

Economy: The Empire State Manufacturing Index for September will be released at 8:30 a.m. ET.

Companies: Apple (AAPL, Fortune 500) shares hit another all-time high Friday, two days after the company unveiled the latest edition of its wildly popular iPhone.

Currencies and commodities: The dollar gained against the euro, but fell versus the British pound and the Japanese yen.

Oil for October delivery fell 36 cents to $98.64 a barrel.

Gold futures for December delivery slid $2.60 to $1,770.10 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury rose slightly, pushing the yield down to 1.86% from 1.87% late Friday.

First Published: September 17, 2012: 5:39 AM ET

17 Sep, 2012

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Obama hits China with trade complaint

President Barack Obama and President Hu Jintao of China.

HONG KONG (CNNMoney) -- The Obama administration will file a complaint Monday with the World Trade Organization, alleging that China has illegally subsidized automotive exports and undercut American suppliers.

The complaint accuses China of providing $1 billion in illegal subsidies to auto and auto-part exporters between 2009 and 2011, according to a senior administration official.

The administration says the benefits provided to Chinese companies violate a WTO prohibition on "export-contingent subsidies."

Chinese cars are not yet common in the U.S., but exporters have managed in recent years to quickly ramp up their shipments of auto parts to the world's largest economy.

The White House estimates that up to 60% of China's automotive industry exporters benefit from the subsidies, making it hard for American companies to compete.

Related: China growth forecasts shrink as economy stumbles

In a related case, the administration launched a complaint against China with the WTO in July over $3 billion in duties Beijing placed on U.S. auto exports.

The move by the White House takes place as President Obama once again steers his campaign to Ohio -- a state saturated with auto part suppliers and industry workers.

Manufacturing, the auto industry and its bailout are all issues central to the presidential campaign, and Ohio is crucial to the president's re-election plans.

While the complaint comes just months before Election Day, frictions between the U.S. and China over trade are not new. The automotive industry has been a particular hot spot, with both sides trading barbs in recent years.

Mitt Romney, the Republican nominee, has taken a combative stance toward China. The former Massachusetts governor has pledged to label China as a "currency manipulator" and hit the country's exports to the U.S. with tariffs.

Some observers worry that if Romney follows through with his plans, a trade war could erupt between the two economic mega-powers.

-- CNN's Jessica Yellin and Dan Lothian contributed to this report.

First Published: September 17, 2012: 4:53 AM ET

17 Sep, 2012

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Buffett: My cancer treatment is done

NEW YORK (CNNMoney) -- Billionaire investor Warren Buffett says he has completed treatment for a mild case of prostate cancer, according to a published report.

Speaking Friday to executives of newspapers he has recently acquired, Buffett was quoted by The Omaha World-Herald as saying "It's a great day for me. Today I had my 44th and last day of radiation." The World-Herald is owned by Berkshire Hathaway (BRKA, Fortune 500), Buffett's investing company.

In a letter to shareholders in April, Buffett disclosed that he had Stage 1 prostate cancer. Buffett, who is now 82, said at the time that the cancer was "not remotely life-threatening."

Less than a month later, Buffett told shareholders gathered in Omaha, Neb., that the cancer was "a non-event."

"Maybe I'll get shot by a jealous husband, but this is a really minor thing," he said about the risk to his life.

Related: Berkshire earnings drop on derivatives

Buffett, one of the world's richest men as a result of his investing prowess, has yet to publicly reveal a succession plan, though he says he has already informed Berkshire's board about his preferred candidates. Upon his departure, Buffett's job will be divided between a CEO in charge of operations and one or more executives in charge of investments.

The World-Herald quoted Buffett as saying he's relieved to be done with the radiation.

"I'll be feeling the side effects for a few weeks yet, but I am so glad to say that's over," Buffett said.

First Published: September 16, 2012: 2:36 PM ET

17 Sep, 2012

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Stocks: Attention shifts to housing

The Dow gained nearly 2% last week. Click chart for more markets data.

NEW YORK (CNNMoney) -- Investors will look toward the housing market this week, after the Federal Reserve announced it would buy $40 billion of mortgage-backed securities each month until conditions improve.

The central bank hopes that the much-anticipated quantitative easing, or QE3, will "put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative," according to the Fed's official statement issued Thursday.

Housing data will take center stage, especially with so much of the Fed's emphasis placed on bolstering the housing market. Investors will digest reports on mortgages, housing starts, building permits and existing home sales.

Related: Hey Fed, lower mortgage rates will only do so much

The housing market has been gaining strength in recent months. Home values are back to levels not seen since the beginning of the Obama administration and the number of homeowners who are underwater on their mortgage is down 11% since last year, according to a Department of Housing and Urban Development (HUD) and Department of the Treasury report out last week.

While QE3 won't impact the data coming out this week, analysts say that the anticipated good news will foreshadow even better news that may come once the Fed's plan kicks in.

"Housing legitimately was recovering before, but now it's going to go up much quicker," said Uri Landesman, president of Platinum Partners. "People are going to look forward to the coming numbers after the Fed starts buying bonds."

Investors will also be keeping an eye on housing stocks, which rallied last week on the Fed news. Shares of homebuilders Hovnanian (HOV), Pulte Group (PHM), Lennar (LEN) and Toll Brothers (TOL) got a boost from the Fed's announcement.

Related: Fear & Greed Index

While housing reports are expected to boost markets, manufacturing data may drag them down. Investors will be looking at reports on Empire State manufacturing on Monday and from the Philadelphia Fed on Friday for signs of an improvement in the sector, which has continued to weigh on the economy.

In corporate news, Trulia Inc., the San Francisco company behind real estate website Trulia.com, is expected to go public this week. The company, which provides information on homes for sale, neighborhoods and housing trends, will set its price on Thursday and intends to list its common stock Friday on the New York Stock Exchange under the symbol "TRLA."

Apple's (AAPL, Fortune 500) iPhone 5 is expected to hit stores Friday. The company's stock hit a record high last week after it unveiled its new faster and thinner iPhone. Pre-orders for the new device sold out in less than an hour. Last year, it took 22 hours for pre-orders to sell out.

Analysts on Wall Street are predicting the new smartphone will be a major success.

U.S. stocks ended the week up between 1.5% and 2.3%. The Dow Jones industrial average, S&P 500 and Nasdaq all added between 0.4% and 0.9% on Friday alone.

First Published: September 16, 2012: 7:47 AM ET

16 Sep, 2012

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