Elon Musk’s vision of a sustainable future is an inspiring one, and it’s not unachievable. But if they’re going to help get us there, Tesla must become a sustainable company. So what does the future hold for Tesla?
Executive Producer & Host: Kristofor Lawson.
Mixing & Production by James Parkinson.
Jasmine Mee Lee is our assistant producer.
Artwork by Andrew Millist.
Theme Music by Nic Buchanan.
Elon Musk Tesla Event: “I want to start talking - just preface this by talking about why, why are we doing this? Why does Tesla exist? Why are we making electric cars, why does it matter? It’s because it’s very important to accelerate the transition to sustainable transport. It really is… [crowd applauds]...this is really important for the future of the world.”
KRIS: Tesla are a company at the forefront of the shift to renewable energy. In addition to electric cars, they’re also investing in solar power and battery storage.
Elon Musk Tesla Event: So, Powerpack is kinda like our industrial strength battery storage system. And we did the, the biggest battery storage system in the world in Australia… And so, expect this to ultimately be really critical for transitioning the world to sustainable energy. Obviously you have to have sustainable energy production and sustainable energy consumption. So sustainable energy production; you need the solar panels, plus the battery, ‘cause the sun doesn’t shine at night. And then the electric cars, electric vehicles in general. But the real exciting thing is, with solar, batteries - solar, plus batteries, plus electric vehicles - we have a fully sustainable future. That’s a future you can feel really excited and optimistic about. I think it really matters.
KRIS: Elon Musk’s vision of a sustainable future is an inspiring one, and it’s not unachievable. But if they’re going to help get us there, Tesla must become a sustainable company. So what does the future hold for Tesla?
KRIS: From Lawson Media, This is Supercharged - a show about power, conflict, and the people who are driving change. I’m Kristofor Lawson, and this season we’re exploring electric vehicles, and how Tesla is forcing the entire automotive industry to move towards an electric future.
KRIS: This is Episode 6: Mission Critical.
KRIS: We’re in the middle of an environmental crisis, and many countries around the world are striving to reduce their carbon footprint. Part of the solution is a move to renewable energy, and Tesla are leading the way, with home solutions like their Powerwall battery storage and SolarRoof, to large scale offerings with Powerpack for businesses and utilities. Electric vehicles also play a vital role in reducing emissions as well, given transportation is one of the biggest contributors to climate change. Once they’re on the road, EVs produce zero emissions.
KRIS: But if we’re going to shift towards mass adoption of electric vehicles, as Tesla is striving to do, there are still environmental impacts that need to be minimised, as the EV industry continues to grow.
ELSA DOMINISH: We definitely don't want to see ourselves creating new environmental problems when we're trying to solve another one, but overall, electric vehicles still do have a net positive environmental impact.
KRIS: This is Elsa Dominish - Senior Research Consultant at the Institute for Sustainable Futures in Sydney. Elsa co-authored a 2019 report on the Responsible Sourcing of Minerals for Renewable Energy. It found that the EV and battery industries need to address the environmental and social impacts of their supply chains, as the demand for key metals used in EV manufacturing is projected to rise.
ELSA DOMINISH: The main metals used in the batteries for electric vehicles are cobalt, nickel, lithium and manganese. And there's also rare earths, used in the permanent magnets, which are part of the generator and the motor, and there's also, of course, lots of typical metals such as steel and aluminium used in the body of the car itself.
ELSA DOMINISH: So as the demand for renewable energy technologies grow, we're projected to see a large demand for the metals required to manufacture them, and so in order to minimise this, we can look at strategies including recycling, so making sure we're capturing those metals at end-of-life. Also, looking at efficiency, so reducing the amount of metals we use in each technology, and the industry's already working very hard at this, partly to reduce costs but also just to make the technologies more efficient.
KRIS: The first step in the supply chain is mining, and right from the start, EV manufacturers are already leaving a global footprint through sourcing the metals they need.
ELSA DOMINISH: They all come from different mines around the world, depending on the type of metal, so lithium typically comes from South America. It's also mined in Australia. Nickel comes from various countries including across the Pacific. Cobalt typically comes from the Democratic Republic of Congo, and rare earths are predominantly mined in China, but they're, of course, very complex global supply chains, so they're being mined in many different places around the world.
