Business: Tesla Steams Full Speed Ahead…

by Wallace Wyss –

It is to laugh, if I didn’t have reasons to cry. I’m talking ’bout the Detroit Big Three and their abject failure to match Elon Musk as he built Tesla into the world’s leading electric car maker.

I grew up in Detroit in the Fifties and remember how slow Detroit was to glom onto new trends. For instance VW was around since before WWII but it took until 1960 for GM to come out with an air cooled car.

The result was the Corvair. It was a decent enough family car but was skewered when Harvard trained lawyer Ralph Nader came out with a book on it entitled “Unsafe at any Speed.”

After that fiasco Detroit was ever more wary of copying any of these new fangled trends from Yurrip. Oh, GM did follow Mazda in rotary engines but when they did it wrong, pulled out, blaming the fuel shortage (their rotary was a bit gas greedy).

And now we come to electric. Knowing some of the stodgy people from the Big Three, I can just imagine what they said at the Bloomfield Open Hunt Club or Grosse Isle Yacht Club over drinks about this upstart South African Elon Musk. They thought, “Hell, he’s just going to make a Lotus into an electric car, so what?”

But that was only the beginning. Then Musk came back with an up market sedan, the Model S, designed by an ex-Pontiac designer who he had recruited. He did the things the reverse of other automakers with the sedan. Instead of working his way up from a low price to a high one, he started out high, coming in price wise above anything from Detroit unless you want to consider some of the decked out SUVs like the Cadillac Escalade.

But all during the phenomenal ten year growth of Tesla, you could hear the naysayers in Detroit saying things to the effect of “How can he sell cars without dealers?” or “How can he sell electric cars nationwide with so few charging stations?”

Well, those questions have been answered. There is an occasional dealer like the one in Santa Monica, but you can buy a Tesla right off your computer. And the charging stations? There’s thousands of them, coast to coast.

And then there were more models–the X, an SUV with gullwing doors for the rear seat passenger, and the Model Y. In the future there’s another sports car.

Now the really embarrassing thing is that Musk has managed to carve out this market of US buyers because other than feeble efforts from Chevrolet (Volt and Bolt) and the soon to arrive Mustang EV and Hummer EV, (not even counting the Fiat electric) Detroit gives the impression that it’s all not worth bothering with when all these alternative vehicles take just 4% of the US market.

More embarrassing is the fact that, as his side job Musk owns a company that makes rockets. He has one big customer–the US government. You would think that job would keep him too busy to study the car market. And then Tesla went so many years not making a profit, who would want to follow him?

But now, Musk is cracking a new market–long distance tractor trailers. He has shown a Tesla tractor trailer. Now I’m not sure if these trucks could share charging stations with Tesla cars but that problem can be solved. A billion is now pocket change to Elon Musk.

What Musk is really hoping for is the bonanza when the American public accepts the autonomous car; and demands there be changes in the laws to allow their sale now. He thinks his version, which started out as Autopilot, is ready to do the whole job, not just part of it. And he has the greatest argument, that traffic accidents will probably drop by 50%.

So Detroit automakers first failed to match his electric efforts, now it looks like they’re dragging their heels on autonomous as well. I would say that the only thing holding back Tesla from more sales in the US is not enough variety in models.

What he needs is:

-a delivery van

-a station wagon

-a convertible

-a landaulet

-a sedanca deville

The last two styles are something Detroit gave up in the Thirties but Musk has a way of bringing up old ideas (those gullwings were on my ’54 Mercedes) and making them seem new.

The biggest threat to Detroit is the money Musk is piling up. Daily. I think he has about $40 billion now, but by 2025 he could have $100 billion. Enough to buy out any Detroit automaker but you have to ask why would he even want to bother–their technology, he probably feels, is too obsolete to bother with.

It’s predicted Tesla stock will rise another 24% this year.

The only thing that used to hurt Tesla was his failure to build as many cars as they were projecting. But recently, Tesla reported second-quarter deliveries that exceeded analysts’ expectations: they reported 90,650 deliveries, while the average estimate was about 70,300.

If they keep up the pace, we might see 757K units in 2021. Wall street is now predicting by 2025, Tesla will deliver 2.5 million vehicles. I am not surprised that I didn’t see this coming. As a publisher, I used to sell Jeff Bezos books wholesale for $11 and he sold them retail for $11 and I would voice to other publishers in derisive tones: “How can the guy make any money?” Well, it was all part of a grand plan that now is paying off. Like Musk, a good day for Bezos is when his company’s net worth goes up a good $10 billion.

So now I am in a blue Funk (with white sidewalls), depressed because the American auto industry mis-judged Musk and ridiculed his efforts and is now forever trying ever catch up. They are at least two years behind but given the current state of technology, two years today is forever.

Not that the Europeans did any better. VW might have had a chance because they had some good prototypes but then had to shell out more than a billion to pay penalties for lying to the world about Diesels. Now they might have to sell Lamborghini just to have enough money to spend on electric car research. It’s not only designing and engineering the cars, they are behind in battery development. And guess which automaker owns their own battery maker? Elon Musk.

The Japanese have another problem with electrics. No place to plug them in. Their houses don’t usually have driveways. They are working on hybrids, full electric and hydrogen but all of them together are still behind where Tesla is now.

Maybe the only dark cloud on Tesla’s future is, if even one or two of the five Chinese automakers making electrics sells a similar quality car worldwide at a lower price than he could ever hope to match. But International politics could result in Chinese cars not being allowed here, though when you consider Buick is big in China how are we going to say “no” to Buick?

A lot of the future of electrics in the US depends on what political party is in the White House. Now that the Democrats won, there’s several governors talking about outlawing sales of new cars with internal combustion engines by 2035. Should that become a national goal, the leading automaker in making every single one of their cars electric is none other than Elon Musk.

And so it is. I admit I guessed wrong on Bezos, and further admit I once regarded Musk as merely a flash in the pan. Wrong on both counts. But now I’m looking at Detroit–will Detroit automakers swallow their pride about being late to the party and get serious? The year 2035 is not that far away. By then Musk will be selling electric cars on the moon.

Let us know what you think in the Comments.

THE AUTHOR: Wallace Wyss has authored 18 car books about automobiles past. Now he is working on some futuristic stories about the future of cars.
 
 

Editor, Mike Gulett owns shares in Tesla.