Avoiding the vortex of the Tesla haters/lovers and reading about what it is that really sets the company so far apart from the rest of the industry is not always easy to come by. But here’s an article that’s a must-read to gain insight as to why that’s the case. For instance, how Tesla solved a potentially fatal flaw in its Model S safety testing in five days that would have taken another manufacturer five months, and why Elon Musk is ok with rushing new models into production before all the issues (panel gaps, etc.) are fleshed out.
It’s written by Philippe Chain, who has 30 years’ experience in the automotive engineering sector. He was Tesla’s VP for quality during the development of the Model S, and prior to that he was at Renault for many years. Since then he moved on to work at Audi on the e-tron EV as well as Faraday Future, another EV startup. Now he is a consultant on the EV field. His experiences at both Tesla and Audi give him legitimacy in making comparisons between the two.
This particular chapter is #3 in a series at mondaynote.com. But the other two chapters, which deal more generally with EV’s and the inevitability of electrification of the automobile are also great reads. Links below.
Chapter 1: The Car Reinvented, from Scratch – Chain takes us through the process of envisioning the car of the future, the EV
Chapter 2: Your next car Will Be Electric – Why the electrification of the car is an inevitability
Chapter 3: How Tesla Cracked the Code of Automobile Innovation
I think the first link (chapter 3) reads exactly like what happens in high level racing teams in Formula 1, LeMans, etc. There’s an issue or a part is needed to be redeveloped and people start boarding flights around the world with raw parts in their luggage while other teams back at the factory are up all night designing, forming, baking or whatever to get the part made and delivered either to the same race weekend or meet up with the team transporters as they are in transit for the next race weekend and/or the mechanics are rebuilding the car to make it work as intended.
It’s that kind of urgency that the author is describing that Tesla can and does do due to their start-up nature and also being born of the tech industry where all night non-stop sessions are a norm etc.
Whereas the “legacy” automakers have controls and procedures in place to try to avert a potential large-scale failure as well as the inevitable blame game – of course VW’s latest software failure where they’ve decided to ship a large batch cars with issues to be corrected down the read gets them a huge amount of criticism, if Tesla did it, they’d get a lot of crap for it as well from the usual places but then there would also be an article written about how that’s just business as usual at Tesla and what needs to be done to “disrupt”, similar to the poor fit and finish scenario described in the linked chapter. Tesla has enough true believer buyers and fans that are willing to be on the bleeding edge and put up with it. But if your VW Golf showed up with poor panel fit or the rear bumpers fell off after going through a puddle, everyone would freak.
Just last week the news was that the Model Y was sent to New Zealand for “winter testing”. Huh? I wonder how the guy across the street from my flip house feels with his new Model Y now, perhaps he’ll be doing his own winter testing here starting in about 3 months. VW and others do two years of winter testing precisely because they can’t afford the bad goodwill (badwill?) that would result if something obvious was missed such as how Model 3 doorhandles froze shut in the bodywork when they were first released (per Electrek, so hardly a Tesla critic.)
No single person at any automaker is as personally involved or invested as Musk is. Colin Chapman MAY be a slight analog there from the semi-recent past, but that was still a long time ago and company structures in general have changed a lot since then. That’s exactly the danger for Tesla though, without Musk there would not be the same drive. Just like there wasn’t before he came on board and was able to revive a promising beginning that was starting to flag. Clearly with the personnel turnover (as noted) it’s not a completely cultural thing, it’s really championed by one person.
I edited slightly and lost a paragraph…Tesla with Musk is very similar to Apple with Jobs. Jobs was bigger than everyone else, he WAS the company and that’s the danger Tesla has with Musk. While Jobs eventually figured out he wasn’t immortal and developed a team that has been very successful from a money perspective, not too much has happened in terms of innovative new products since his passing. He too could inspire (or scare) people into doing things that were not the normm I saw it firsthand on the marketing side a a supplier and dealing with various internal people there. Tesla’s turnover issue as noted in the linked chapter indicates that there’s may not really be a cohesive company culture, more that there is one person driving it and everyone. Tesla would likely have a huge problem if something happened to Musk, just like Apple almost went under after forcing out Jobs and basically floundered until he came back, after which time Apple obviously exceeded everyone’s expectations, over and over again. Now they are still doing very well, partly due to the great team in place, but there hasn’t been anything revolutionary that changed the industry again since he passed. That’s due to the visionary nature and drive of Jobs (and by extension, Musk).