KRIS: And depending on the type of metal, mining can have far reaching consequences on the environment, and local communities.
ELSA DOMINISH: There's communities around the world that are feeling the impacts of mining. Because renewables are growing so quickly, and we do need to shift to them really quickly in order to avoid the worst impacts of climate change, we want to make sure that this doesn't just scale up really rapidly into new mining that's done not in a responsible way. So some of the impacts we've seen, the most well-known are, of course, around cobalt mining in the Democratic Republic of Congo. There's a lot of heavy metal contamination of the soils and water that's led to a lot of health problems for the local communities. Even communities that are not directly involved in mining, but those impacts have spread out throughout the community.
ELSA DOMINISH: And then, if we are needing to get these metals from new mines, making sure that's done responsibly, so that includes, of course, the social side of it, so looking at labour rights and good work conditions, particularly for metals such as cobalt where they are done often in an informal way or hand-dug mines, which can be very dangerous. There's also many cases of child labour for that. Then, of course, there's the environmental side, so making sure that the wastes are properly stored from the mining process.
KRIS: As well as responsible sourcing, recycling is the most important strategy to reduce both the environmental impact, and the demand for these metals.
ELSA DOMINISH: We can recycle batteries from electric vehicles, and most manufacturers are putting schemes in place, but there's, I guess, a couple of tricky things to note. And one is that, while we may be recycling the battery, we're not necessarily recovering everything we can at the end of that process. So generally, recyclers are focusing on recovering the cobalt and the nickel because they're the more valuable metals, whereas lithium, manganese - even copper and aluminium are sometimes not recovered from the process. We do have the technology to make that happen. It's just that it's not necessarily economic because it's cheaper to get those metals from a new mine rather than from a recycled source.
KRIS: There’s also the potential to prolong the life of EV batteries, which may still be utilised long after they’ve been removed from a vehicle.
ELSA DOMINISH: So for example, batteries from electric vehicles, once they've lost a bit of their capacity, but they're still working, but they're just not quite as efficient as one would like for use in a car, they can then be used for stationary storage. When they're on the ground and not being driven around, it doesn't quite matter that they're less efficient because they're not taking up as much valuable space as they would be in a car, and so a lot of manufacturers are looking to this, whether that's, yeah, to using the batteries, say, for storage at a utility scale is quite a promising option.
KRIS: For these strategies to be implemented successfully, EV manufacturers like Tesla must take a proactive approach and plan ahead for the future. But the good news is, many companies are already taking action.
ELSA DOMINISH: Yeah, I think manufacturers, particularly for electric vehicles, as opposed to other types of renewables can have a really big influence on their supply chains. I think that a lot of them are very concerned about making sure that the products that they're supplying and selling do have good environmental and social credentials, and they're looking to make sure they’re sourced responsibly. Of course, they can go further on this, but I think it's encouraging to see that this is something that the industry is aware of.
KRIS: Governments could also play a part in assisting the auto industry through the EV transition.
ELSA DOMINISH: Governments, at the moment, don't play a huge role, but they definitely could play a larger role. For example, in the EU, they have guidance on how to make sure that things are sourced responsibly if they're coming from conflict-affected areas, but not many other countries are really looking into it, but governments also can have a really big role to play in terms of making sure that manufacturers and suppliers have a system in place for dealing with the technologies at end-of-life, so that we avoid creating this huge waste stream, and we can recover the metals from those technologies at end-of-life and reuse them for new ones. There's been some small schemes in parts of the US, and the EU does have an end-of-life scheme for batteries, but a lot of other countries, this is something that they need to focus on in the short-term, particularly as these technologies are set to come online so rapidly.
KRIS: In 2018, Bloomberg NEF published a report on the outlook of electric vehicles, which projected that 57% of all new car sales will be electric by 2040 - and EVs will make up over 30% of the global fleet. So how will our current systems support that transition, and what needs to happen to get there? Well, most urgently we need to look at infrastructure. Not just more charging stations but the electric grid itself.
