Tuesday, July 01, 2008

I Predict Tesla Will Fail Miserably

Tesla has gone through a few ups and downs: Promising an exciting electric sportscar and then not delivering. Announcing an engineering HQ in Michigan and then selling the land it would stand on. Releasing plans for an electric passenger car (WhiteStar) then canceling it, and giving CEO Martin Eberhard the heave-ho.

And through all this, Tesla has yet to deliver one electric car to a customer. And even if they managed to start production of the 2-seater, it will be made by Lotus in England with an electric motor made in Taiwan. Tesla has no experience building cars.

So given this rather shaky history, and total lack of any manufacturing experience, why has California (Arnold) decided to finance the purchase of $100 million of manufacturing equipment for the production of a 4-door electric passenger car, and lease this equipment to Tesla? At the end of the lease Tesla will have the option to buy the equipment with no sales taxes. And California will grant Tesla over $1 million to train workers to make the car.

Now that California has bankrolled Tesla's electric 4-door car, it puts Tesla in the hugely embarrassing position of having to make the car. They will build the factory but not the car. Tesla will fail miserably. There will be a scandal. People will ask "how did this happen?". I wish I was wrong.

Update 05/01/2013:

These past few weeks I have seen at least one Tesla Model S each day I have driven in SF. And I'm sure there are many more that I haven't noticed. I was wrong when I predicted the failure of Tesla.

The four door Model S is a success because:

1) It is priced to compete with top of the line BMW, Mercedes, and Porsche sedans. And it has the prestige to compete with them.

2) It has a useful driving range.

3) The styling is pleasant, and doesn't "rock the boat".

4) Excellent performance

and finally,

5) (Perhaps) Elon Musk's deep pockets assured that the car would at least reach production.

Anyway, the car is popular and I was wrong.


Anonymous said...

Almost every fact here is wrong. What are your sources?

Peter Reynolds said...

Please give me a specific example of an error and I will gladly answer your question!

Darryl Siry said...

first - apologies for the anonymous comment - I was using my blackberry and couldn't use the form to log in.

here are the facts that are wrong, in the order they appear:

We have delivered the Roadster - it is now in production and we have started deliveries to customers.

We never canceled the whitestar project.

we manufacture the motor in our own factory with our own employees in Taiwan. We manufacture the battery in our own facility with our own employees. Lotus is a contract manufacturer for the body and chassis assembly.

Many of our employees have decades of experience building cars. They come from the car industry after all. There is a lot of talent available out there.

Those are the facts you got wrong. I also don't agree with your opinion but you are free to think what you want.

So what are your sources?

Peter Reynolds said...

My sources are varied, but do not include puff TV, radio, newspapers or the monthly automotive magazines. Among others I read Autoblog, Jalopnik, TheTruthAboutCars, and listen to TTAC podcasts.

I have been following the progress of Tesla for some time and I relied on my memory of events to write this entry. It was incorrect of me to write "Announcing an engineering HQ in Michigan and then selling the land it would stand on". Tesla does have a R&D office in Rochester Hills, Michigan.

I would not dismiss the huge contribution made by Lotus in making the body and suspension for the roadster. I think Tesla will find this too challenging to do themselves.

I contend that body, chassis, paint and assembly constitute the major part of auto manufacturing. The only things left are engine, transmission and batteries. Stamping, Body and Weld, Paint and Assembly must all be synchronized. Outside parts suppliers must be managed and monitored for quality and on-time delivery. Management must coordinate a supply chain that might extend around the world.