Interesting you mention Jobs… Monday Note was started by Jean Louis Gassee, who was an Apple exec who played a small role in the ouster of Jobs from Apple. Both Jobs and Gassee would go own to create new workstation companies, Jobs with NeXT and Gassee with Be. When Apple was on the ropes and needed a new OS, they bought NeXT instead of Be, got Jobs back in the acquisition, and the rest is history. The internals of the modern Mac and iPhone operating system still, to this day, have similarities with the NeXTs from 30 years ago.
I worked in an office years ago where the managing partner had a high tech IQ. We got a NeXT system and used it for a few years. When I moved to another office with a bunch of stand-alone PCs that were being used like typewriters I felt like I had regressed to the 1940s.
Same thing happened when I was at UIUC. Perfectly good lab full of NeXT pizza boxes replaced with boring old WinNT machines. 🙁
Tesla does seem like a one-man company but that may be hindsight, at least in the purely automotive field. That part of the company is at a point where I’m not sure Musk is absolutely necessary for Tesla to succeed for many years to come.
Tesla’s lead in battery technology, software (close to a million Teslas on the road, providing constant feedback on operational efficiency and self-driving behaviour), and of course charging infrastructure, is such that if they were a ‘legacy’ manufacturer they would still be seen as uncatchable for at least 5-10 years. And of course the cars work, vey well, and buyers love them. They’re not just an ‘experimental’ company any more.
Even if (or as) their dominance as the number one EV manufacturer fades, they could be highly profitable as a company that licenses aspects of their technology to others.
The stock market’s enthusiasm for Tesla may be too Musk-dependent (what will He come up with next??), but my sense is that the basic foundation of the company in the automotive field is pretty well established. Without Musk it might not conquer the world as we know it, but it would still be a very successful car company.
I’m not sure I agree with Chain’s comment, in Chapter 1: “ not having to experience a gas station ever again…”. But where will one get Slim Jim’s or red-hot Cheetoh’s on a road trip? Last I checked, those weren’t available at SuperCharger stations.
Seriously though, I think part of Tesla’s success has been its tech industry DNA. As a now-retired veteran of Silicon Valley, the “all-nighters” to solve problems (including all-night flights from SFO to manufacturers in Asia) and the culture of accepting bugs when products are released to customers, knowing that software fixes (which often solve or at least work around HW problems) can be deployed quickly and cheaply, are just part of the culture.
Tesla seems more successful as a stock to own than a car. I still believe it is more hype than as solid auto manufacturer. Human still struggles to build a powerful energy storage device, and electrochemical storage even lithium battery is not a solution. And don’t forget Toyota once owned a portion of Tesla, it walked away. Can we assume Toyota didn’t know Tesla had potential then? Other thing is Tesla doesn’t have its own battery technology and manufacturing capacity. It totally depends on Panasonic to make the batteries. Rumor says it will use CATL battery for its vehicles in China.
If electric vehicle is the future, I think it should be the company like BYD, which is partially owned by Warren Buffett. BYD has no hype, it is strong battery technology and manufacturing capacity — BYD uses a different type of lithium battery. It also has its own auto lineup producing a regular vehicle. BYD also actively develops its own power semiconductor plant so that it can be fully independent electric car company.
He was Tesla’s VP for quality
he might want to keep that a secret.
Not buying it. Literally. And I have a friend who got burned badly (-$500K)) shorting the stock.
I want Tesla to succeed wildly. That said, Part 3 was titled “Your next car will be electric” yet Figure 1 on that page shows a US market share of new passenger share of EV’s in 2023 at <4%.
