Past performance = future results

A year ago, Tesla faced a crisis of confidence that threatened to blow the entire gig sky high. Highway debris was penetrating the Model S battery and causing a “flaming Tesla problem,” as the WSJ termed it. It looked as if the world’s best EV — and purportedly best overall car of any nature — needed more time in the oven. The NHTSA was investigating, and so everyone was whispering the “R” word. An elemental design flaw threatened to send Elon & Co. back to not just the drawing board, but to Staples — to buy a whole new drawing board. Tesla was in trouble.

No problem! Tesla fitted a titanium shield to the bottom of the car, posted videos of it in action and doused the heartburn overnight. Nitsa backed away. Time bore witness to the effectiveness of that shield. It’s now a year later. We’ve heard nothing about highway debris. Or about the overheating charger problem. Remember that one? Another crisis. Solved via OTA update and a cheap adapter overnighted to owners. Done.

But the headlines now say Tesla is in trouble again. Why? Not because the product is blowing up or anything. The problem is China. It’s not the rose garden everyone was expecting. So the Tesla story has changed. The China chapter is going to drag on a bit. The stock is trading near a 52-week low because investors are crybabies and get all pouty when they have to wait too long for their baw-baw and blankie.

But let’s compare this year’s unsolved problem to last year’s solved problem. Last year’s was scarier, what with the imagery of fiery death and all. This China thing isn’t scary. Annoying, yes, because it can’t be quickly engineered away — but not scary. The home battery unveiling, and the Model X unveiling to follow, will provide at least two good psychological boosts this year to nudge China into the background while Elon & Co. slowly work on getting ol’ China aroused. Some partners do take a while, you know, especially if they’ve got anxiety issues.

So what’s up with the headline to this blog post? Tesla’s past performance in the clutch allows us to safely predict more heroics in the clutch. This time victory won’t come in the form of a walk-off homer. It will be a manufactured run, and the inning might drag on for quite some time, but don’t change the channel — unless Elon starts grabbing his crotch and spitting.

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Chinese scalpers pumped early sales

This Old House TeslaMondoTeslaMondo has already predicted rampant Model X scalping. Turns out even the relatively-pedestrian Model S was heavily scalped as Tesla entered China, resulting in a temporary and artificial bump in demand right out of the gate. Now that reality has set in for the speculators — and the reality is sluggish demand — China is the only place in the world with unsold Tesla inventory, says Elon. Nevertheless, Tesla plans to establish local engineering and production within three years as it eyes the long-term potential of China. Biggest obstacle? Lack of infrastructure, both real and perceived. So Tesla is:

1. Adding Superchargers at a faster pace, proportionally, than anywhere in the world, according to Musk during the “anxiety” conference call.
2. Providing Chinese customers with free wall chargers.
3. Also providing adapters so they can charge almost anywhere. (Does this adapter exist in the US?)

If Tesla can overcome the fire hysteria of 2013, it can overcome an anachronistic nation. China will be a good litmus test for India. China may lack EV infrastructure, but India lacks infrastructure, period.

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“Anxiety” conference call nuggets

These are direct quotes. Each of them is a potential news story in itself.

Overall intent: Most people, when they have a Model S, don’t actually have range anxiety. That’s the biggest comment I got when I announced these features. But it’s helpful for people that don’t drive Model S. It may put their mind at ease.

Australia: Our sales of Model S in Australia have been surprisingly good. I’ve been pretty happy with our progress there. Its seems Australians really do like the Model S quite a bit. And as a result, we’re putting a significant investment in Superchargers in Australia.

China thawing: We’ve proportionately added more Superchargers in China than anywhere else in the world . . . And we’ve taken a number of other steps to provide Model S owners with adapters for using virtually any charging location in China — and those have only just gone out. I’m fairly optimistic about China long-term. We’re early seeing some steady improvements in China, so it think it’s on the upswing.

Range boost superfluous: A little more range would be better, sure, but it’s not what makes the difference . . . If we wanted to, we could create a 500 mile battery pack right now. But on balance, the driver is carrying around a lot of unused capacity in the pack. So the marginal utility of, let’s say, going from the 400 mile range to the 500 mile range is pretty low, and then you’ve got all the costs and the weight of that battery pack. So there’s sort of a sweet spot, I think, in the 250 to maybe 350 mile range that’s really ideal.

Range assurance: You’ve got intelligent charging stations and an intelligent car communicating dynamically in a big network. That’s never existed before.

Auto-steering: Some of the manufacturers have it kind of backward. If you take your hands off the wheel for a certain period of time, then auto steering stops working. But what if somebody is distracted or fell asleep or something? You don’t want to have the car stop steering. So it’s kind of backward . . . We haven’t made a final assessment on this, but one possible way is to detect torque on the steering wheel, so that if we see the steering wheel is — if there’s no hand force on the steering wheel for some period if time — we might just issue a visual and auditory alert just to make sure you’re okay. If there’s driver fatigue, just to wake the driver up.

User Interface change later this year: The UI change is in keeping with the newly enabled software. The car is becoming more sensor-aware. We’re kind of waking up the car, if you will, and increasing its capabilities over time. As we turn on these sensors, and the car is more awake and aware, you want to have an interface that reflects the way the car sees the world. It is a big change in the UI paradigm that will take place.

Model X surprises: Model X is going to be coming out this summer. It’s got some elements that people haven’t seen so far in the show car.

