No. 919
October 18, 2017

Follow Autoextremist





Editors' Note: If you have a comment, please include your name or initials (AND YOUR HOMETOWN TOO, PLEASE). We do not print email addresses. If you want to read previous issues, click on "Next Entry" on the bottom of each section. Thank you.



The Air Being Sold Smells Really Bad.

I cannot agree more with today's Rant regarding St. Elon and the noxious cloud of bullshit that surrounds today's “connected car” pronouncements. Every industry exists to serve a specific purpose: “Silicon Valley” makes technology, including those that ‘connect’ us to the world. “Detroit” makes things that deliver us from Point A to Point B. Each industry has shown great creativity and innovation as well as a singular focus on delivering what their respective customers want – sometimes before customers know what they want.

Today we're seeing the early efforts to blur the lines between industries, as Silicon Valley delves into the automaking business and Detroit attempts to do ‘connectivity’ and make vehicles that are part of the Internet of Things (IoT.) This will not end well. Why? A casual glance at each industry centers makes it clear.

“Silicon Valley” exists to create devices and technology that locate and sort information and create links between data points which enable users to connect with people, get answers to questions, locate information, conduct personal business and make informed purchase decisions. “Detroit” makes vehicles to convey people and stuff from one place to another. Period.

We've already seen what happens when these worlds collide: Distracted drivers. People engaging in activities that are totally incompatible. And as this movement gains traction it's easy to see where it will lead: People who should be paying attention to the serious act of driving their vehicles inundated by an endless stream of distractions informing them of where to get the best price on an unlimited range of things. Witness what happens if you search for something on Google. For the next 6 months every time you open a browser window you'll see ads for the thing you searched for. Search for “Strontium 90” (a deadly and highly radioactive substance) and I guarantee you'll see banner ads that say “Get the best price on Strontium 90 here.” Most Silicon Valley companies are chasing one thing: Revenue from clicks and incremental payments for purchases. They sell your information by the terabyte – every day. Imagine that business model invading the cabin of you car. NO THANKS!

Bringing IoT into the drivers seat is a recipe for unparalleled carnage on the roads, right? So the solution everyone is clamoring for is autonomous vehicles. Right. 15 minutes driving around Michigan, with its Mad Max road conditions shows the folly of such thinking. Our national infrastructure – especially the roads – are in no condition to accommodate autonomous vehicles. Potholes, poor maintenance and things like Winter weather and storms just add to the mess.

Here's my solution (based on years working in Product Planning for a major automaker): Let Silicon Valley be Silicon Valley. Let them make their iPhones and Android devices with services and features people want. And let Detroit be Detroit, making cars, trucks and SUVs people want with features that delight. Find a way to integrate these devices into the vehicle display systems (e.g. Apple CarPlay) and leave it at that. As for autonomous vehicles? I think it'll be great – imagine being able to relax during the morning commute – but don't get too far away from the driver having to be engaged in the process. And for God's sake keep the stream of ads from invading the sacred space of the drivers seat! (I remember a meeting about 10 years ago where streaming ads and sales promotions on the vehicle's screen was demonstrated. One guy said he'd carve the screen out of the dashboard with a chain saw if that ever happened in his car. Amen to that!)

This headlong rush is not only short-sighted; it's also very dangerous. We need to slow down and be continually reminded where each industry's purpose lies.


Pile driving.

Once again you hit the nail on the head. And the comments are spot on. I'm glad there are people out there that see this current autonomous/connected trend for the shit show that it is. Maybe one day the powers that be will wake up and listen. I'm sure I'll read that future headline on

Plymouth, Michigan


Connect me not.

You are absolutely right about the delusions surrounding connected vehicles, data, and the future of the automobile and industry. The mobile device, aka cell phone, is the king of this medium. It goes everywhere its owner goes, virtually 24/7/365; the automobile does not. Plus, the device's owner engages that device to do countless things providing more insight into that person than the automobile ever could.

I don’t know why, but the Detroit auto execs seem to not want to be in the auto business. They are the ones that seem to be wanting for passion for the industry, and confidence in its relevance and future. GM in particular has a long history of investing in non-automotive stuff. Can you point to a major success?