Electric cars are currently a niche, West Coast phenomenon, where the weather doesn't often drop below freezing and the driving distances are relatively short. Elsewhere, gasoline is an excellent substitute and with delivery infrastructure in place.
The United States uses 37 quadrillion BTU's for electricity plus another 28
quads for transportation, the two largest consumers of power. Excellent pictorial here:
https://flowcharts.llnl.gov/content/assets/docs/2019_United-States_Energy.pdf
I hope Tesla will succeed. I recently read about a battery under their development that will blow away current batteries. I hope it's real; I'd love to have an electric car.
But I'm neither short nor long their stock.
It’s not niche here in Colorado, lots of Teslas all over the place in all seasons as well as Leafs and even Bolts with every other model represented (often imported to the state as used cars) to some extent (Fiat 500e seems curiously popular) as well and not just Boulder.
Distances out here aren’t really short and it certainly gets cold. I used to live in California, there is nothing short about distances there and the rest of the West Coast either.
EVs certainly are a niche in Colorado: 2.5% of new car sales. My back-alley neighbor has had a Leaf for years and got a Model 3 a couple of years ago. Great cars. But I see only three/hundred (at most) electric cars in even high-dollar Cherry Creek through which I ride my bike several times a week.
Gasoline is king and will be for at least another decade or two. Not every trip, but I’ve seen Teslas on I-70 between Denver and Vail. Maybe one out of thousand cars? Cool cars, but range is still an issue, especially when the weather drops to 0°F which is frequently does on the approaches to the 11K’ Johnson-Eisenhower tunnels. I’ve been stuck between Silverthorn and Georgetown on the EB approach for several hours, waiting for those gigantic wreckers to snatch the stuck semi’s off the road. IDK that I’d want to be in an EV during those interludes.
Distances in the Denver metro are relatively short, coming from the Chicago area it amazed me how quick I could get from Centennial to downtown or to the foothills compared to home to the city/lake, and Tesla’s are prevalent enough here too, range isn’t an issue within a large metropolitan area unless you’re using it to Uber or instacart deliveries all day, but nobody who can afford a Tesla seems to do that.
I don’t consider them niche, as they’re definitely more common new cars in Colorado than entire brands I can think of, but I will say there are A LOT of west coast transplants in Denver, and without knocking on their windows like a crazy person I’d wager a sizable percentage of their owners hail from California. I saw way more Model 3s and S sedans there than model Xs despite the state’s long time regional infatuation with SUVs, even before the great crossover epoch.
I’d guess that the reason you see more S and 3 than X is that the S has been sold for much longer and the 3 is significantly less expensive than either. The S and 3 are generally also considered far better looking and less controversial than the X and its doors. The CA transplants are usually easy to spot by the car pool stickers on the bumpers that don’t seem to easily be removed (likely by design). Of the electric car owners I personally know here only one brought hers from California (so less than ten percent), the rest were CO purchases.
I’d certainly agree that 2.5% of sales is getting far beyond just niche, of course the visible percentage on the streets will be less than that percentage as it would also include all vehicles on the roads sold before electrics were available, that’s why you won’t see 3 electrics for every hundred total vehicles. The RAV4 for example sold at a rate of 2.5% of ALL new vehicles in 2018 and I wouldn’t consider a RAV4 any kind of niche quantity product. 2.5 out of a 100 is a lot, the RAV4 sells more often than anything but the three fullsize truck lines in the US.
I also don’t see EVs on the backs of flatbeds anywhere near as much as everyone was predicting when the great range anxiety debate was raging. I’d surmise that when stopped on I-70, even for hours a Tesla is less likely to run out of power than a conventionally powered car is to run out of gas. Electrics generally get better range in the city (and stop and go) than they do at continuous freeway speeds.