MARCUS BRAZIL: So, having a large number of electric vehicles on the grid is going to put an extra load on the grid, and with more than ten percent of electric vehicles, our modelling has shown this could lead to failures in areas of the electric grid.
KRIS: This is Marcus Brazil.
MARCUS BRAZIL: I'm an associate professor at the University of Melbourne in Electrical and Electronic Engineering.
KRIS: Marcus has used mathematical modelling to project how the electric grid might react to a roll out of EVs. I’ll let him explain.
MARCUS BRAZIL: There's two parts of it. One is optimisation models, in which we basically try to create a mathematical model of how the grid as a whole and the demands on the grid work, but in a way that we can actually then apply optimisation methods to this, to find out how to run this grid as efficiently as possible. So, we make a whole lot of simplifying assumptions, but assumptions that are sort of very close to what actually happens, and use that to then find optimisation algorithms and control strategies for running the grid in a really efficient way.
MARCUS BRAZIL: We then have simulation models which simulate the behaviour of the grid and electric vehicles and traffic and so on, in a much more realistic way. We use real data from electric power companies and data that's been collected on traffic conditions. And then we're able to use this to get a very realistic idea of sort of how well these algorithms would actually work in practise.
KRIS: This issue of whether our electrical grids can cope with the influx of EV’s is something that’s been looked at around the world. Another person looking at this impact is Hauke Engel from McKinsey & Company in Germany.
Hauke Engel: So when when people talk about e-mobility, of course, there's many questions around the, the potential hurdles for for EV uptake, right, there's this questions around consumer acceptance, do people actually like to drive electric to, they prefer kind of the roar of an internal combustion engine? Can you do away with actually produce the kind of cars and then the volumes of cars that that people might want. And what do we do about the batteries? Is there a sufficient raw materials for the batteries? Can we produce them in sufficient volumes? And of course, one question that always comes up is, you know, can we actually power all these these activities that we'd like to see on the roads… So we set out to to cast a closer look at this and understand what the potential challenges are, in terms of the the energy system, if we saw a large scale introduced introduction of electric vehicles,
KRIS: Hauke’s research focused specifically on the German market, and looked at questions around whether Germany would need additional power generation to support the huge numbers of EVs set to hit the market. And whether the grid would need additional support on the most extreme days, and whether the local power grids, the ones in your local community, could handle having people coming home from work and plugging in their EVs at the same time.
Hauke Engel: And what we found was that on the total power demand side, so the question Do we need extra power stations? That's actually not the case. So the data relative Increase in in power demand. Even in a high electricity penetrations, there is only a few percentage points. Now that's something that's now we can either easily over time add a little bit of generation capacity and it's not a showstopper, or was actually within the slack that's totally already in the system. And, and likewise, the question of the system, the macro wide peak load. So the demand generation capacity required at the most extreme day of the year, that also doesn't increase a lot, again, only increasing in a few percentage points. And that's well covered within current system margins. So it's, it's called the spinning reserve. So the safety margin that that's already built into the into the energy system into the generation capacity can easily handle the debt increase… However we did find is that challenges will arise at the local level. So if you look at kind of the last mile of power supply both in the, in the residential world as to when people plug in at home in the evening you might get some issues there. And if you look at public charging stations… there again, we expect to see some issues with the grid, if that's not practically addressing the planning stage.
KRIS: The issue that Hauke identified was around how you deal with that moment when everyone owns an EV, they come home at night and they plug it in, and then they go and go other things in their house. And it’s this kind of this last mile of the energy grid where the real problem could exist.
Hauke Engel: Now, when you when the people living in that area… when they start buying EVs, they typically charge those in the evening right because people used the car, usually during the day, then they come back in the evening and plug into start charging. Now the complication is that they also start doing lots of other things at the same time so, they came home they put the kettle, on that they put the stove on, they put the AC on, they put the TV on. So, you anyway already have the peak demand of power in this evening hours. So that's already the time of the day that determines kind of what the transformer needs to be designed for. And now you're adding on top, the extra and demanded charged electric vehicle. So, that is beyond a certain level of EVs that you have in that area that will cause trouble for the transformer because it will simply increase the that that peak load that evening peak load beyond what the transformer’s designed to handle.
