Tesla is one of the most fascinating car companies and success stories in History.
~ Aristotle Sabouni
It'll never work[edit | edit source]
Tesla and Elon Musk are intertwined and full of contradictions, hypocrisy, and innovation:
- A Silicon Valley billionaire was going to beat Detroit, Germany, Japan and Korea combined at manufacturing cars?
- Instead of using off-the-shelf suppliers for everything, they would vertically integrate and design things themselves?
- They would throw away 100 years of domain knowledge in supply chains, manufacturing, sales, distribution and support?
It makes no sense... and yet it worked.
I waved off Tesla as supreme arrogance of Techies.
- I knew a lot of the type and had worked in Silicon Valley: people smart in their one area, but lacking humility to recognize how little they knew about the world at large. (Elon later admits his blind spots, but tenacity got them through).
- Stick laptop batteries in cars? Yeah, they could make a few cars for rich people. So the roadster and Model S's "success", weren't a huge shock to me, not even the Model X. (Just a low-volume rebodied SUV version of the S). The Valley has stupid money, and that he could build those $100K boutique cars, with usable range and slow recharging times was a yawner.
- The bigger question was whether they could mainstream it, scale, and build something like the Model 3 (or Model Y): $30-40K cars, in the middle of the market, that could get widespread consumer appeal. Or get any sort of competitive advantages (without that scale) that would create barriers to entry for the competition? That I doubted strongly.
I was wrong.
Honestly, I figured as the economics made the EV's more viable, that the big boys would turn their focus and fire their money cannon (and manufacturing, supply chain, and marketing knowledge) at Tesla and crush them in a wave of superior products filling every subsegment... and the hyper-competition would starve them out of existence.
Face it, the big automakers had expertise, money, manufacturing, supply chains (and suppliers), labor, distribution, support... betting on Tesla was saying that Elon and Co, knew more than the entire industry, on virtually every continent. The sky-rocketing overhyped Stock was sort of confirming that... in 2012 Tesla was worth more than any other auto-maker, each of whom was producing 100x the cars that Tesla was. So it was a hype rocket, that had to come back down to earth.
It didn't play that way at all, and I'm humbled by the focus of one man to make a difference... the competitive advantages he carved out... and at the systemic incompetence of large bureaucracies (that were the big automakers) and doing things the way they were always done, as well as how little I knew of their shortcomings.
In theory, few startups should succeed in established industries. And in reality, most do fail to more established players. But in disruptive technologies, you get the impetus of the status quo, and the unwillingness of established players to bet on upstart technologies, until it is too late. So MOST startups fail -- but some succeed in spite of the odds stacked against them. And when they do, they succeed spectacularly.
|Tesla has probably hurt the environment more than helped. Hybrids were advancing. Without EV's, hybrids would have become more popular, a slower migration would have happened until battery tech advanced more. And we would have probably save more carbon with Hybrids than EV's. I like the cars. I don't like the bullshit or sanctimony that goes with them.|
What happened?[edit | edit source]
EV's alone were not the biggest disruption by themselves (just a small part of it)... face it, a change in who supplies your drivetrain doesn't change the manufacturing problems with a car. Especially if you think of cars how Detroit (and thus the globe) did:
- the automakers were a marketer, supporter, assembler of 10,000 parts, built on contract -- they were the hub 10,000 partnerships
- the dealers did the sales and support
- the parts suppliers knew more about designing each part than the main company ever could -- and those supply chains were locked up with their huge contracts (and thus focus/business) depending on the big boys.
- they had their own marketing and sales departments, working with local advertisers all over the world to design product to local needs, and market them accordingly
- even the software and computer systems that control a car (which is huge) was 100's of millions of lines of code, with 20 different subsystems -- you can't just magically recreate that.
But Tesla and Elon didn't do what I (and the industry) expected and fight them by their rules. He wasn't just an assembler, distributor, marketer -- he ignored their strong points, and created his own, and disrupted the industry at every level. Basically, Elon was much smarter (and a better businessman) than I gave him credit for, and the big-Auto companies were far less competent (nor as smart as I and they thought).