My sense is that this is all more PR BS to alleviate pressure on their, until just recently, pathetically performing stock prices. GM is famous for creating buzz about stuff that never materializes, especially when the business of selling cars isn’t going as well as hoped. How many more decades is the Cadillac turnaround going to take? Heck, they have only been talking about it since the Reagan years.

Stay Extreme.

Detroit, Michigan

The Stupid 500.

GREAT article on The Stupid 500. I believe USA Today reporter Mike Hembree adds a needed observation. To quote: "The final stage of the Alabama 500 looked more like an amateur demolition derby than one of the stops along the road to stock car racing's biggest championship." How sad - RIP NASCAR.

Cleveland, Ohio


Some people just never learn from past mistakes.

You know, the entire automotive industry is one that is best described as “all hat, no cattle”. Enron Musk isn't the only one living in the delusional “future”, its commonplace for people that are obviously out of touch with reality, you know, today's typical “CEO”, to make grandeur pronouncements with no results. I think the problem is Human Resources has tainted the gene pool and although the people involved today are great at making changes to something already in existence, they are lost with fulfilling these great pronouncements. There are NO fucking shortcuts, people. There is NO “free energy”, No “zero emissions”, NO “self driving cars”. However, if you are not already working on bringing to production some type of vehicle that appeals to the mass market, you wont be in business much longer. If you fail to pay heed to basic business principles, you will not make it. If you cannot produce a product that can sell 100,000 units the first year of production, you are toast. If you bring multiple “flops” at a couple of Billion dollars each to full production, you will not be in business much longer. This is the state of the “big 3” today - GM cannot create 20 new models of gas powered vehicles that posses great styling, great dependability and great fuel economy today. There is NO chance of them creating 20 models of vehicles powered by electricity in our lifetimes. Ford produces vehicle models that fail to live up to their first quarter production forecasts as a matter of habit. Now dependent on suppliers for “technology”, it also has a habit of picking the wrong suppliers. The problem is, those same suppliers are working for everyone else. Cheapness hurts. FCA is producing the same crap it was in 2004. That pretty much sums it up for them although they have added a number of high liability, high performance vehicles, and high liability electronics to the mix. They have also added multiple new models that are just like the ones they “replaced” that don't seem to sell and suffer a lot of quality problems. Some people just never learn from past mistakes. The best thing that they have going for them is Honda and Toyota copying them, for whatever reason. As for Musk and his followers, if you don't sell 100,000 of a model the first year of production, you will not make it. That's why corporations have people known as “product planners” and not one “genius” predicting the future...

Detroit, Michigan

The End is approaching.

As I was driving to work this Monday morning I was praying you’d already have the new column up, and that you’d say EXACTLY what you said. THANK YOU.

I won’t completely ridicule someone whose company figured out how to launch rockets and land them standing up on a tiny barge bobbing in the sea. It’s astounding and I can’t get enough of watching it. But that’s pretty much a cost-is-no-object project, building a device that is operated by people who truly are the best and the brightest and who study and train for years to do it.

I know I’m preaching to the converted when I say an automobile has to be reliable in nearly every type of weather and road condition found on Earth, and has to be safely operable by complete and total morons who haven’t the faintest idea how it works and certainly can’t be bothered learning. And it has to be built and sold profitably at prices we mere mortals can afford.

The car business in which you and I have spent our lives constructs the most amazing mass produced product in the history of the world. So sad that St. Elon now finds out it is, to quote another charlatan, “tougher than he thought it would be.” If Tesla is hand-welding customer cars, and terminating 500 people at a time for bad performance appraisals, please tell me the end must be approaching. Maybe the troglodytes in Detroit aren’t so stupid after all, eh?

And of course your criticism of the rest of us in the industry – thinking we can offer customers anything better than the $600 iPhone already in my pocket, and thinking that’s what customers even remotely want from us – is equally well founded. I want a beautiful, reliable car that drives so well that it makes my day better by giving me some enjoyment running from one commitment to another. If a car company has figured out how to make Apple CarPlay throw my phone screen to the screen in the car, it has given me all the connectivity I want from it, thanks very much.

