Notes on Tesla, From Tech Maven Fritz Maffry
Here are some interesting updates on Telsa, from our Kansas City, MO-based colleague Fritz Maffry. – ed
The Perfect Storm
The media is beginning to grasp that the transportation sector is facing a “perfect storm,” beginning with the end of a high volume cycle, then adding autonomous, followed by the trade war and the rise of Chinese exporters. On top of that, add Tesla and their disruptive presence, and the changing economics of the mainstream moving from the profitable status quo to a period of reduced profitability.
There are too many simultaneous aligned factors at once for a bullish narrative to sound true. BMW just had significant volume losses (4.8%), and the concerns are now reverberating through the entire automotive supply chain. Something different is in the air. Expect painful consolidation pressures in China by the way. More here and here.
Tesla and the Envelope of Manufacture
Independent confirmation is indicating that Tesla has worked up the learning curve to a new systems level approach to disruptive capabilities in manufacturing. “The machine that makes machines” is what Elon considers the best true output of Tesla. Now having been battle-hardened by the model 3 scale up and release, Tesla is realizing relatively smooth scale-up with the opening of the European and Chinese markets. The flexibility of manufacturability and systems mastery must validate a leap of faith that Tesla has the capacity and skill to enter many markets in a few years and be advantaged in doing so.
All the automakers are trying to be more like Tesla, not the other way around; it is most likely that for at least three years, they will lead that curve of experience. That is several lifetimes in the near-term storm and the speed advantage of Tesla is to be telling on cycle advantages on systems. The systems are advancing faster than the model schedule might suggest; it is modularly upgradeable which is unlike anything from the traditional industry. More here and here.
The collective systems mastery enabling fusion disruptions at Speed Tesla may not be better than all the competition on literally everything, but they are certainly there on the most important things as the market makes a huge upturn in terms of electric advancing over internal combustion in the fleet mix.
Elon Positive on Pickup Truck
Like so many others, I was not wowed with the pre-screen of the Tesla crossover. Even though this is a fine vehicle, it is not the form factor that was expected by the public, and Elon certainly got that feedback. Nor were expectations well managed prior to the public showing.
Accordingly, Elon now is affirming both that he is moving up the dates on the pickup truck release, and that he really likes what is coming together on that. He wants to sell one million units, which is interesting to see because of systems mastery he now can move dates up, where for competitors, that is just not realistic with their development cycle times. Tesla also does not have to worry about cannibalizing their status quo business, so he can play things differently.
Prognosis
Tesla has such systems mastery that they are going to excel despite all the chaff and noise. Because their systems expertise is applicable way beyond their current market targets, they have categorically different prospects than their noted competition.
If you believe electric is about to gain huge amount of ground, and if you use the examples of Norway in terms of what could happen, there is little to detract from Tesla making a power move over the next two years. Boats, airplanes, tractors, construction and mining equipment… when will it end? There is no reason it should.
The virtuous mastery of the systems set has Tesla heading to new places. Note, they already have maybe the best growth trajectory of anyone in terms of international upside and coverage. GM sells off Europe, Tesla moves big to Europe. Ford stubs toe in China, Tesla doubles down big time. Already Tesla has impacted the industry massively and that was just the warm up.
Craig,
Oh, how I wish Fritz Maffry’s hugely optimistic, fan boy, predictions were based on real evidence or demonstrative analysis instead of just enthusiastic delusion.
Like Fritz, I’m also an admirer of Elon Musk and his abilities as both a visionary and practical industrialist.
Unlike Fritz, I was an early supporter of Tesla both as a shareholder and model S owner.
Also unlike Fritz, (and many Tesla fans) I can also appreciate the limitations and difficulties faced by Tesla along with the logistical and technological difficulties and limitations faced by Tesla and all manufactures of ‘BEV’ vehicles.
No, Tesla is not going to sell 1 million ‘pick-up truck’ models per year any time in the foreseeable future! There just isn’t a market for such a vehicle outside a small niche fan base. Teals will struggle to sell 1 million vehicles of any variety any time soon.
In 2018,Tesla struggled to produce 89,000 vehicles. That figure represented an enormous challenge for what is still a relatively new company with an even newer technology.
Posting little charts about the vehicle market in micro-nations like Iceland or even Norway and attempting to extrapolate those figures to the rest of the world is as silly as accepting statistics from the Peoples Republic of China as accurate or reliable.
As an industrial corporation, Telsa is making mistakes, but learning fast and still retains loyal shareholder support. The US President is helping with changing the way the US does business both as an exporter and importer with the People Republic of China.
President Trump’s determined fight with the Peoples Republic ovfer IP protection and respect for patent rights, is only just beginning although with some success as China was unprepared for such a determined and shrewdly judged campaign.
Chinese leadership made the mistake of underestimating the US President, but not as badly as the Europeans. China’s policy will be to take the long view, make a pretense of compliance and simply out wait the US administration, knowing the US political system will sooner of later, deliver another administration with policies of weak appeasement.
It will be a monumental task to impose on a huge dragon which sees industrial and commercial espionage and commercial theft of intellectual property as a rightful method of promoting national economic prosperity.
The US must win this fight, as if it fails, we long term economic prosperity of all Western nations will also fail. Recognition of this danger, and successfully of combating this threat to the US and the West will be remembered as the defining moment of not only the Trump Presidency, but America’s future place as the leader of Western Civilization.
If in 2020 the US returns to the old weak policies of appeasement pursued by previous administrations, then US strength will disappear and US allies will slowly abandon a decaying giant.
Tesla’s future, indeed any corporation’s future in China, depends on President Trump waging a sufficiently resolute and astutely judged trade war to force China to adopt international standards and expectations.
It won’t be easy. Currently, China sees no advantage in compliance, in fact it’s fair to say compliance works against the best interests of China.
This makes the President’s task almost impossible ! But succeed he must, and those who oppose, attempt to derail his policies or distract him from this task, are doing irreparable harm both to the US nation and Western civilization.