Tesla disrupted everything:
- Dealers and sales? Fuck em -- he was going to go direct distribution, with an Apple Store (Company Store) model. Just put low pressure showrooms, that did nothing but promote the brand, and trust customers to buy or not. No sales. No haggling. No deals. Here's the price, take it or leave it. And instead of that being a weakness in the lack of partnerships, it reduced friction to consumers in the purchase process.
- Support was solved before scale by offering insane features: we'll just come to you. The simpler design of EV's meant less goes wrong, so they could afford to spend more fixing the things that do go wrong. And that built a perception of a premium brand. Mercedes might have a nicer service lobby and give you a loaner car... but Tesla sent someone to your home to fix it. That didn't scale well, and with the Model 3 and Y, their service is more painful and inferior... but you need it less, and the brand identity is sort of cemented with the better experience.
- Tesla crushed the software side of things -- focusing on a Tablet based UI meant that they could keep improving things a few times a year (or month in the early days). Continuous improvment (Kaizen), applied on a monthly delivery cycle (instead of every 3 years), and after a few years in, Tesla was able to refine and hone in on some of the best user interfaces in the world.
- Tesla all but ignored traditional marketing and customer focus. They wouldn't make 1,000 different feature options. They'd design the best product they could, and let the customer decide if they liked it or not. (Not try to convince them). Save the planet, refuel at home, for the performance, quietness, lower repair and maintenance costs, there were lots of reasons to buy, but they'd let consumers figure it out.
- Part suppliers? Tesla did the only thing they could do, cut down the count (and thus weight), designed lots of things themselves, and went minimalist. But this returned cost, reliability, and other savings. The car was much less "off-the-shelf" compromises, and a lot more figuring out the weakest point of each thing (in costs, weight, reliability, etc), and just improving that. They ended up with a car that was designed as a single product, instead of a fleet of different cars that had compromises because the same component was used in many of them.
- The biggest parts were the batteries. And Tesla managed to do the improbable -- convince every battery supplier to both supply them... and allow them to make their own batteries to compete with them... and to partner with them to help them make those batteries and factories and scale them. They lept ahead of any other automaker in what it takes to put electric in an electric car (and do battery manufacturing and management).
- Tesla did things like go minimalist (less to break). So other cars have 10 guages and custom designed dashboard. Tesla has an iPad -- with software to control everyone. One part -- lowers costs, simpler, less clutter, and they can keep updating it.
Conclusion[edit | edit source]
So EV's gave Tesla a window of transition. But they didn't win by putting batteries in a car before other people did. (GM beat them to market by a decade, and some of the automakers had made electric cars 100 years before Tesla). What Tesla did, not necessarily by intent -- was disrupt every facet of automaking and distribution. Each barrier thrown up by the industry, was knocked down or gone around, and they found not only different ways, but often better ones (from a consumer PoV).
Now the big auto-companies are trying to catch up... and they can't always get there from here.
Online sales just can't be as smooth. Fixed pricing doesn't work when you have an independent dealer network. The big companies aren't managing one car model, or even brand -- they have many. So one model lemon weighs on the rest of the products -- while Tesla has fewer models, fewer options, and adapts quicker to problems because they're more focused.
The auto-companies are scrambling to catch up to Tesla in battery capacity and software -- as well as EV drivetrain software. In manufacturing Telsa has capability to build 1M cars in 2021, and looks to end 2022 near doubling that. The big automakers wont be near that number for a couple years.
Tesla invented their own infrastructure in areas like supercharging. So now they have a private network of chargers that allow EV's to travel across the country the most painlessly. While the Big automakers have partnerships with charging networks... that get's into the reality of economics: low use charging points aren't as interesting as high use ones. While 3rd party networks will focus more on high use and high returns... the consumer trying to travel across country experiences the worst spots... and is left with that bitter taste of failure. But Tesla looks at it from a systems PoV, instead of a franchise PoV -- meaning the system quality is better.