KRIS: Given that there could be an impact on load, the question then becomes - what do we do to make sure EVs don’t place too much strain on the energy grid? Through modelling the data Marcus learned that our current grids may actually support a large adoption of electric vehicles - but it would require a different approach in order to manage that new demand.
MARCUS BRAZIL: Well, the idea is to basically change the philosophy of how we run the grid. So, to have a grid that has more demand management built into it, so more control over the demand. So, where possible, we look at loads that have some flexibility in them where we can actually change when the power's actually required. And even making small changes of just a few minutes to when you actually demand energy from the grid can make an enormous difference in terms of maintaining the ability of the grid to provide the required load.
MARCUS BRAZIL: So this idea of demand management, through careful control algorithms and optimisation algorithms is the way in which we'd be able to sort of cope with these new extra loads without threatening the requirements of other users, in particular important users like hospitals and so on.
KRIS: This type of demand management has been utilised before. In California, for instance, they’ve been able to stabilise the grid during peak periods in summer, when everyone powers up their air conditioners. And in the case of electric vehicles, Marcus says that it could even be more effective.
MARCUS BRAZIL: So, the idea is that electric vehicles are actually one of the most flexible loads that we would add to the grid, in that you don't need to start charging your vehicle the minute you get home. You might plug in when you get home, but you actually won't need your vehicle again typically until 8 or 10 hours later, when you're next heading back to work. So, there's a lot of flexibility as to when the system can actually start charging the vehicle, and by allowing the system to use that flexibility, so to delay charging or to interrupt charging at those times in order to make sure that the grid doesn't become overloaded, it means that we can actually increase the penetration of electric vehicles to, say, up to at least 80% or even more, without actually needing to increase the capacity of the grid.
KRIS: Implementing this across the system comes down to governments and power companies investing in the infrastructure needed to make it all happen. But electric vehicles may provide additional support that could benefit the entire grid.
MARCUS BRAZIL: It's certainly possible that electric vehicles could be part of the battery storage systems that will help support the grid. Particularly, just helping smooth out demand on voltage and current at particular times of day. So, you wouldn't necessarily be needing to draw large amounts of energy from electric vehicles, but this could be another source of energy that can be used to help rebalance the grid.
KRIS: Hauke says another way that you can deal with demand is to change the incentives around power usage… However the more practical solution is to control when EVs charge so that the load can be balanced throughout the night.
Hauke Engel: Basically it boils down to you can either use incentives with people to proactively change what they do. So, you can change the power tariffs... Or on the other hand, the other solution would be to use what's called smart charging. So it's essentially control when vehicles charge…
KRIS: Another way to stabilise the demand is with batteries. Either batteries that might be placed next to a transformer on the local grid and that kicks in when power demands might strain the network, or battery storage on your home. Tesla are one of the more prominent when it comes to battery technology in households, and at a grid scale with projects like the Hornsdale Power Reserve in South Australia. LG are another manufacturer who do home batteries and are in many ways a more viable alternative for homeowners looking to get their money back. However Tesla’s strategy clearly has a path when the company can influence the whole supply chain of your power - from grid-scale storage… right down to the battery in your electric vehicle. Battery technology has improved dramatically in recent years, but in regards to EVs, they still need further development in order to achieve the longer distances we’re used to with internal combustion vehicles.
MARCUS BRAZIL: Internal combustion engines, are seeing the end of their days, but we do need to find ways in which we can have vehicles that have the same sort of flexibility in terms of being able to travel long distances and giving the freedom of movement that those vehicles have. And it should be possible, there's no problem with the power and speed of electric vehicles, the real problem is just with recharging the batteries. So, I think that's really sort of the important technological challenge that is presented to us at the moment… At least sort of within cities and for everyday commuting and so on, electric vehicles are already looking like a really good alternative to the combustion engine.
KRIS: But the important thing to take away here is that power companies and our governments need to anticipate the growth in EV adoption and plan ahead.