Joe Folz
Milton, Georgia


What if they don't know Jack?

Richard Parry-Jones is supposed to have said “Today's cars are the most complex, sophisticated machines ever to be placed in the hands of inexpert operators.” Silicon Valley would be wise to make sure they understand that.

Jim Z.
Detroit, Michigan

You talkin' to me?

Troglodyte?!?! Hey, I resemble that remark!

Detroit, Michigan

Kudos, deserved.

The best ad for Chevrolet has got to be the Chevrolet Centennial truck commercial that came out last week that had clips of Chevrolet truck ads throughout the years. And I hope the centennial bowtie design goes on all Chevrolet models, not just the two trucks.

Cleveland, Ohio

Prototype this.

Way back when I was a pup in the old-fashioned auto industry, we used to make prototype vehicles by hand using parts that were essentially hand-made from temporary tooling. We used those vehicles for testing stuff. Stuff like durability, ride and handling development, crash performance, fit/finish studies, corrosion performance, and assembly procedures. There was never any thought that we might be able to sell some of the “slightly used” vehicles from the prototype fleet. We foolishly crushed all of them.

Now we find that Tesla is building cars partly by hand using “hand-made” components (we called them prototype parts) and then selling them to an eagerly awaiting customer base.

I wonder why we never thought that we could get away with selling some of those prototypes to the public? What a great way to knock down the cost of building those vehicles!

Wilmington, North Carolina

The Tesla show is coming to an end.

The smoke and mirrors side show that is Tesla is coming to an end. Anyone can be a niche automaker, and Tesla is finding out but quick how hard it is to be a volume player in the auto game. The bigger issue for me is the volume players are following Tesla's lead by going all-in on electric. Ford and GM announced big plan on electric last week. Where this leads is anyone's guess but I personally see this as a fools errand into a market no one gives a shit about.

Plymouth, Michigan


The Elon Show.

I still think the “Elon Show” has just been a very expensive marketing campaign for Tesla's superior (and it sounds like it really is- I don't really know) battery technology. I mean, if you think about it, if Elon had gone to any of the major automakers and said, “I have a new battery that will power your car a distance the same as a gas engine, just sign here,” the automakers would have politely declined and said there's no market, or laughed hysterically as they frog-marched him out of their office.

Elon has demonstrated, that at least right now, that there is at least reasonable market for these cars. And his battery technology is at least what he's been claiming.

All that is to say, I still think the end game for Tesla is that the car division will be sold to a larger automaker once cooler heads prevail. The Model 3 is going to demonstrate where Tesla is very weak - product support through lack of dealerships - and the average buyer of one of the mid-priced cars is not going to tolerate being a test mule or being put off by a service appointment six weeks from now. Tesla is going to say, “Geez, this building cars for the masses is a total pain in the ass! And we don't make any money (or lose more) on these cheaper cars,” and they'll sell out to focus on supplying batteries to the new-believers at the big car makers.

But who will buy the company though? Maybe an automaker that has a reputation recently soiled by building dirty engines that has refocused on electric technology. The same automaker that has been an also-ran in the U.S. who would like to build a greater presence. The same company that recently bought into Navistar to expand their non-existent diesel truck business here. Hmmmm…

Mill Creek, Washington


Ask the man who almost bought one.

Bravo on your assessment of Tesla and Elon Musk. I was one of the many who forked over a deposit for a model 3. Why? I like cars but not enough to pay for a Model S. I liked the design more so than the current line up of other EVs. I liked the price point. I liked that it was a refundable deposit. My wife has a long commute and even though our 2007 Camry Hybrid with 175k has no signs that it will die anytime soon this was an exciting thought for us to have an EV that was in my humble opinion a good looking car. (Not a fan of the Leaf, Bolt, or i3)

I have decided this week that I am going to be cancelling our reservation for the Model 3. Besides the missed production benchmarks, by the time I would most likely get my model 3 (if ever) all of the major auto manufacturers are on the quest to create more EV line-ups which will bring more selection. But what really makes me laugh is that I read and article that Elon reached out to the Governor of Puerto Rico to advise that he could rebuild Puerto Rico's electricity grid after the decimation during hurricane Maria. This just further justifies that he doesn't seem to be concerned about making money. Puerto Rico cannot even pay its bills and obligations. Who's going to pay for this Elon? You are so full of shit.