Sorry, I didn’t mean the cars themselves were also transplants from CA, but the owners who originated from CA might be more prone to buy Tesla sedans than Model Xs, carrying over their regional habits. For a native or long time CO resident who had been buying SUVs for years, I wouldn’t expect them to go from something like a 4-Runner or Forester to a Model 3 sedan. There’s actually a big Tesla showroom in Littleton I’ve driven by a few times out there
When an EV is stopped, waiting for the pass to re-open it doesn’t use much power, unless of course you want to keep warm by turning on the heater, in which case it drains of range pretty quickly.
EV’s that use heat pumps for cabin heat such as the new Model Y and some of the others that don’t start with as much range should do better in this regard than those that only use resistive heating.
Yes the heat pump is more efficient, but at this point most EVs still have resistive heating.
Another one of those cases where Tesla is far behind. The lowly Leaf has had a heat pump for years.
“I’d surmise that when stopped on I-70, even for hours a Tesla is less likely to run out of power than a conventionally powered car is to run out of gas.”
That would be an interesting test: parking an EV and gasoline car in, say, 15°F ambient then running the HVAC to maintain 50° in the cabin to determine which was able hold 50° longer, the EV starting with 3/4s charge and the gasoline car with 3/4s tank of gas.
Once when driving EB I-70 was closed at Vail for seven hours. Fortunately the City of Vail has lots of deep underground parking that remains ~50° even in the coldest weather. It would not have been fun to be stopped halfway up the pass in that case.
Chapter three quotes Tesla’s market capitalization at $271 billion. I read today that Tesla’s market cap is now up to $330 billion. From a base of $100 billion, every $50B that the market cap achieves, and sustains for at least six months, earns Mr. Musk another boatload of money. If, or when, Tesla gets to $650B by 2028, he will have earned ten year compensation of $55.2 billion through his compensation contract he was awarded in 2018.
This is addition to the shares in the company he owns.
Staggering numbers, if they can sustain their roadmap..
I really have no interest in Tesla or electric cars in general. (This isn’t the place to delve into the reasons but I do not see any good reason to be pushing them.) I do not plan to ever own an electric vehicle. I’m old enough that it would be virtually impossible to do away with gasoline in my lifetime, or at least that part of it that I’ll still be driving, so that’s what I’m sticking with.
Musk chewing up and spitting out 44% of his direct report employees last year makes clear he has a lot of maturing to do. No business can sustain a culture like that for long because shit always rolls down hill. Form follows function and cannot be overstated regarding electric motors and batteries. E-motors can be infinitely scaled up/down and batteries into almost any shape. Very few could see that early on but Musk sure did. Then they created and designed a POSITIVE buying/owning/proactive communication customer experience. Now whodathunk that was possible? Telsa cut through auto industry BS because they saw how very few dealers truly shined and baked an overall positive experience into their DNA. The majority of dealers are just meeting sales goals by any means necessary and screw the customer, albeit not as blatantly as in the past. We are witnessing the beginning of a most turbid time for the entire auto industry mostly thanks to Tesla. How government handles the large number of enevitable manufacturing, service, driver, etc. related job losses is a litmus test. The learnings of which may be applied to future highly disruptive technologies like the confluence of artificial intelligence and robotics on service sector employment. Tesla is so much more than just electric vehicles. Even talking with non-motorheads about Telsa’s many implications I find many are simultaneously fascinated and apprehensive. It’s very interesting to hear from a former Tesla senior executive how Tesla culture is so different from established automakers. All I can say is this; I’m very excited for future neoteric-electric conveyances and changes they will bring. I’m even more appreciative I don’t work at a direct competitor knowing Tesla’s literally world’s ahead. The link below is Bob Lutz infamous article on an electro-motive future that includes nondescript modules. https://www.autonews.com/article/20171105/INDUSTRY_REDESIGNED/171109944/bob-lutz-kiss-the-good-times-goodbye
Quite fascinating stuff, and from someone who can firmly claim to know what they’re talking about. The only slight weakness in what they say is the inner-city dweller unit problem. As yet unsolved, it is not so easily dismissed.
