By Peter M. DeLorenzo
Detroit. People who visit this website are well aware of the fact that I’m not a fan of “St. Elon” Musk. I’m not closed-mindedly dismissive of him, however. Far from it, in fact. On the one hand he is a true visionary, and the innovative American company that he leads and the success he has achieved are to be applauded. And though some of his mental meanderings are well, just slightly this side of crazy, others are truly eye-poppingly brilliant as well.
But it’s a different story when it comes to building automobiles. Yes, Musk pushed the idea of a not-so-affordable, fully-electric luxury automobile to the forefront of the automobile industry at a time when automobile companies had been dragging their feet. And yes, he did it – albeit with little fanfare – with the help of auto industry veterans in this region, because he couldn’t get his cars built without the experience of people who had been doing it day-in, day-out for years.
And, by virtue of the most blindly insatiable cult of personality this business has ever seen, Musk willed Tesla to becoming one of the most sought-after brands in this business. But, it was obvious that there were gaping holes in the Musk Miracle when it came to Tesla.
When Tesla took over the former NUMMI Toyota-GM plant, he insisted that he was going to take the moribund automobile industry to school and show it how things should be done. Remember, this was one of the most influential plants in automotive history, an exercise in just-in-time manufacturing that was simply remarkable in its efficiency. In its heyday, the NUMMI plant churned out 430,000 vehicles in 2006, with 4,700 employees.
Tesla hasn’t fared so well. Under Musk’s direction, the former NUMMI plant has been able to produce just under 100,000 cars annually in the former NUMMI plant, with 10,000 employees. The bloated workforce was the direct result of Musk & Co. being unable to build its cars with even a modicum of efficiency. But that wasn’t the only problem. The poor efficiency of the plant was compounded by the piss-poor quality of the vehicles delivered. Tesla models were saddled with some of the most egregious flaws the business has ever seen, but yet to his acolytes, “St. Elon” still could do no wrong, and the quality miscues were dismissed as “minor annoyances” when in fact many of them were fundamental assembly flaws that required major – and lengthy - repairs.
But that was really only the beginning of Tesla’s issues. When Musk predicted that the “affordable” Tesla Model 3 would tip the auto industry on its ear two years ago, and that Tesla would be churning out 500,000 cars annually by 2017, the lemming consumers signed up in droves for the “privilege” of getting on the build list for the Model 3. And then they waited. And waited. And waited.
At the time of the Model 3 announcement, I predicted that the vehicle would be Musk’s “Waterloo” and that he couldn’t deliver the vehicle on time or couldn’t come close to producing that many vehicles in a year. But even though I predicted that this car would be a disaster, even I was shocked at the depth and breadth of the futility Musk & Co. displayed while trying to bring the Model 3 to fruition.
The ugly reality is that Tesla simply couldn’t build the cars with any sort of production pace or even a shred of quality. And not only that, the lowball price that Musk announced at its overhyped introduction - $35,000 – instantly became $20,000 more, if you were lucky to even get one three years later.
But again, these are just some of the nasty realities of Tesla that his True Believers refused to acknowledge. The others? The automotive side of Tesla has never made a dime. Not even close, in fact. But despite that, some notable dupes on Wall Street kept running the stock up to ridiculous heights, and remember, this was for a company that never showed even an ounce of profitability and wasn’t forecast to deliver any in the foreseeable future either. Yet the stock frenzy continued, with the Tesla share price rising to unheard of heights for a company that again, wasn’t profitable in the least.
This understandably drove domestic automobile executives bat-shit crazy. They knew full well that if they showed up on an analyst call and announced that they were doing darn well, thanks for asking, but that their companies weren’t going to see any profitability anytime soon, uh, are you kidding me? The Wall Street-types would be camped outside of the Detroit-based car company headquarters with lit torches and raised pitchforks, demanding heads. And the mainstream media, on cue, would follow suit decrying “the inept” domestic auto manufacturers.
Yet Elon Musk was allowed to continue one of the biggest scams perpetrated in American corporate history with no profits, myriad production snafus, endless quality and people problems, a new model that was a complete and utter disaster, and on, and on, and on.
But the other dimension of this story that came to light is the exposed fragility of Musk himself. In a now-infamous interview in the New York Times ten days ago, Musk, when asked about his current state, had this to say: “This past year has been the most difficult and painful year of my career,” he said. “It was excruciating.”
This interview occurred not long after Musk had hastily erected a massive tent outside of the Tesla manufacturing facility to accelerate the build of Model 3s. (He’s even sleeping in the factory to focus on getting the Model 3 models built.) And then there was his infamous Twitter missive insisting he had a buyer for the company, funding secured. It was a mark of blatant desperation, a diversionary tactic that exposed Musk for who he truly is: someone who is quick to throw out ideas – rational or not – but who, when the chips are down is incapable of following up on them.
In the end, making brilliant pronouncements was easy for Musk, but delivering a quality, mainstream automobile was another thing altogether, and it would prove to be his undoing. In other words, a full-blown Muskian Nightmare.
Musk, it turns out, for all his bluster and swinging dick-ism, is no different from any other egomaniacal corporate leader who has come before him. I know this pains his blind loyalists who refuse to accept the fact that St. Elon is merely mortal, but so be it.
Yes, Musk is brilliant and visionary, but he’s burdened by the same thing that has vexed countless leaders who have come before him: an incredible level of unfettered hubris that is relentlessly untethered to accountability. No one tells Musk “no” and gets away with it, because after all, when he’s all-knowing and all-seeing, why ask why?
I predict that Musk will sell his automobile operations because he has painted himself into a corner, and there’s no elegant way to get out of the hole he’s put himself – and his company – in. Yes, he did some notable things in his automotive venture, but it wasn’t enough to sustain an actual profitable business model. Oh yes, and he will probably go out while castigating the “moribund” domestic automobile industry, insisting that he showed the world how it’s done.
But in the end, for all his brilliance, Elon simply couldn’t get it done.
And that’s the High-Octane Truth for this week.