North of Cincinnati

Smoke and mirrors forever.

Musk has a long, long way to go. His money men will simply arrange for a secondary stock offering (there are few things Wall Street loves, and profits from, more). Sheeple who lost out on the IPO will throw their cash at this. Tesla has always been sustained by promise, never performance and people have accepted this. Too many people have forgotten the Dot com crash and the lessons they should have learned – actual earnings are the true measure of a company.

Vancouver, British Columbia, Canada


Might want to check.

Are we sure that the Ferrari FUV isn't intended to be sold worldwide by Fu-King Motors, ltd ?

Dave Guyette
(AE's Portland-based correspondent)
Portlandia, Oregon


Your basic Muskian nightmare.

 …and now this, from the Nobel Committee in Stockholm, after awarding this year's prize in Economics to Richard Thaler:

“Richard H. Thaler has incorporated psychologically realistic assumptions into analyses of economic decision-making. By exploring the consequences of limited rationality, social preferences, and lack of self-control, he has shown how these human traits systematically affect individual decisions as well as market outcomes”.

So human behavior, as irrational as it is, is driving market outcomes, e.g. Tesla?

Who knew?

I'm sure St. Elon will emerge unscathed, but not so his customers or investors. Ouch.

Let's add Tesla to the pantheon of Pipe Dreams, also including Tucker and Davis and Dale and Fisker and, and, and…

Decatur, Georgia


Pure Electric? How about no.

I like electric cars. I enjoyed my time in the Chevrolet Volt for the week I had it. But the simple fact is that electric cars will never, and I mean never replace cars with a gas engine. At least not in my lifetime. The grid cannot handle the power needs we have today - otherwise we wouldn't be having “flex alerts” every time it goes over 80. Apartment owners won't want the charging stations in their garages because it ties a particular parking space to a particular unit. Apartment dwellers don't want to pay the $1,000,000.00 in renters insurance a landlord will (and does) require. Not to mention that a lot of older L.A. apartments simply don't have a parking space. What do they do, get a really long extension cord? Boston? New York? Aren't they places where parking is, uh hard to find? Sorry, not seeing it. Hydrogen, maybe, but pure electric will always only serve the wealthy or suburbanites.

Tom Pease
(AE's L.A.-based correspondent)
Beverly Hills, California

From the “Sometimes The Comedy Just Writes Itself” File.

Headline on an F1 story at “Ferrari paid price for ignoring quality control — Marchionne.” Well, if anyone would know about ignoring quality control...

Green Bay, Wisconsin


From the "Man Of Few Words" File.

A Ferrari SUV?

FU indeed, Sergio.



A card-carrying Wall Street Apologist weighs-in.

I enjoy Peter's columns every week, and agree with him on Tesla. However, his ignorant attacks on “the greed merchants of Wall Street” betray his stupidity regarding finance. This may come as news to Peter but like the auto industry, the Street is not a homogeneous place where everyone has the same opinion. On top of that, investors, including thousands of individuals around the world, are the ones who have bid up TSLA over the past few years. They are allowed to invest in any way they want, regardless of what the Street says. If Peter did a little research, and spent some time outside his comfort zone of the automobile industry and the Detroit metropolitan area, he would know that a significant number of Wall Street players, especially hedge funds, have been short TSLA and have taken big hits on those positions. Peter's simplistic arguments about Wall Street do not stand up to scrutiny. Peter's insights on the automobile industry are extremely useful. It would be nice if he tried to apply the same level of analysis to other parts of the economy, and not just make uninformed pronouncements that add nothing real to the discussion.

