Just-in-time auto industry news and analysis
Google’s self-driving car company Waymo is retiring its iconic “Firefly” self-driving vehicles from testing fleets after three years in service. The Firefly, which were widely known as “the koala cars,” are being replaced by Waymo’s expanding fleet of Chrysler Pacifica plug-in hybrid autonomous minivans. This transition comes as Waymo moves toward commercial availability, including an “early rider program” in Phoenix, Arizona.
Tesla’s high-flying image, which had been moving from strength to strength since early 2013, hit its biggest speed bump last year when its Autopilot semi-autonomous/Advanced Driver Assist System (ADAS) came under scrutiny in the wake of Joshua Brown’s death. Suddenly Tesla’s pioneering Autopilot system went from being one of the company’s key strengths to being a serious liability that raised troubling questions about the company’s safety culture. Tesla CEO Elon Musk tried to swat away these concerns with what proved to be a set of highly misleading statistics about Autopilot safety, but the issue was not laid to rest until NHTSA closed its investigation with a report that seemed to exonerate Autopilot as a safety risk. With a single sentence, NHTSA shut down the most dangerous PR problem in Tesla’s history:
The data show that the Tesla vehicles crash rate dropped by almost 40 percent after Autosteer installation.
Because NHTSA is the federal authority on automotive safety, with unparalleled resources to assess and investigate safety risks, this single sentence effectively shut down public concerns about Autopilot’s safety. In a terse statement on its company blog, Tesla noted
we appreciate the thoroughness of NHTSA’s report and its conclusion
But how thorough was NHTSA’s investigation, and how accurate was its conclusion? As it turns out, the questions around Autopilot’s safety may not be as settled as Tesla and NHTSA would have you believe.
They waited for reservations… will they also wait for service? (image courtesy Investors Business Daily)
Much of the critical coverage of Tesla Motors, both here at Daily Kanban and elsewhere, has focused on issues that Tesla is able to get away with as a small-volume manufacturer serving an affluent, early-adopter market segment. From manufacturing bottlenecks to quality control problems, from inconsistent, hype-happy communication to poor service, Tesla has been able to weather a storm of problems because its customers and fans are so patient with and passionate about the company. But as Tesla moves from expensive, low-volume cars to the mass market Model 3 these problems are taking on a new significance. In part this is because higher volumes increase the likelihood of quality and service problems, and in part it is because mass market customers who depend on a single car for their daily routine are more demanding than luxury car buyers who can always take the Lexus to work if their Tesla is broken.
Given Tesla’s pattern of releasing cars with insufficient testing as well as its chronic quality problems, it’s safe to assume that the Model 3 will face its fair share of issues. Thus, investing in service infrastructure that will allow Tesla to promptly and affordably repair and upgrade high volumes of Model 3 is extremely important. As Bertel has written about at Forbes, Tesla is behind the curve on those investments and it will cost billions to catch them up. Just yesterday a piece by former Tesla employee Evan Niu dramatically illustrated just how far Tesla has to go to improve its service time, which has dragged on for 8 long months in Niu’s case. Now an exclusive study of about 800 Tesla Model 3 reservation holders, EV owners and luxury brand car owners conducted last year on behalf of a major automaker and provided to Daily Kanban by an industry source, reveals why Tesla’s quality and service woes are so critical to the success or failure of the Model 3.
On October 20th of last year Tesla Motors published an official blog post announcing an important development:
“as of today, all Tesla vehicles produced in our factory – including Model 3 – will have the hardware needed for full self-driving capability at a safety level substantially greater than that of a human driver.”
Tesla backed up this bold claim with a slick video, set to The Rolling Stones’ “Paint It Black,” which depicted one of the company’s Model X SUVs driving itself from a home in the Bay Area to the company’s headquarters near the Stanford University campus, apparently with no driver input. In a tweet linking to the video, Tesla’s CEO Elon Musk described this demonstration in no uncertain terms:
“Tesla drives itself (no human input at all) thru urban streets to highway to streets, then finds a parking spot”
After months of negative news about Tesla’s Autopilot in the wake of a deadly crash that the system had failed to prevent, the video prompted a return to the fawning, uncritical media coverage that characterized the initial launch of Autopilot. And by advertising a new sensor suite that made all existing Teslas obsolete, the company was able to bolster demand for its cars even as it discontinued the discounts that had driven sales in the third quarter. Like so many of Tesla’s publicity stunts, the video was a masterpiece of viral marketing that drove the company’s image to new heights… but like so many of Tesla’s publicity stunts it also turns out to have been extremely misleading.
Since 2009, the California Alternative Energy And Advanced Transportation Financing Authority (CAEATFA) has handed out more than $100 million in sales tax exemption (STE) tax relief to Tesla Motors, the main beneficiary of the state government program. Tesla’s latest application, which requested about $100 million in STE on the purchase of more than a billion dollars worth of equipment that the automaker will use to develop and build its Model 3 sedan [previous coverage here], was by far the biggest application in the program’s history and comes as the program faces record demand for tax relief. As a result of this high demand and Tesla’s historical domination of the program, CAEATFA approved just 48% of Tesla’s massive Model 3 request at its December 13 meeting, leaving more than half of its latest request unfunded.
Excerpt from Katz’s counter claim
The always-exciting tale of Tesla Motors took an especially interesting turn back in September, when Forbes reported that the electric automaker was suing a certain Todd Katz for allegedly impersonating Tesla CEO Elon Musk in an email sent to CFO Jason Wheeler. According to Tesla’s lawsuit, Katz sent an email from “elontesla@yahoo.com” to Wheeler on August 3rd, in which he impersonated Musk and sought “material, non-public” and “trade secret” information on behalf of his then-employer, the energy sector services company Quest Integrity, and its oil industry clients. Now Katz is firing back with a counter-suit alleging that Tesla hacked his Twitter account. Lawyers for Katz and Tesla have failed to settle the matter, and the first hearing for the case has been set for January 12th. Most exciting of all, Katz’s court filings suggest Tesla may have hacked you too.
Today I appeared on Bloomberg television to discuss Tesla’s latest earnings, as I have after the electric car maker’s last few quarterly reports, but this time things were somewhat different. Minutes before we went live, the show’s host Emily Chang told me that she would be asking me about a correction that Tesla had requested to my most recent Bloomberg View post about the new Autopilot 2.0 hardware suite announcement. My initial draft had said that “several” people had died in Teslas with Autopilot enabled, and at the request of a Tesla representative my editors and I agreed to clarify that only two deaths were tied to the controversial driver assist system. I am always happy to make factual corrections to my writing, but because I had limited time to explain the complex circumstances around this particular issue I thought I would write a post laying out the particulars of this case.
Sketchy…
Documents filed by Tesla with the California Alternative Energy and Advanced Transportation Financing Authority and obtained exclusively by Daily Kanban have provided unique perspective on the electric automaker’s ramp-up to production of the Model 3. But there’s more to the story than the production side: Tesla’s equipment purchases are split between production equipment and tooling for the development and prototyping of Model 3, new versions of the Gen 2 vehicles and possibly even other vehicles hinted at in Tesla’s Master Plan Part Deux. This helps explain why the production volume increase from Tesla’s $1.2b investment in Model 3 is so modest, but what does it say about the state of the Model 3’s development?