The BigA's are trying to respond now (2021), but it's about 3 years too late: Telsa has a lead in technology, supply chain, and momentum -- and a bunch of Tesla clone products (with slightly better fit and finish) from the rest of the industry will keep them from losing their brand loyalists, but not large swaths of the apathetic middle, and their efforts to mainstream EV's is just teaching consumers that Tesla does EV's better than anyone else.
So Tesla had products that under-perform on just about every delivery promise: date, quality, quantity, and sometimes even capabilty. And yet they still exceed what anyone expected them to be able to deliver, let alone what the competitors are delivering. If consumers want to play the game of going to the dealer, negotiating for an hour while the sales person talks to his manager... and then you have to bring you car in for their service center every couple months, and you have a lot more chargers -- but a large percentage don't work, and so on. Then the big automakers EV's work. But if they want to buy online, no haggling, have their car delivered to them, and have a charging network that works? Telsa is leading the pack.
Milestones[edit | edit source]
- Tesla/2019.02.28 Model 3 and Online Only - Tesla surprised everyone in 2019 by finally shipping the $35,000 low-end model 3 (originally planned for 2012 and $20-30K). They shocked everyone by eliminating their retail stores: all cars to be bought on-line.Tesla surprised everyone in 2019 by finally shipping the $35,000 low-end model 3 (originally planned for 2012 and $20-30K). They shocked everyone by eliminating their retail stores: all cars to be bought on-line.
- Tesla/Cybertruck - Announced 2019, too ugly to be a Cadillac, but with specs that were incredible. The look grew on me (not my wife).Announced 2019, too ugly to be a Cadillac, but with specs that were incredible. The look grew on me (not my wife). Target Price=$39,900, Target Date=Late 2021. Actual Price=X, Date=2023+
More[edit | edit source]
- Cars/2021 Tesla Model Y - I bought a Model Y to see how we liked Electric Cars.
- Electric Vehicles - Whatever you wanted to know about Electric Cars, but were afraid to ask. (Or didn't lookup any place else).
- Elon Musk/Visionary - Tesla is a business first. There were lots of things Elon could have done to drive EV's faster and wider, but it would have cost him and his company money/profits. I don't think it's bad that he thinks about his employees, investors, customers and himself/control, and puts those first. But he's an entrepreneur before being a philanthropist.
- May roadtrip - A quick day trip to San Antonio, turns into a few life lessons about Tesla, and what can go wrong? Other than lying about range, traffic, supercharger lines, road hazards, technical difficulties, it was a great day.
- Elon Musk - Musk is an autistic boundary-pushing visionary. A world of followers isn't much of a world, so we need some limit testers. The man is accomplished: he grossly overstated what he could achieve and when... but then also way over-delivered on what anyone believed was possible. So even when I grouse, the world is better for a few loudmouths willing to challenge the status quo.
- Tesla FSD hits kids - Dan O'Dowd (Senatorial Candidate) claims FSD is unsafe and uses a deceptive video to do it. He shows Tesla FSD hitting a kid-size mannequin. There are problems with the video and premise, and the person making the accusation like it appears FSD isn't engaged, he's created a scenario where it will fail, and likely has his foot on the gas overriding the car.
- Tesla/Guy blows up Tesla - So this guy in Finland blows up his 2013 Model S -- and the media loves to report it. (The left hates Elon Musk for standing up to them, and thus loves to bag on Telsa). But instead of journalism and explaining the what/why, they just took glee in the environmental violence.
- Tesla/India obstructing automakers - India's response to Tesla is a great lesson in leftist economics (or anti-economics). They think they're winning by failing to compare the seen benefits to the unseen costs. (The latter being the point of economics). They put up barriers to sales/innovation (protectionism), and it only protects them from the growth and opportunities they would have had.
- Xinjiang Showroom - There's a moral argument to be made to not trade with China over their treatment of the Uyghurs, or their own citizens. Many want it both ways. The U.S. government will open trade relations, do nothing to stop them stealing trade secrets, not hold them accountable, but want to hold businesses to a different standard and be outraged that corps won't pay the price that politicans won't.