Three years ago this month, Bloomberg published this “view” by Edward Niedermeyer, an auto journalist who gets published on big websites because he’s an auto journalist who gets published on big websites. With three years of hindsight, and with Model III apparently about to start pilot production, let’s revisit his Bloomberg piece, eh?
Niedermeyer, 2014: From the beginning, there have been signs that Elon Musk’s ambitions for Tesla Motors exceeded his grasp on reality — or at least the realities of the car business.
TeslaMondo, 2017: Big Auto is squirming amid a new reality defined by Tesla. Quoth Audi: “I hate to admit it, but Tesla did everything right.” Quoth FCA: “I’m incredibly impressed with what that kid has done.” Tesla’s gobbling of market share has totally transformed the product strategy of, well, just about every automaker. This was Musk’s true intent all along. He told a German audience (27:57) in 2013 : “If the big car companies see that our sales are good, and that we are actually taking a little bit of market share — I mean, we’re a tiny company, you know, a drop in the bucket — but if they see that people are buying these cars, then they will have no choice but to conclude that electric cars are the right way to go, and that will accelerate the transition to sustainable transport.” This is TeslaMondo’s favorite Musk quote, dry as it may be. Why? Because there is none more prophetic. Notice what’s been happening lately:
5/08/2016: Hyundai/Kia announce new EV strategy
6/21/2016: VW announces new EV strategy
8/03/2016: GM announces new EV strategy
11/25/2016: Jaguar/Land Rover announce new EV strategy
11/27/2016: Daimler announces new EV strategy
11/30/16: Toyota announces new EV strategy
12/5/2016: BMW announces new EV strategy
12/17/2016: Renault/Nissan/Mitsubishi announce new EV strategy
1/19/2017: Ford announces new EV strategy
Niedermeyer, 2014: Tesla’s market capitalization is hovering around $30 billion, about half that of General Motors and Ford.
TeslaMondo, 2017: How about $43 billion, or 88% percent of Ford?
Niedermeyer, 2014: “But wait,” cry the market and financial press with one voice, “Tesla now has the potential to disrupt both the auto industry and the power utilities.” Which is true enough, in the sense that I have the potential to disrupt the world curling rankings.
Bonus: This Bloomberg panelist dismissed Tesla Energy as “jumping the shark,” a 1970s Happy Days reference that would require an overlong explanation here.
If she thinks Musk is like Fonzie, she obviously hasn’t met Nvidia’s CEO.
TeslaMondo, 2017: Tesla Energy has made bigger and bigger headlines as it powers bigger and bigger entities, including islands. “It’s growing as fast as we can humanly scale it,” says CTO JB Straubel. Tesla Motors is now Tesla Inc., a three-headed hydra breathing down on autos, battery storage and solar. The auto division is grabbing the attention while the others are in flux due to the recent acquisition of SolarCity. But never mind that stuff. The real news is that Niedermeyer is making notable progress:
Niedermeyer, 2014: In the case of the Gigafactory, Tesla’s ability to disrupt lithium-ion battery production is severely limited by two major factors: first, Tesla itself has no experience manufacturing battery cells; second, Tesla depends on the very companies Musk wants to “disrupt.” Panasonic, Tesla’s main battery supplier and “default assumption,” for his Gigafactory partner, has (for fairly obvious reasons) not committed to Musk’s vision of a plan designed to lower the market price of its product by 30 percent. Which brings us to Tesla’s ability to disrupt the car market. If Panasonic believed sales of electrified vehicles held the sort of growth Musk anticipates, it would far more likely pursue that opportunity with Toyota, its electric-battery partner since 1996. Toyota, the world’s most valuable automaker and the industry leader in hybrid electrification, announced last year that it would increase joint lithium-ion battery production with Panasonic to 200,000 units per year. Having also owned a stake in Tesla since 2010, Toyota could easily have offered to cut Tesla into that deal. The fact that it didn’t supports the long-standing perception among Toyota-watchers that chief executive officer Akio Toyoda invested in an exciting car and brand four years ago, not a potential industry disruptor.
TeslaMondo, 2017: Panasonic is now the pursuer, not the pursued. It just expanded its Gigafactory involvement, and Panasonic’s CEO is telling the press he hopes to land a contract for some of Tesla’s autonomous driving gear. Meanwhile, superman Toyota is now stuck with the SoreEye fuel cell vehicle and the plug-in Prius Prime, neither of which is moving the sales needle or doing anything for the brand. Every month Toyota puts more cash on the hood of the Prime. The rebate is now $1,000 in some regions. Yet a decade ago, the Prius was a marvel of planet-saving engineering that everyone simply had to own. Sound familiar? Unfortunately, Toyota balked at EVs, and now it’s scrambling to catch the EV train that’s long left the station with Musk at the controls. TeslaMondo talks to car buyers every single day. Prius buyers are declaring, “This will be my last gas-powered car.” The Prius, whose name means predecessor, has suddenly become the Pontis, or bridge, to EV ownership. Whose EV will they buy? Gee, guess.
Niedermeyer, 2014: Toyota is no stranger to disruption, having overturned the global car business over the course of decades. But rather than high-concept, visionary technology and hype, it was Toyota’s mastery of the culture of manufacturing that drove it from bit player to industry titan. Toyota emphasizes kaizen, or continuous improvement, not Musk’s mercurial style.
TeslaMondo, 2017: Name one vehicle in the history of vehicles that has come to exemplify kaizen better than the Tesla Model S. It has repeatedly molted into a better and stronger creature. It shares little with its forebear born just a few years ago, in 2012. And that’s without mentioning the software updates, issued over the air. That’s a new type of kaizen that no other automaker can match.
Niedermeyer, 2014: If Musk really believes the Wall Street-Silicon Valley line that Tesla is in a position to seriously “disrupt” decades-old relationships like Toyota-Panasonic, let alone the auto industry more broadly, he’s headed for a stunning fall.
TeslaMondo, 2017: Rather than issue a broad, windy retort about Tesla’s status as disruptor, let’s focus on one unarguable example. Century-old mammoths like BMW and Nissan are now resorting to tapping people on the shoulder — people who are waiting in line for a Tesla Model III — and trying to talk them out of it. If this isn’t disruption, what is? And if disruption isn’t the first stage of a revolution, what is?