MARCUS BRAZIL: It's really important that they anticipate increases in demand, particularly as electric vehicle usage increases, and that they basically use this as an opportunity to improve the way in which we run the grid as a whole… The potential pitfall would be to promote electric vehicles to allow more and more people to take up electric vehicles without having any demand management on the grid. So, without actually looking at the way in which we provide power.
MARCUS BRAZIL: I see electric vehicles as being an opportunity not only for better, greener transport, but also as an opportunity for improving the way that the grid as a whole works, and that we start building in more demand management, having a grid that's sort of much more responsive to the needs of the people who are using that power and not just blindly providing the power that they seem to require without actually looking at "Okay, is there some flexibility in that demand and can we actually shift that demand in order to make sure that the grid as a whole is as responsive and robust as possible?".
KRIS: After the break, we’ll look at what lies ahead for Tesla and the rest of the EV industry.
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KRIS: Despite their chequered past, it’s now clear that electric vehicles are here to stay - in large part thanks to the resurgence led by Tesla. But can we say the same about Tesla itself? Will they survive the short term, and live to see the world of the future they envisioned?
KRIS: Well, in order to secure their own future, one of two things needs to happen. Either they produce and sell enough cars to be self sustaining, or they continue their current trend of raising money through investors, and presales, whenever they need it. The question is, which outcome is most likely?
EDWARD NEIDERMEYER: Running a company, especially a car company, in such a way, where you have to be raising a billion dollars or more every 12 to 18 months is a very, very poor way to run a company. And I think that's one of the lessons here is that the venture capital model that works for startups, particularly software startups, is really poorly adapted to the auto industry.
KRIS: That’s Edward Neidermeyer, author of Ludicrous.
EDWARD NEIDERMEYER: You know, I blame the venture capital approach as much as I do Tesla, for them sort of ending up on this fundraising treadmill. And I think it's one of the biggest questions about their future because if a downturn, a cyclical downturn in the economy happens, and capital is no longer as easy to get - and keep in mind, with the exception of 2008-2009, we've been in an environment where capital has been sloshing all over the place. It's been very easy, especially for technology companies to raise money anytime they need to, particularly if they have a very well known person like Elon Musk, raising the money. And I think the real risk is if Tesla is not able to have the discipline to operate efficiently and to be profitable every quarter, then the risk is that when the downturn comes in capital is not as available, that they will once again, as they as they always do, need to raise another one to two billion dollars and it simply won't be there. This is where you pay the price of a company not being financially sustainable.
KRIS: Part of the improvement in profitability is the result of cost cutting measures like Tesla reducing the size of their workforce which Elon Musk announced at the start of 2019, and a focus on streamlining their production. But they’re yet to achieve an annual profit. The company’s ability to raise billions of dollars through increasing their share price is impressive, but that can’t last forever without realising some more tangible return for investors.
EDWARD NEIDERMEYER: They've also promised so much, and they've also accustomed investors to expect such huge rapid growth and massive, massive ambitions, that I think it actually would be very difficult for them to dial back and to say, “okay, we're only going to grow as much as our profits allow us to, we're not going to raise more money”. My fear is that they've painted themselves into a corner where they have to stick to the story that they can grow and grow and grow infinitely, and eventually become a 10 million unit a year automaker. Because that's sort of what they sold investors on. And sort of becoming financially sustainable right now pushes the timeline for becoming a 10 million year automaker out decades and not, you know, five to ten years or whatever people might want to believe. And so I also think there's one other thing that is really worrying about the immediate future for Tesla, and that is the fact that they've taken customer money for what's called “full self driving”. And I have very serious doubts that that's something that they will be able to deliver, at least as they sold it. And I think that it's already had a very corrosive effect on one of Tesla's most important assets, which is faith in Elon Musk. If they are indeed unable to deliver full self driving, the risks both for the business, but also for civil liability, and even potentially criminal charges, I think is very real. And I think that that's, to me, in the short term of the next few years, if they're unable to deliver that, confidence in this company will will collapse. And the way they set it up, it's kind of all or nothing. You either fully believe it or you're just incredibly skeptical. And I worry that if they don't deliver that and they're not financially sustainable, and especially if there's a downturn, they could go bankrupt extremely quickly, and in fact they've, they've nearly gone bankrupt numerous times throughout their history.
