“Fake News : False stories that appear to be news, spread on the internet or using other media, usually created to influence political views or as a joke”
Source : Cambridge Dictionary
Criticism is very easy. People enjoy feeling superior, and like to attack things they don’t understand. Refutation of criticism requires effort and research, and responses are complicated. People lose interest before explanations are available, and when they are, nobody reads them. The falsities become accepted as truth.
Tesla – a prime example of how people fear innovation
Tesla is a significant target of many organisations. There are accusations of poor financial management, production issues, and false advertising.
This leads to a series of important questions.
Are these accusations true? Is Tesla a bad company? If not, why, do people hate Tesla when it (a successful innovative company) is finally achieving great milestones? Why does America attack its most well-known, popular, and successful new manufacturing company, when it brings so much employment to places like Nevada and California, and is producing electric vehicles which are the envy of Europe and Asia?
Some facts about Tesla and the wider automotive industry:
It is expensive and difficult to set up a new automotive company. Tesla is the first new automotive company in the US since Chrysler in 1924.
Tesla is distinctly and critically different from other companies, in areas including driving aids, over-the-air software updates, artificial intelligence and information technology, and battery and vehicle design.
Tesla was established due to a sequence of extremely fortunate and unlikely events.
The Global Financial Crisis allowed purchases of a new production plant and stamping equipment for far less than expected.
Without the Global Financial Crisis, Tesla may never have appeared, and were days from folding in 2008 (before the GFC) and 2013 (soon after the Model S was released).
An influx of funds arrived via Daimler Chrysler and a US government loan at the precise moments that they were required.
Innovative leaders and engineers arrived at moments when they were needed, with ideas that fit the need and the times.
Watch this 2016 analysis by Andrea James (a former analyst who covered Tesla’s earlier history), especially from 32:38 to 36:20.
Source : Youtube (August 2016). [Andrea James (former TSLA analyst) interview by DaveT]
Typical arguments : True, False, or Uncertain?
Tesla is in danger of bankruptcy.
Tesla is spending significant sums on expansion and infrastructure, and does have high levels of debt (currently around $11 billion USD). It has been recently downgraded by Moodys to a lower credit rating. It is also true that the Model 3 vehicle needs to be successful for Tesla to succeed, and to pay their debts.
The expenses have been necessary for infrastructure, such as building and fitting out their vast battery factory, expanding their service departments, and extending their supercharging network. In fact, Tesla is projected to expand faster than any other modern automotive company, except perhaps the Ford Model T. (Note first quarter report on 2018 Vehicle Production and Deliveries.)
Tesla is still only in the early production phases of the production ramp, however they are not in danger of bankruptcy. The youtube video below explains why.
Source : Youtube (March 2018) [Why Isn't Tesla Broke?]
Tesla is a poor manufacturer, it repeatedly fails at meeting its targets/deadlines.
Tesla is not a poor manufacturer, but it is certainly inexperienced. It has had multiple issues in producing vehicles.
- Failures of parts suppliers can lead to issues in production. This has occurred multiple times. The vehicles are unlike traditional vehicles, and the parts are often unique. Tesla has had trouble with suppliers, and sometimes has had to manufacture parts themselves. For this reason they are far more vertically integrated than other automotive companies.
- Tesla is attempting to add a higher level of automation than other companies. This leads to some problems in production, and repeated setbacks.
- It needs to be more cautious and less outwardly optimistic in their projections. It has invariably failed to meet its own deadlines.
However Tesla is working hard at improving is manufacturing glitches. The Model S is significantly better than when it was first produced (though the Model X is still below average in reliability). Tesla owners rate Tesla vehicles very highly. Finally, Tesla is probably becoming more cautious in its projections.
Tesla’s autopilot is dangerous.
The USA based NHTSA (National Highway Traffic Safety Administration) believes that vehicles with Tesla’s autopilot are 40% safer than without it.
It is simplistic to say that Tesla’s vehicles are dangerous, though they can be if operated incorrectly. Autopilot is a driving aid, like cruise control. Cruise control should not be used to drive a vehicle without human oversight, and people generally understand this.
Autopilot in the future could become problematic in a public relations sense, as the types of accidents may change. That is, imagine that human driving flaws are radically improved and removed, and the accident rate therefore drops enormously, but autopilot occasionally has an accident that a human wouldn’t. The negative publicity would be unwarranted, but guaranteed. This sort of issue needs to be anticipated.
Therefore, the criticisms are at least partially justified.
However, it is also not true to say that Tesla is a bad company, nor is it in trouble.
At worst, Tesla has made some mistakes, but it has also been successful.
Since 2007, Tesla has evolved into a 37,000 employee company selling 100,000 vehicles annually, solar roofs, solar panels, and battery storage, and has some of the best automotive based artificial intelligence engineering in the world. Tesla is engaging in new manufacturing processes and challenging new industries in a multitude of ways.
It is this novelty and innovation that Tesla has displayed, which has resulted in a heavy attack by a variety of parties.
Forces against Tesla
There are many organisations who want Tesla to fail.
1. The Koch brothers and their empire
The Koch brothers are two conservative billionaire brothers engaged in oil and fossil fuel businesses. They are anti-climate change and fund anti electric vehicle movements.
2. The media
The mainstream media likes to portray Tesla as in trouble or struggling. They also often ignore positive news.
This could be merely due to advertising, Tesla does not advertise, and all other automotive