Chris Thomas
New York, New York

Editor-in-Chief's Note: I love it when a card-carrying Wall Street Apologist weighs-in, and I love it too that this guy would deign to derisively tell me to "stay in my lane" because I don't know what I'm talking about. Really? Your defense of a corrosive body that regularly preys on average Joe and Jill investors for their own edification is specious, at best. This just in: "Individual investors around the world" wouldn't have blown up Tesla stock if it weren't for the parasitic trolls on Wall Street breathlessly touting Tesla as the "magic bullet" that would transform and revolutionize the "moribund" domestic auto industry. And to say anything else is just a flat-out bold-faced lie. The denizens of Wall Street have dismissed the industrial fabric of this nation - aka the auto industry - for decades because it just wasn't sexy enough or profitable enough for their tastes. As if providing mass transportation for the country was some sort of sin. And post the "anything-to-do-with-Silicon Valley-must-be-genius" love-fest that Wall Street willingly participated in, anything that was as far removed from Detroit must be brilliant, right? Especially a car from Elon Musk, the Patron Saint of Smoke and Mirrors. Well guess what? After beating the drum for years that Elon Musk was The Answer for all mankind, now you're suggesting that - wait a minute - maybe he isn't? And that there were plenty of Wall Streeters who sounded the alarm about Tesla and actually got burned in the process themselves? Really? Where were they, exactly? And what sort of Dome of Delusion are you living in? As for my "uninformed pronouncements," you are obviously mistaking me for someone else. The denizens of Wall Street are guilty as charged for fueling Elon Musk's rise. I'm glad my column pissed-off the resident homers and apologists who actually think they provide an unbiased view of America, when all they consistently care about is "buy on the rumor, sell on the news." And I'm glad the High-Octane Truth hurts. I stand by every word. -PMD

You're dead wrong about Wall Street.

Peter, your rant about Tesla is wrong about Wall Street's motivations in respect to the US based auto industry, there is no hatred of the motor trades. Wall Street does not reward the Detroit automakers, in particular, because the industry has been for many decades a consumer of capital that produces low returns on that capital. There are many reasons why this is the case, and The Wall Street Journal's Holman Jenkins has for years forcefully argued that US regulatory efforts, most especially the ridiculous CAFE standards and California's zero emissions pipe dreams, force the domestic industry to limit the large trucks and cars they can most profitably produce, while having to invest heavily in unprofitable small cars and new tech including electric vehicles. He argues that wrongheaded regulation is an unsustainable overhead on an already crippled industry.
Wall Street shows its love when investors anticipate, rightly or wrongly, future returns on capital. It shows its disdain when value destruction is demonstrated decade after decade.

Dan D.
State College, Pennsylvania

Editor-in-Chief's Note: I stand by every word, Part II. -PMD


CAFE isn't the enemy.

Great rant Peter and dead on. The Emperor has no clothes.

I take issue from my fellow Texan's comment (Dan): “There are many reasons why this is the case, and The Wall Street Journal's Holman Jenkins has for years forcefully argued that US regulatory efforts, most especially the ridiculous CAFE standards and California's zero emissions pipe dreams, force the domestic industry to limit the large trucks and cars they can most profitably produce, while having to invest heavily in unprofitable small cars and new tech including electric vehicles.”

I could not disagree more. CAFE and air regs have been our savior. Just watch any city-based movie from the late 60's. Choice is certainly nice – but a communal effort for improvement is always welcomed.

Dave M.
Houston, Texas


It's still a good system when all is said and done.

Wow, glad I came back to check for any new reader mail! Gotta make some popcorn for this! I'm a Finance MBA but never worked on Wall Street. I agree with Peter; it's hard to explain why people bid up companies like Musk's (or Amazon, for that matter ;-)

If you don't have a credible plan for eventually producing cash flows and earnings then why would people bid up the stock? The only answer I can think of is the ‘greater fool’ theory, that someone even more reckless will come along and buy it from you at a still-higher price. Obviously, that happens and I guess we call it speculation… as long as it works, it's great until it stops working, and then it sucks. Ideally, the people who play this game, like those who put on pads and walk out onto a football field, understand the risks and are using their own capital (as opposed to say, taxpayer-backed bank deposits).

But Peter's point is correct that this is a fundamentally unimpressive aspect of capitalism and markets. There's plenty of wealth to be made as an investor rather than a speculator and that's why I would never buy Tesla for my own account. But I would no more deny people the opportunity to speculate if that's what they want to do, than to own an SUV or an electric car or any of the kaleidoscope of other choices our amazing system offers.