David Kirsch: Well, I should state that I'm on the record as saying that Tesla is overvalued and it's fair market value of common stock may actually be zero, meaning that the company may end up in bankruptcy sooner than we think.
KRIS: This is David Kirsch, who we heard from back in episode one.
David Kirsch: So Tesla I think is in a lot of trouble and that is I think becoming conventional wisdom. I wrote about this two years ago and have been saying it for a long time… I don't think the future of electric vehicles depends upon Tesla at this point. I think that train has left the proverbial station, I think that ship has sailed, use whatever transportation metaphor you'd like…. so in some sense, it doesn't really matter what happens to Tesla.
EDWARD NEIDERMEYER: … Ultimately, Tesla needs to go bankrupt in order to become sustainable. I think they've they, they not only need to reboot the image of what where's the company being successful? And what does that what kind of company should it then be? Um, I think Have to back away from from the mass market ambitions. And you know, I think a partnership with an automaker makes a lot of sense because then they can use parts from there you know, that they've developed with suppliers and things like that. But I think that that between the, undesirable assets like the factory and the factory is also extremely dysfunctional, I huge amounts of debt, and totally unrealistic investor expectations that were required to sort of keep raising this money, those are all things that needs to be left behind for Tesla to move forward on a sustainable basis.
DANA HULL: I think their approach was the right one. I just think that every time that Tesla comes out with a car, it's kind of a bet the company sort of project, where everyone... It's all hands on deck to get the car done. They're not really at an Apple-like stage where they've got multiple product lines and multiple business units all focusing on these individual products. Each product launch is sort of mission critical.
KRIS: This is Bloomberg reporter, Dana Hull.
DANA HULL: I do have a lot of questions about the company's finances and the turnover of executives. They're always skating by, and things are more tenuous on the financial side than I think people realise. That said, I think Tesla's working on all kinds of things behind the scenes that no one really has any insight into….And as a company, we just don't really know that much about what goes on there… . So for me it's kind of like putting together a big jigsaw puzzle where I feel like Tesla's involved in so many industries; automotive, solar, utility. They're really doing a lot, across a lot of industries… But I'm always eager to get more of a handle on what's coming next, what else is in their pipeline in terms of secured contracts, and who's doing what.
HARVEY PITT: The difficulty with a company like Tesla is that even its least expensive automobile sells for something around $35,000 or $40,000 dollars.
KRIS: This is Harvey Pitt, a former chair of the SEC.
HARVEY PITT: We are talking, therefore about a product that is very expensive for average and somewhat below average Americans. It is not a problem that is endemic slowly to Tesla, but it is nonetheless, one major difficulty. At the outset of the existence of a company like Tesla, it can pay for a lot of the kinds of services it needs by printing paper. It can print stock and make stock available and the promise that the company holds forth can potentially drive the market price of the stock while the company gets over the initial hurdles that any start-up company faces.
HARVEY PITT: In Tesla's case, whatever the length of that period is, it appears to have ended awhile ago, but Tesla is not yet capable of realising on it's very strong promise. So, the fact that start-up companies, or tech companies rely more on stock rather than out-of-pocket cash, is a very common phenomenon, but at some point, it becomes necessary to convert your promise into reality.
KRIS: And Harvey says that if Tesla can’t realise their ambition and continuously hit the high targets they set for themselves - it could cause serious repercussions for the company.
HARVEY PITT: And I believe that, many people in viewing the market place, would say that Tesla is now in a very dangerous period where it's continued failure to achieve more of the results everyone has come to expect, could conceivably deal a very serious body blow to the company… every day that it fails to deliver on its magnificent promise, puts the company into continuing jeopardy.
KRIS: So can Tesla survive without Elon?
