Tesla: Insane or Clever

Tesla: Insane or Clever
Elon Musk makes it easy to dismiss his grandiose — unhinged, even — descriptions of his product plans. But if we look past the hyperbole, we see a serious threat for legacy automakers who don’t know and love software.
By Jean-Louis Gassée
May 19 2019
https://mondaynote.com/tesla-insane-or-clever-b7a8e1479f6b

“I feel very confident predicting 1 million autonomous robo-taxis for Tesla next year,”

When Elon Musk utters these words at Tesla’s Autonomy Day late April, a song plays inside my head: They’re Coming to Take Me Away, Ha-Haaa!. I imagine two burly men in white coats coming on stage, wrapping Elon in a tight jacket, and whisking him to a padded cell. (I last heard the song in the late sixties while I was still in France. The refrain obviously made a lasting impression.)

One view is that Musk is deranged. Seriously. Not a little bit like someone with a passion for labels that adorn Camembert boxes (a tyriosémiophile). No, more like someone who keeps announcing the closure of Tesla retail stores, only to partially countermand his order within days; like someone who gets in serious trouble with the SEC for falsely claiming “funding secured” to take Tesla private at $420/share, and then getting sued and fined to the tune of $40M; or like someone who claims the mythical $35K Model 3 has finally become available, removes it from the Tesla site a little later, waits a few beats and then claims it actually is available but you have to order by phone or in person, followed by a price increase a couple of weeks later.

Over the years, these zigzags, the lofty promises and changing stories have become a Musk trademark. In the past, I’ve wondered when and how Tesla’s autocratic founder would “exaggerate too much” and cause shareowners to give the CEO, who owns about 20% of the company, more time with his family and SpaceX.

For a brief moment, I wonder if the surreal “1 million robo-taxis by 2020” is going to be the turning point. But, no. Instead of calling for a psychiatric intervention, most observers just shrug off Musk’s grandiose talk as clever publicity. We’ve seen his lofty pronouncements before, perhaps not this grand, he’s outdoing himself this time, but we’ve been immunized.

AI expert Kai-Fu Lee of Apple, Silicon Graphics, Microsoft, and Google fame used the best antidote for such folly, Twitter humor:

“If there are a million Tesla robo-taxis functioning on the road in 2020, I will eat them.”
In Musk’s “different” mind, an overnight Over The Air software update transforms a million Tesla cars out in the field into Full Self Drive (FSD) vehicles by the end of next year. But wait, there’s more: FSD will upend the math of automotive depreciation, usually the largest financial drain when owning a car. Electrek, a site dedicated to electric vehicles, reproduces a Musk tweet in which he claims a million mile life for a Tesla:

On that basis, Musk explains how Tesla owners will make money [as always, edits and emphasis mine]:

“The average Tesla car is currently parked for 22 hours per day. Starting next year, owners will be able to flip a switch inside the Tesla app, and send out their car to pick up and drop off passengers autonomously, earning an estimated 65 cents per mile in fares. […] owners might be able to earn $30,000 in gross revenue from their cars per year, or more than $300,000 in revenue over the 11-year lifespan of their car. With a basic version of the Model 3 costing $38,000 after incentives, self-driving Tesla robotaxis could become a profitable side business for owners…”
…and…

“The fundamental message that consumers should be taking today is that it is financially insane to buy anything other than a Tesla, […] it will be like owning a horse in three years. I mean, fine if you want to own a horse. But you should go into it with that expectation.”
This, Musk says, will transform Tesla into a $500 billion company participating in a $3 trillion autonomous-mobility-as-a-service market. Right around the corner.

Regrettably, Musk’s self-indulgence — his PR as performance art — has cauterized our nerve endings, leading to a jaded look at the more substantial technical parts of the Autonomy Day presentation (full video here, slides here, a helpful CleanTechnica technical commentary here). Indeed, some of the tasty technical morsels must be consumed with caution, especially when it comes to the processing power of Tesla’s autonomous driving computer, or the claim that the company’s use of video cameras is vastly superior to the lidars (3D laser scanners) used by everyone else, Waymo (part of the Alphabet/Google empire) in particular.

But, if we make a patient effort to see through the PR excesses, we see an interesting image come into focus, a picture of Tesla winning the war with its software weapons and its vertical integration.

[snip]

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