Benzinga | Jul 27, 2020 11:50AM EDT

Tesla Bear Gordon Johnson On Why Company Is Running On 'Borrowed Time'

Electric vehicle manufacturer Tesla Inc (NASDAQ:TSLA) is "running on borrowed time," as it can only rely on regulatory tax credits for so long, according to GLJ Research's Gordon Johnson.

What Happened: Tesla is making a profit on tax credits, but the argument could be made that this is well-known and merely part of the company's business strategy for the next few years, CNBC's "Squawk Box" co-host Andrew Ross Sorkin said.

In response, Johnson said that Tesla's first-quarter 10Q regulatory filing shows the company said it recognizes revenue on the actual transfer of ownership.

The massive increase in the tax credit revenue now looks like

it was an exchange in revenue recognition, meaning the parties that bought the credit might not even own them, he said.

Why It's Important: The bulk of the credits Tesla sells goes to Fiat Chrysler Automobiles NV (NYSE:FCA), and the newly formed entity with Peugeot will only pay $1.2 billion in credit revenue through 2023, the analyst said.

The math implies that Tesla already pulled forward 60% in the first six months of 2020 alone, Johnson said.

Tesla has only shown positive net income in four of the last 26 quarters when excluding the credits, he said.

What's Next: Tesla already guided for a 48% drop in its tax credit revenue over the back half of 2020, and it will likely "get worse" in 2021, Johnson said.

"When people start to see that the growth is slowing, we think it becomes a real problem for Tesla," he said. "We see that -- we think it will become really evident in the third quarter."

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Photo courtesy of Tesla.