HARVEY PITT: I believe right now, it probably can't. On the creative side, Mr. Musk has credibility. People correctly perceive him as having creative genius. The real question is can Tesla survive without somebody who is experienced and who can behave like an adult actually operating the business while Mr. Musk continues to do his magic with respect to the creation of modern vehicles that take advantage of electrical power. To me, that is really the fundamental question.
HARVEY PITT: I think that Tesla desperately needs what Mr. Musk can give it, but it also desperately needs what I think Mr. Musk is unable to give it, namely, adult experienced leadership, I think it needs both.
KRIS: It’s difficult to predict exactly where Tesla will end up. A third potential outcome could be that a traditional manufacturer acquires Tesla - but at least at this point in time, that seems unlikely.
DANA HULL: They will either become the dominant electric vehicle maker in the world, they'll have a factory cranking out cars in China, and they will just take the world by storm, or you know - or they'll be maybe taken over by someone else and potentially be acquired. So I actually don't really know. On some days I feel very optimistic, on some days I'm more pessimistic.
EDWARD NEIDERMEYER: One of the scariest things about Tesla is that they are playing in the house. For some time playing such a confidence game where confidence and faith in Elon Musk is so fundamental to their ability to survive to raise the money they need to survive, as well as to the appeal of their cars and everything else. They have a very hard time now sort of pivoting, changing plans and being more pragmatic. And especially as you get into the mass market, pragmatism becomes the most important thing.
EDWARD NEIDERMEYER: I think ultimately with Tesla, you know, because they have to take these sort of really tough steps to become what I would see as a sustainable automaker to get what I see as their opportunity to become a lasting, sustainable player and in the car business. And it requires stepping back from big promises and big commitments and it and and really changing the attitude. And what this company does is it bluffs its way forward, even when everything is stacked against it. And you know, this is part of what makes them so admirable in certain sense. they've overcome impossible odds because they're willing to, to kind of bluff their way through... But I think that their their chance of… success at this point on is is so slim, certainly with the full self driving that, you know, I think they they need to kind of give themselves a fresh start so that the good parts of Tesla can continue and continue to have the impact that they've had on this on the whole industry and on the market and bring them all towards more electric vehicles and leave behind the sort of toxic aspects of the company.
KRIS: The past decade has seen the popularisation of the electric car. EVs are now cool, and they’re good for the planet. But would we be at this same moment in time without Tesla?
Hauke Engel: That's a really good question. So I think Tesla definitely had a tipping role here. Now that they just took kind of a Silicon Valley type disrupter tech mindset to this… and simply proved to the market that it's possible to produce a, an actual vehicle that consumers want to buy at at a decent price. So that was definitely a proof of concept. role that Tesla played… battery technology matured roughly around that time. So it was definitely more complex than Tesla did this. But they, they were part of the mix. And they were one of the many factors that led to the rise of EVs and kind of the, the tipping point in, in, in commercial viability of electric vehicles that we're seeing right now.
KRIS: So given that Tesla as a business struggles financially, and that they’re now not the only manufacturer making electric cars, why are Tesla having this cultural moment that other car companies just aren’t?
Lora Kolodny: Tesla's been at it longer. In one sense, at least branding and media they have an early mover's advantage.
KRIS: This is Lora Kolodny from CNBC.com.
Lora Kolodny: First mover's advantage doesn't always turn out to be true or long lasting, but they definitely have it where brand marketing and media are concerned. The other thing is, you know, Tesla is partly responsible for restarting this electric vehicle revolution that had been set aside, you know, with the abandonment of the EV1 and earlier efforts. Martin Eberhard and Mark Tarpening, and you know, Elon Musk, as an early investor, at least, are really responsible for bringing about an awakening that electrification could work now… Tesla came up with the advent of social media, they are dominant as far as a presence on platforms like Twitter and Reddit, they, even though Elon Musk removed Tesla's official presence from Facebook, there are so many communities Tesla has its own TMC forums and in part, it's generational, right? It was web 2.0, dawn of the electric car. If you are early to those platforms, you could have a great presence there. And that's what we're seeing. It's really helping their, their brand and their identity and they're also, they're popular with younger generation. They’re trusted and popular with sort of gamers who are very online and social. And again, it's, it's good for their SEO, it's good for their presence on social, it's good for a living conversation about the brand and the cars and they're charismatic but difficult CEO. It's not surprising to me that they have that given all those years invested into online community building.
