Mr. Elon Musk enters the Shark Tank set and says:
Hi sharks, my name is Elon Musk. My company — well, you all know it, and some of you may own our cars too — is Tesla. I am here to raise 5 billion dollars for a 10% equity stake in my company. But if youcan’t spare 5 billion dollars, I am still interested in your free advice!
Let me introduce you to our newest model — Model 3. We made this model to be our most affordable electric car — starting at approx. $50K, and if you want the good stuff like autonomous driving, you are looking at approx. $60K or more. Still affordable, right? At least to you guys, this is peanuts!
Mr. Musk continues:
So, why I am on Shark Tank? Well, the traditional carmakers are catching up to us. We are not doing so well in manufacturing side. Most of our competitors are going to be out with their electric vehicles in 2020. And, I am having a hard time producing vehicles in Fremont, California — where the median home price is over 1M dollars — and also have some quality issues with the look and feel of the vehicles.
We are attracting first-time buyers of electric cars but having a hard time converting folks that drive high-end vehicles from other brands like BMW, Porshe, Lexus, Audi, etc. They seem not to like our look and feel — interior and exterior. This article’s author, who tried to buy a Tesla twice in last 5 years and decided not to, has the following comment about the new Model 3:
Model 3 feels like a Toyota Corolla as far as the interior or the exterior goes. It has a giant Android-ish (not an iPad-ish) tablet as the sole centerpiece and everything else pretty much feels cheap and unimaginative.
Mr. Musk proceeds:
Also, unlike the President, I appear not to be allowed to rant or vent on Twitter. So when I tweeted out of frustration as seen below, I was fined millions by the Securities and Exchange Commission (SEC) and Wall Street was pissed!
With a big sigh, Mr. Musk explains:
So, we are not doing so well. As you know, Wall Street tends to dislike tech innovators, or crazy ones that fall in the “Think Different” category. This is why perhaps Steve Jobs had such a wild ride on Wall Street. Seriously, Tesla needs to get its act together soon. Please advise.
Mr. Wonderful (Kevin O’Leary) raises his right hand and speaks:
Elon, you need to forget about being a car company and become acting like a tech company and license the sh*it out of your software and A.I. hardware.
Forget about making cars in the US — in the middle of the Silicon Valley in California. For God’s sake, let Germany, Japan, China and India make their cars that run on the Tesla OS with Tesla A.I. boards and sensors! Make a ton of money from licensing from the tech and spreading the power of electric cars to all over the world! Isn’ t that what you really want to do, anyway? Stop the madness or you are dead to me!
Now, do you think this is good advice for Tesla? Let me make my case in the rest of the article.
Is Tesla a car company or a tech company?
The core competency of Tesla is technology, not manufacturing cars. It is a high tech company in Silicon Valley! As a tech company, it is not good at:
- Making pricing work for mass-market adoption while keeping profit margins
- Producing affordable cars with a good look and feel. The Roadstar might be good looking and impressive, but it is a luxury car at $250K or more. The rest of the models are mediocre in aesthetics when compared to comparably priced cars from other well-established car companies.
- Manufacturing in the US might be heroic or patriotic, but why not build and deliver cars made for Europe and Asia on their continents. The labor force in Asia might be more suitable for factory jobs than Californians.
Competition Dead Ahead!
All of the major car companies are coming up with their electric vehicles with great specs. Competing on the electric models will be fierce in 2020. This is true if Tesla was just an electric car company. It is not! It makes the smartest computer for cars with the best of the class autonomous driving technologies — both software and hardware!
Other manufacturers are going to eat Tesla’s lunch on electronic and mass-market models in a short few years. What Tesla needs to do is focus all its efforts on building the best self-driving, artificially intelligent computer (not car) in the world.
Most car manufacturers are not going to outsmart Tesla in high-tech, computer science-based technologies. The traditional car companies suck at the high-tech. Companies like Volkswagon (Porshe, Audi), BMW, etc. are terrible with their software — I know from personal experience. Americans dominate the software industry, and Tesla has the most significant lead in self-driving hardware and software.
If I have to put my life in the hands of a computer driver, I would only do it if the software is MADE IN AMERICA — yes, we dominate in this space and will do so far many years to come.
This is because the software is an art form — you cannot “factory” produce software. You cannot “train” top-notch software programmers. American programming geniuses learn to program before they go to college. China and India are way behind when it comes to producing top-tier software that people want to use in the West. Sorry, we don’t WeChat in America!
Elon, Make a Bigger Change in the World!
Based on the public interviews and what I have read about Elon Musk over the years, I get the feeling that Mr. Musk is not after personal wealth — he has demonstrated that in the past by risking his wealth on SpaceX and made it possible to develop reusable rocket technology.
Mr. Musk has the same “Think Different” mindset that Steve Jobs had. They are similar in many ways. They make things happen when others can’t. Their wealth is a side-effect of their out-of-the-box thinking and doing.
I wish Tesla would focus on demonstrating its technology through a single high-end car model and let other car companies like Ford, GM, Toyota, Honda, Nissan, BMW, Porsche, Tata, etc. license its core technologies for building affordable electric cars. This way, Tesla can focus on building the core tech and only for those who are willing to pay the price for the topline electric cars.
Right now, it is trying to make affordable electric cars which is an optimization process that the Japanese are best at due to decades of experience. Tesla is not going to get there anytime soon to be on par with companies like Toyota or Honda. Tesla will be out of time!
By licensing its core technology to companies like Toyota, Honda, etc. we can expect these car giants to make affordable, practical electrical cars at many price points as they already do for their gas-engine car lines.
Tesla can be the IBM of electric cars without making IBM’s biggest business mistake — which should be viewed as their most benevolent act — of allowing PC clones to be made by anybody without paying a license fee to IBM. Licensing Tesla tech is the primary way Tesla can become profitable faster than being a car company with all the disadvantages of not being a pro car company.
IMHO, Tesla cars are not very attractive from an aesthetic point of view. So far, I have tried to buy a Tesla car twice — both times, I couldn’t make myself go through with the purchase!
In the same fashion, once I left the world of generic PCs for the Apple ecosystem years ago, I couldn’t make myself purchase a new PC again! Tesla and the generic PC companies have the same problem when compared to say Apple. They lack the polish that makes them highly desirable to the people who can afford them.
As an experienced software professional with a hardware background, I think of a Tesla car as nothing but a battery-powered Linux computer with a bunch of sensors with a Toyota Corolla grade user experience.
Tesla cars look like they were made through a kick-starter project. They really do!
Anyone who drives a Porsche, Audi, BMW, or Lexus knows how much effort these car companies put in their interior and exterior design and manufacturing.
I wish Tesla the best of luck, but I hope to buy Tesla technology-powered cars from proven car manufacturers in the future. Tesla as-is is dead to me!
Obviously, Elon Musk didn’t go to the Shark Tank show yet and this is a fictitious account of an event that never happened.