May you live in interesting times.
Regardless of the origins of that phrase, for those of us that cover the auto industry, it usually ends up being an apt description of our lives. Shortly before I began writing professionally about cars, another of the endless stream of startups that think they can become the next GM or Ford came into public awareness and things have never been quite the same. Regardless of the ultimate fate of Tesla, the company has had an impact and Ed Niedermeyer has spent the past several years researching and writing what is arguably the best take on the company to date.
Niedermeyer began his Tesla quest in 2008 when he took a gig with The Truth About Cars. At the time, Tesla was desperately trying to deliver its first product, the Roadster to customers. As with seemingly every project since the Roadster, Tesla has shown incredible flashes of brilliance that have consistently be tripped up by the hubris of early investor and later CEO, Elon Musk.
Unlike a biography of Musk published a couple of years ago, Ludicrous is not a hagiography of the man, nor does it especially even focus on him except to the degree that he has impacted the path of the company. Certainly, without Musk’s early and ongoing involvement, Tesla would almost certainly never have delivered a product or survived to this day in its current form. Musk personally put in most of the dollars that made the Roadster a reality. He has also been the chief pitchman for the brand throughout most of its history.
Conversely, he has been in many ways the company’s biggest problem. A key factor in Tesla’s survival as a going concern has been its ability to raise new capital to fund operations. To date, Tesla’s business has never been self-sustaining. However, the cult of personality that Musk has built around himself has enabled Tesla to go back to the equity and debt markets over and over again, raising some $19 billion since 2010. But why should a company that for a time had a higher market value than General Motors or Ford, need to raise so much cash in order to achieve such a small market share?
In Ludicrous, Niedermeyer chronicles the story of Tesla, looking at what the company has accomplished and where it has gone wrong. There’s nothing inherently wrong with reaching for the stars when developing new technology of products. That’s how great products are created. But if your goal is to transform the auto industry and the way people get around, the business itself should probably be as sustainable as the powertrain.
This requires a balance between dreaming big and focusing on the elements that make your product special. You need enough of the latter to convince customers this is the right path forward buy the cars and fund the business. But if you reach too far, you risk spreading yourself too thin on aspects of the product that aren’t ready for primetime and wasting precious resources. Prime examples are the doors on the Model X and the two-speed transmission on the Roadster.
Through its efforts over the past 16 years, Tesla has demonstrated to the world that there is a market for appealing electric vehicles that offer the attributes that consumers want beyond environmental friendliness. Niedermeyer tells us how the original team came to be and what went wrong, giving credit where it is due. But Ludicrous is also a cautionary tale for anyone starting a business. At its heart, the book features a warning about change for the sake of change.
Musk’s approach to most things is to start from scratch, ignoring the hard-won lessons of predecessors, especially in areas like manufacturing and customer service. There are also important lessons here for regulators that are considering incentives to promote specific technologies. Consider how those lessons might be used or abused, such as the extra EV credits granted for having battery swap capability.
Ludicrous is a fascinating read for anyone interested in how an automaker can grow from an idea and all of the ways it might potentially fail along the way. For everyone involved directly at Tesla or those of observing from outside the fence, the last decade has certainly been an interesting time. The book is available from most booksellers including Amazon in kindle and hardcover with an audiobook coming soon.