KRIS: Do you think that other manufacturers actually have a chance of catching Tesla right now and especially I guess, given that Tesla produce their own batteries and the other manufacturers don’t?
Lora Kolodny: So GM just announced a big partnership to manufacturer batteries with LG Chem in the United States and LG is a supplier to Tesla, so that could change the equation. I think that for years, Tesla sceptics and short sellers and so forth have overestimated the competition. But it's starting to get interesting. So Tesla will be dealing with a more competitive landscape than ever before. In China, you know, there's already BYD and Roewe and a number of others that make electric vehicles pretty successfully and in a number of different classes. China's a whole different puzzle ball, if you will. But I mean, do I think, Hey, I'm sure Honeywell never anticipated like Dell and then Apple, right. I mean, who's it's really hard to say Tesla again. First mover's advantage works when it's working and it works in some arenas, and it's, it's not always long lasting, think back to Blackberry and so forth. It's it's really hard to say and it's really not my place. But so far… Tesla's getting a great response to other technology, not just their battery with its range, but people are eager for autopilot type features safety assist, and they enjoy the entertainment… like the video games and dog mode should be a standard I think. So it's funny because... I report on the news about Tesla and its triumphs and struggles and people will paint reporters as you know, the enemy. We can't help what's going on. Right. It's like there are some triumphs there are hardships but it's I'm not a hater. Tesla's like God's gift to a reporter because it's an interesting ambitious, spontaneous, crazy. They make good and bad decisions. But basically you know, I'm able to recognise like what resonates with drivers and prospective customers of Tesla, because I talk to them all the time. And again, I think they're, I think they're winning not just like the tree huggers and the EV proponents who are like into car tech, but they they are getting people because of the design aesthetic, they're getting people who are just super fans of Elon or the whole Tesla vibe, they are, you know, they're getting people who want autopilot and beyond who believe that full self driving will be real and soon. And so they can compete, they can differentiate on a lot of levels too, it'll be a really interesting competitive landscape as all the shapes up.
KRIS: Throughout this series we’ve looked deeply at the EV market, and Tesla specifically. And despite all their faults, Tesla is a company that inspires loyalty unlike any other manufacturer. So what actually inspires their customers to ignore the competition, and put down their money - for a vehicle that might be years away from delivery? Here’s Ralf Schwesinger - who we met in Episode 1.
Ralf Schwesinger: To begin with, when you look at what makes you buy a car. Like the first car you buy from a company it’s a salesperson that gives it to you. However the second car is sold by someone else. The second car is sold by the person doing the service. And what we experienced is that the people who work for Tesla they are the ones who make the difference because they give you a feeling that you are important and that you play a major role in the whole concept, and they try to treat you very, very well. They may not be able to resolve everything right away but that’s not the point. The thing is, if I’m told that I need to wait for something good, I’m happy to wait because someone told me I need to wait a little bit. If someone doesn’t tell me that, and doesn’t manage my expectations well, I might react a little different, but Tesla do that quite good. So they talk to the user as a client, as a customer, we are aware what’s going on, the product is the right product, the plan is the right plan. And actually it’s as Nicole said, it’s not only cars it’s much more than that. It’s that much more than that why we have the car, and why we were willing to spend more money on a car than any other brand that is comparable, because there’s more behind it. I mean I don’t know if I would want to buy a car from someone who’s lying to me, I don’t want that. If that honestly means I have to wait a little bit longer well okay he’s honest, I’ll buy it. Simple as that.
KRIS: Thanks to everyone we spoke with for this series, there were many more voices who didn’t make it into the final episodes - but we really appreciate everyone who took the time to speak us. We did reach out to Tesla on multiple occasions for involvement in this series however they declined.
KRIS: If you’d like to listen to more podcasts about Tesla - then I encourage you to listen to Reveal’s great investigation into Tesla’s Fremont Factory, and The City who recently published an investigation into Tesla’s Nevada Gigafactory.