December 20, 2017
Tesla has written themselves a fascinating story so far. Since their inception fourteen years ago, they went from producing cars that nobody bothered to buy, to being at the forefront of future mobility. It can be said that they had single-handedly forced the issue on electric cars, while other manufacturers were still conducting their own feasibility studies.
2012 was a notable turning point for the company. It showed their better connected and well-established counterparts that the electric car can be attractive, and that everybody laboured on building them. Since then, the Model S is in its fifth year of production, and the fact that it remains without any direct competitors in its segment, only provides evidence of its technological prominence.
Everything Tesla builds has the goal to disrupt the status quo - from their gull-winged Model X SUV to their unusual approach to interior design. The recent unveiling of Tesla’s two newest concepts, an all-electric semi-truck and the brand new Tesla Roadster, tells us that the company is still pushing boundaries. Tesla’s CEO, Elon Musk, claims that when the Roadster goes on sale in 2020, it will be the fastest car in the world at $250,000, a fraction of the cost for a Bugatti Chiron. It will also have the ability to drive more than 900km on a single charge, and directly pollute nothing but controlled heat, breakneck speed and nervous smiles.
Tesla’s hunger to innovate and disrupt stems from the man at the helm - Elon Musk. The world knows him to be many things: a philanthropist, an environmentalist, a futurist, an idol, a Martian, and at times, the comic book definition of the man before he becomes the supervillain. His ideas and methods are highly unorthodox - hanging lightly in the balance between progressively futuristic and ludicrous - evident in the founding of both SpaceX and The Boring Company. The former is a space transport company, founded with the intention (amongst other things) to explore the possibility of colonising Mars, and the latter was created to ease transport congestion by connecting major cities via a high-speed underground passenger and freighting transport system called Hyperloop (think bullet-train, but underground). His antics don’t stop there - he bet the entire state of South Australia that Tesla could build a 100-megawatt battery facility in 100 days, or the cost would be free of charge (it was completed in 60 days), then proceeded to offer Tesla’s services to rebuild Puerto Rico’s storm-hit power grid.
It’s this sort of humanitarian, gung-ho attitude to solving problems that gave Tesla and Elon Musk a far-reaching, positively mad fan base that’s ready to engage in heated internet arguments with anybody that criticizes their lord and saviour.
But his unconventional methods create high-risk situations that could cost his companies billions. And in this case, it could cost Tesla its future. The stunted production of their very first mass-market car, the Model 3, revealed a host of problems that included questionable working conditions, the cruel firing of about 700 workers and the discovery of numerous manufacturing defects. According to analysts, the Model 3’s “production-hell” was self-inflicted and entirely avoidable. The problem was found to be bottlenecks on the production line, caused by suppliers not being able to produce sufficient parts for the car.
Upon further investigation, these problems stemmed from their ‘highly unusual’ approach to the automotive production line. It was reported by Reuters that Tesla skipped the industry-standard process of prototyping their parts and cars, which was meant to ensure that the line can operate immediately at full capacity. Despite this, Tesla kept faith in Musk’s directive of using complex analytical techniques that ought to streamline the process by cutting down production time and costs. But this high-risk approach has dramatically slowed down the Model 3’s production line, and its consequences could go as far as collapsing Tesla, as Ryan Felton of Jalopnik writes: “Tesla’s long-term viability hinges on the success of the Model 3. The production issues need to be figured out—and fast.”
And he’s correct - the Model 3’s role in Tesla is the moneymaker. Its successes should’ve meant that the company would be able to ease investor dependencies, reduce debt, expand, and further innovate. It’s a strategy that most established manufacturers such as Porsche use to grow their brand. Porsche’s two SUVs, the Cayenne and Macan, did its job perfectly, as it was reported that it helped the brand post record-high profits, enabling them to expand their model line-up and venture into electrification.
There is no doubt that Tesla can build and design revolutionary cars, but questions regarding their qualities as a car manufacturer and the uncertainties that surround their future keep appearing. The creaks and creases in their low-volume models haven’t been fully addressed yet, despite the Model S and X being in their respective fifth and third year of production. And as far as the Model 3 is concerned, its rivals are taking advantage of these issues - scheduling all-electric versions of their premium sedans for release as early as 2019 - threatening to knock the Tesla Model 3 off its perch as the market leader.
A profitable future for Tesla and Elon Musk remains to be seen, but the showcase of the electric semi-truck and the new Tesla Roadster has occupied the mass media enough to throw them off the scent left by Tesla’s ongoing nightmare. And it’s only a matter of time before the conversation shifts back to their woes.
Tesla needs to act fast if they want to remain relevant in the future.