Tom W.
Austin, Texas


More on Tesla.

Peter, I do appreciate the emails you posted this week. I enjoyed the arguments over the financial merits of Tesla, and like many I too, find the company, and its owner, Elon Musk, to be overrated.

But I have to take issue with one of your reader's comment on Elon's offer to rebuild the electrical grid of Puerto Rico. Of course he won't make money on the venture- it's called charity. Given how great the need of our fellow citizens, I would applaud anyone's effort to help.

I would expect that if he does help out, the costs would come from his own deep pockets. I would also expect that the success or failure of Tesla motors would be decided independently of this venture. I would not put it past him to use the effort in some future PR campaign, but again, we consumers can thank him for his service, and simultaneously decline to purchase his products.

Personally, I do think Tesla's stock will decline, but I've yet to make money on that. Better to watch is his product's market share, which will show how he fares relative to competition. I thank you for your reporting on that dynamic on your site, and I look forward to hearing the latest word in the future.

Dave Guyette, Part II 

Portlandia, Oregon 


Connected distractions.

Your comments about “connectivity” in the automobile were spot on--as usual. However I believe the problem being faced by today's drivers goes beyond the nonsense of needing to be “connected” at every moment of our lives.
The trend toward touch screen displays for all of the normal driver connections with the car itself represents a major distraction for the driver. Let's say I want to turn on my heated seat. On my ancient and venerable 1999 SUV, I only need to feel around for the switch for the heated seat and turn it on--either high or low. On my new an modern 2017 minivan, I must first touch the screen to illuminate it. (I turn it off whenever possible because I don't like the glare in my eyes, especially at night.) Then, after bringing it back to life, I must find the proper icon to touch to invoke the environmental controls. Then I must find and touch the icon representing heated seats. Then I must decide if I want high or low heat and poke that icon. In the process of turning on my heated seat, I've been required to take my eyes off the road 3 times to look at the screen displays. This is not a good thing and it can be as distracting as a cell phone call from a hand-held cell phone.

AAA just published the results of a study which indicate that the graphic displays necessary for drivers to interact with their vehicle controls represent a major distraction from the driving task. I wonder how long it will be before the manufacturers get off this “connectivity” and display bandwagon and go back to controls which don't require driver inattention to the driving task?

In pilot training, you are reminded again and again that your first task is to fly the airplane and forget all the other inputs until you are able to divert your attention without losing control. Where does that leave us with the automobile where we really need to “drive the car” instead of looking at the display screen?

Wilmington, North Carolina


All electric? Not so fast.

As a degreed electrical engineer with 40+ years experience in control and power systems, I still cannot understand how all electric cars can ever hope to be a viable solution for general transportation. Hybrid drive systems I understand and think these have great potential IF the problems of battery weight, battery capacity, and initial cost can be significantly addressed. All electric vehicles (AEV) I feel will never work due to the following:

1) You arrive home from work with your AEV badly needing a recharge. Just as you plug it into the charger, you get a call that some emergency occurred to a family member and you need to drive 40 minutes to a hospital right now. How are you going to make this happen? Do not pass GO or Collect $200. 2) There is road construction and/or a vehicle accident that resulted in hours sitting in traffic plus a detour of many additional miles from your normal commute. It is dark, raining, cold, or all of the above and your AEV dies before you reach home. Does AAA bring you two gallons of electrons to pour into the battery? Sorry Charlie. 3) You are in the HOV lane driving 19 MPH with the “RECHARGE NOW” idiot light flashing on the dash. I am sure all of the tired and pissed-off commuters behind you will be totally sympathetic to your AEV social statement as they drive by you on the shoulder. This totally sucks. 4) How much will Joe’s Towing charge you to pick up and deliver your dead AEV to your house with his roll-back. And now you want Joe to push your AEV into the garage so the charging cord will reach! Really! Ouch! 5) You have a real important meeting at work today with your boss and an equally important client. As you walk into the garage in the morning, you see the charging cord lying on the floor in front of the AEV. Bummer!

Oh, I could go on but you get the drift.

Jeff B.
Mercer, Pennsylvania