Wall-mounted “destination” chargers: Any hotel or restaurant that has Model S customers can actually request a wall-connector charger from tesla, and we’ll provide it at no cost — provided they put that charger a prominent and convenient location. There’s a huge network of Tesla destination chargers, that’s growing, that people don’t even quite realize is there. We’ll probably see, long-term, a factor of 10 more destination chargers than Superchargers. They’ll be virtually everywhere.

Legality: We’re in constant contact with the NHTSA and other regulatory agencies around the word.

Audiophilia: We’ve re-written the audio codec for both the standard and ultra high-fi version of the car. I think it’s going to have a really noticeable improvement in sound. It’s already pretty good, but it’s going to be better. Also improvements in radio reception. We’ve taken direct control of about 100 parameters that are used for the radio reception system and re-tuned the radio.

 

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Shopping for Chinese partners begins

BMW Brilliance Zinoro BYD Denza TeslaMondoAs expected, Telsa has begun scouting Chinese automakers for potential partnerships. The partnership payoff for Tesla? Tariff avoidance and government incentive inclusion. In other words, a much cheaper price tag for Chinese customers — just for partnering with the likes of, say, Lifan Motors, which is bragging about a visit from Tesla.

BMW’s partnership with Brilliance resulted in the, um, brilliant Zinoro (top). Daimler’s partnership with BYD resulted in the Denza. You may recall BYD’s chairman called the Model S a “rich man’s toy.” Well, one look the Denza tells us it’s not for the rich, and it’s not much of a toy. Congrats!

In keeping with typical Chinese nomenclature, Tesla’s locally-assembled Model S variant surely will bear a name like Tesla Happy Motors Lucky Ducky.

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New lexicon needed for autonomy

Just as new laws are needed — at least in the US — for Tesla’s business model, a new vocabulary is required for self-driving cars. Make that semi-autonomous. Uh, driverless. Get the idea? Nobody agrees on the terminology. And yet we’re supposed to agree on the legality?

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How will autonomy overcome these?

TeslaMondo believes that despite some potential benefits of autonomous transport, the utopian vision of cars moving effortlessly like blood cells through capillaries, each with a little lubricated buffer zone, is never going to become real. Instead, autonomy will stop well short of that vision, will prove itself a mixed blessing, will ultimately render us only a little better off than we are now. Why the lukewarm attitude on the subject? These roadblocks aren’t easily pushed aside:

The override button. Surely every car, no matter how smart, will have a manual override. Your life could depend on it. Sometimes you simply MUST commandeer your car to get yourself out of harm’s way. But if there’s an override available, surely it will be abused. So we’ll always have to deal with people riding “bareback” and messing up the flow.

The desire to drive. Think it will ever go away? Not a chance.

Crime. Idle hands are the devil’s workshop.

Pedestrians. Ever drive through Manhattan? It’s you versus them. If your car politely defers to them, you’ll be sitting there at a green light. And the next green light. And the next green light.

Poor infrastructure. No car can read signs and road markings that don’t exist, or have been deftly vandalized so that 30mph says 80mph.

Cognitive distraction. If you let your guard down while the car drives itself, your reaction time to an emergency — one that the car can’t dodge — is dangerously bad. You might as well be drunk. And surely people will be exactly that — not to mention nude.

Balloon boys. If cars require almost no input to move around, some cars will end up sailing down the highway with a thoroughly confused and frightened guest on board.

Litigiousness. No need to elaborate on this one.

And the list goes on. Autonomous driving will offer some benefits, but as we’ve seen with The Jetsons or 2001: A Space Odyssey — when we try to predict our relationship with technology, we tend to overreach just a bit.

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Middle adopters likely budged today

Early adopters already have EVs and don’t have range anxiety. Late adopters haven’t arrived yet. We’ll meet them circa 2020. It’s the middle adopters — the fence-sitters, the people who believe in the product but also believe in Murphy’s Law, the ones who tend to start sentences by saying, “With my luck . . . ” — those are the folks may finally click the “Buy” button after today’s press conference. “That Tesla car is foolproof now? I’m in.” A little psychological nudge is all it takes to get middle adopters over the tipping point.

Want an example? The Prius. The first generation captured early adopters. The second generation “tipped” the middle adopters not with a big wow feature, but with incremental improvements in fuel economy, cargo space and winter road grip — a series of updates. Okay, so the Model S is still a first-generation car — but only on the outside. It has molted many times over on the inside. It’s a different creature. It might as well be considered second or even third generation.

The impact on TSLA shares today? A negation of a two-day anticipatory rally. Oh well. It took a while to digest the impact of the dual-motor car. It will take a while to digest today’s revelations also. Contrary to some comments today, Elon was wise to call a press conference instead of quietly issuing yet another OTA. He drove the point home to middle adopters that Tesla constantly and relentlessly improves the product even as it sits in your driveway. This makes an S-Class seem like a throwaway.

On deck: Home battery. Let’s see if Tesla can create excitement over a big flat thing that doesn’t move, yet promises to move vast amounts of $$ into Tesla’s bank account.

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New Jersey enters 21st century

Bill becomes law TeslaMondoTesla can now sell in New Jersey stores without telling customers to step outside and order from their smartphones. And there was much rejoicing. Tomorrow morning we’ll find out how Tesla plans to end range anxiety. And there was much rejoicing. The press is trying to imply Elon Musk wants to end human driving, when he was only voicing the likely mentality of future regulators. And there was much rejoicing.

 

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