Not a shadow of doubt that Musk is in the genius realm, because I have read parts of this analysis before, but some years ago. So he is not the first to envision how flat-structured tech ideas and manufacturing could be applied to a new way of thinking about cars, but is the only one to have applied it. (Between the idea and the reality, between the motion and the act, falls the shadow, as per TS Eliot. Those who can step confidently across that barely exist). I’ve said before here that the arrival of the Tesla S, just four or so years after a converted Lotus, is a marvel, and it is as much a marvel of having been done as the product itself.
One thing, though. What a world this Dickensian business must be, with these high-tech slaves of this revolution, quite at the whim of this unpleasant robber-baron. I am one who wouldn’t sacrifice my well-being for the glory of such a god: I have, in another field, learnt better. Such behaviour as the near-boast of a 45% turnover is a turn-off, such that it dirties my perception of the product: it creates an ordure that sticks to the owners, whom I then do not want to join.
Irrational, perhaps, but I took the author’s insight into the irrationality at the heart of transportation -buying to be key. And a suprsing one.
No doubt that it would be incredibly difficult working for Musk. But it needs to be said that Henry Ford’s treatment of his workers (especially through the depression era) wasn’t a great environment to work for, either, so it’s not like it’s anything new.
There’s been an incredible amount of engineers and brilliant minds that have been in the auto industry or the innvation/ invention industry (even Nikola Tesla). Unfortunately, they have often been poor at the business side of things. Musk has managed to combine the two for something truly extraordinary, and visionaries often are temperamental and difficult to work for.
An interesting read. It seems that Tesla could only have come from the US, as the culture Musk has built seems quite opposite the highly ordered and systematized cultures of Japan and Germany that have slowly come to rule in conventional vehicle manufacturing.
I agree with the above that Tesla seems to be a one-man show, but one-man shows can be pretty successful – as the Ford Motor Company’s history shows. The test will come after Musk burns out or moves on – will organizational bloat slowly take over, as seems to be the norm in human organizations.
This is a great read, thanks for posting it! Interestingly enough, as a supervisor at work, I work in the PPE industry, and as one can expect, it is a high pressure, high demand industry at the moment. If product doesn’t get to certain customers, there can be food production line shutdowns, etc. Same thing with making errors.
I come in early, stay late, work hard, and always, always try to be ahead for tomorrow or next week. I expect the same out of my employees. In my experience, most people would rather react to problems, rather than anticipate them and correct them. Minor things like forgetting to order supplies drive me nuts, because those are the small things that end up costing someone in major ways when you need to be making critical progress in critical times; like a marathon runner that forgets to tie their shoes or something like that.
Finding out that Tesla has gone through a 44 percent (!!!) turnover rate in the last year alone makes me feel relieved that my ethic and discipline won’t tolerate anything but aspiring to be the best, and that personal pride is something that the best sports players that win the championship don’t technically get really paid beyond their regular salary to do. The best of the best prepare way before their work day/ shift starts, and long after it ends.
It’s not the most fun environment, but I’d be willing to wager that the most successful people at anything were not in the most fun environments either. Most (all?) will say that they want to be the best, but it is a lie that they tell themselves that helps them get through their day, I guess.
What particularly struck me was the difference in layers of managemental hierarchy. Two layers at Tesla compared with four at Audi in engineering alone plus others on top of that? Why is it so? No wonder Tesla can implement things so quickly! Too quickly for their own good, maybe, but I have to applaud their lean-management model.
I have to wonder what all those layers of hierarchy at other manufacturers actually do, other than slow down processes and clog up the works. Are people really that afraid of making a decision that they have to have somebody ‘upstairs’ to pass the buck on to? I’ve heard of several businesses in different fields where productivity actually increases when a certain manager is on leave. That seems to me a key example of a person whose position is unnecessary.
As businesses strive to cut labour costs to the bone in order to survive in such a dog-eat-dog environment, I have to wonder how much longer it will be before they take a look at (and an axe to) the managemental hierarchy itself.