Tesla Motors CEO Elon Musk’s recent release of “alpha” designs for a “Hyperloop” transportation system made a huge splash in media and technology circles. Prepared with the help of engineers from Tesla and SpaceX, Hyperloop imagines rapid and efficient transit in the form of pods flying through a tube between Los Angeles and the San Francisco.
This bold vision easily created the kind of public splash that PR bosses at mainstream automakers can only dream of. At the same time, it highlighted Tesla’s dependence on the “visionary” exploits of its mercurial and overstretched CEO. This dependence is proving to be a brilliant tactic in the short term, but it has troubling implications on the firm’s long-term strategy.
In an excerpt from his new book, former Tesla PR director David Vespremi describes how then-CEO Martin Eberhard’s rallied the troops by articulating Tesla’s higher mission: to replace gas-powered cars with electric cars. Showing beleaguered executives a picture of a two year-old girl, Eberhard said
“Katy has never seen a phone handset attached by a corded wire… If we are successful, what we are building today – something that is so challenging for us to build because we are literally inventing it as we go –will be as familiar to Katy as a cellular phone. And if we’re really successful, a gasoline powered car will be as common place for Katy as an adult, as a corded telephone handset is to us today.”
With several mass-market plug-in vehicles generating little demand after years on the market, much has changed since the days when Eberhard led Tesla with a vision of transformative optimism. Under Elon Musk, Tesla has become even more closely associated with the belief that technology as a transformative historical force… but Eberhard’s utopian spin is rapidly being replaced with a focus on developing a new form of luxury brand.
The orthodoxy among Tesla believers has not fundamentally changed as EVs enter the trough of disillusionment: EVs are still destined to replace gas cars, the higher-than expected costs just makes them more exclusive. The fusion of technological determinism with exclusivity and Musk’s larger-than-life personality underpins Tesla’s potent luxury appeal which now transcends the need for an actual plan to make EVs viable for the mass market.
Hyperloop perfectly illustrates this transition in terms of Tesla’s vision for mid-distance travel. After years wasted on a Supercharger network, and a half-hearted semi-endorsement of limited battery swap infrastructure, Musk seems to have come to an obvious conclusion: luxury brand customers don’t drive themselves long distances. Rather than investing in a battery-swap infrastructure that could enable transformative adoption levels, Musk has realized that his actual customers would rather imagine a product that improves upon first class air travel.
Enter Hyperloop, a gee-wiz concept that cost little more than Musk’s credibility with hard-nosed independent engineers. Cementing Musk’s image as a visionary dreamer certainly helped with the well-moneyed tech-sector types who make up the core of his business, but it’s also translated into a sag in the value of Tesla’s highly-traded stock. And investor concerns are well-placed: Tesla would have received the same PR benefits had Musk kept his project independent, without incurring the risks of having its brand associated with such a half-baked proposal.
More to the point, Tesla faces too many real-world obstacles to have its CEO distracted by “halo train concepts,” when he’s not running his other highly-complex companies. Without progress on a brutal state-by-state fight with dealers, its in-house retail model is doomed. Manufacturing and design issues will not be tolerated by customers forever.
Perhaps most troubling of all, the UAW has set up an organizing committee at Tesla’s Freemont, CA plant and a propaganda campaign to falsely smear Elon Musk as a union-busting tyrant is underway. That the union, or its supporters, are tying Toyota’s investment in Tesla to the utterly false narrative that Toyota (rather than bankrupt and bailed-out GM) was responsible for the shutdown of the NUMMI joint venture, illustrates perfectly the kind of “partner” that has come knocking. This, not Hyperloop, should be keeping Musk up at night.
Though Musk and his wild plans continue to provide a brand halo unique in the automotive space, Tesla faces enough serious and unsexy issues to require a steady, focused hand on the helm. Or at the very least, some sign that Tesla’s headstrong leader can find innovative solutions to the prosaic but nonetheless very real problems that vex every auto industry executive.
