Well as we come to the close of 2020 something is pretty undeniable right now.
Tesla is for real.
Tesla is not going away, in spite of the opinion of a whole lot of people on the financial markets who still short it like almost no other stock, but that aside The company has a certain solidity to it.
So, I wanted to bring together two of our best minds from Road Show to figure out why Tesla is, frankly, great.
Joining me now is Road Show editor and chief, Will Stevens Roadshow reviews editor and one good one.
And guys I think I want to start here with justifying why we’re having this conversation.
Why is it now start with you, Tim we feel we can say it’s time to have a conversation about why Tesla is great.
I think ultimately it all comes down to profitability that is shown now for a number of quarters in a row that they can actually make money.
And it seems like kind of the simple, fundamental basic thing.
But ultimately, this is a company that struggled with that simple, fundamental basic thing for a long time now and the fact that they’ve proven that they can do that again and again, really has driven the market to Insane, outrageous heights with a stock valuation.
I think that’s a little bit, maybe not so realistic.
But ultimately the fact that the company’s been around, they’re expanding, the expansions are going well, the companies are that the cars from the road, the sales continue to increase.
They’re making money, I think that’s what it all comes down to.
Now a lot of the detractors out there will say, yeah, a lot of that profitability wouldn’t be there sequentially if they weren’t selling carbon credits, which isn’t exactly selling cars.
And yet others will say well that’s just part of being a leader is you’ve got an a whole nother asset you can sell aside from just selling cars.
Where do you fall in that without getting you know wonky about the business of running a business?
Ultimately, it’s part of business models pretty fundamental to the way the company operates.
And so for them to not leverage that would be kind of a dumb thing.
So for them to leverage that, it makes sense.
I see no reason why that should be counted against and I think the thing that they do need to be a bit concerned about those of course as more and more companies get into producing EDS, and ultimately they will have less interest in purchasing those carbon credits.
So that That the opportunity for Tesla will be drying up, in the not too distant future as Tesla’s competition will continue to get more sharp.
But I think a lot of Tesla’s skeptics over the years have been saying, well just wait until company x releases car.
And then that’ll be the end of Tesla.
And we heard that about the Jaguar I pace and the Porsche, Panamera and the Audi e Tron and so many other things that have come to the market.
But yet Tesla still continues to be successful despite those things.
So I think the company’s still doing quite well despite all the strikes against.
Antoine, let’s talk about the cars now.
You spend an inordinate amount of time with Teslas.
[LAUGH] What do you think about the cars when you tell someone who’s not in our biz, a regular person, to convince them that, no, Tesla Based on its cars is the real deal.
Well, I think that a lot of the proof is in the pudding there as far as them being innovators pushing the technology.
As far as electric cars, as far as on some level autonomous technology, but mostly on the electrification side.
We saw that they were among the first to break that 200 mile barrier, they continue to push battery technology They continue to also push powertrain technology because there are two sides to that efficiency coining.
You got to get both of them right intestines proven time and time again that if nothing else they do bulletproof electrification technology.
Well, I mean the rest of the car You can say what you can about the build quality of the body is about their interior design.
And we can sit here and argue a long time about what their messaging on autonomous driving technology and how that lines up with the reality of their technology but.
At the end of the day, they do battery electric vehicles better than anyone else.
And it’s obvious because you see that not only in how they’re pushing the rest of the industry, they put a fire under the **** of every other major automaker to, you know, get their electrification technology.
As on par with what Tesla’s doing.
But then also you see it at the enthusiast level you see little garages that are building kit electric cars and nine times out of ten.
You look under the hood and there’s a Tesla battery or a Tesla drive unit.
You’re an O g on automotive reviews at CNET preven pre road show.
Why you feel about electric cars like Tesla in general, compared to the feel and the spirit of a combustion cars, are still a big Gulf in the joy of driving between the two types?.>>It’s a different animal and I don’t feel there is a gulf I just think it’s the different level of taste.
A well tuned electric vehicle can be as fun if not more fun than a gasoline engine.
And there are things that gasoline engines.
Diesel engines can do that just you can’t recreate in an electrified vehicle.
Things like the sound, that the sense of engagement with the engine, the smell, that sort of stuff.
But if you’re talking about just pure thrust in a lot of ways, I feel like Electrification is almost better suited for performance than the combustion engine.
Could it cook skills in a lot of those gaps that you try to fill in with things like reducing turbo lag or with minimizing shift time you get rid of turbo by having instant torque.
That’s always on.
They get rid of transmissions.
So you’re always torque, no gaps for shifting.
And the only difference then is that you start looking at things like motor sport, you formulate e-races like 45 minutes long versus a 24 hour endurance race.
That’s where, sort of, the disconnect is now.
It’s that you have a lot of fun but you can only have it for so long.
And that’ll change.
So Tim, [UNKNOWN] made an interesting point there about how essential Tesla’s battery and power train Tech has been, regardless of other sort of peripheral issues that one might find with their cars.
How important is do you think that Tesla has this unique power and battery advantage?
I guess I’m really asking is how durable is it?
Do you think The LTMs from GM and others out there are gonna come along and equal or generisize battery and power tech.
That’s really the one thing I think that a lot of us are waiting for is for some other manufacturer, any other manufacturer really to come out there and offer a car with better ultimately, better energy density then Tesla has been able to offer.
That’s really what it really comes down to is how many miles can you get out of a given battery pack?
And right now as far as cars on the market today, Tesla is definitely the world leader.
It comes down a lot to their batteryg technology.
From the beginning, they’ve used these 18 650g battery cells, which we’ve seen everything from laptops to electric cars.
And that’s really what they’ve built their business around and that has allowed them to have
Much higher energy density than we’ve seen for other companies, even those companies that are using customized and bespoke battery cells within their packs, they’re still not able to be Tesla using this off the shelf battery technology.
I think a lot of that comes down to the mindset of Tesla, they’re willing to kind of push the edge a little bit more when it comes to what’s an acceptable amount of.
Failure rates in batteries for example, we’ve seen a lot of people having to go through two or three or four different battery packs on their cars.
But Tesla lovers, they’re kind of okay with that which is interesting versus a company like Audi that’s going to be a lot more conservative when it comes to the programming of their battery pack.
So maybe if the E-Tron had the same kind of edgy acceptance for risk tolerance.
In the E Tron that Tesla has in their model S, for example, maybe the each one would be able to go as far.
But other companies, they don’t have that same approach and not willing to push the envelope like that.
And so that’s why we see model S with 350 miles of range versus a comparable Mercedes or Audi that’ll only go to two to 50 and 80.
And right now for a lot of E V consumers.
That’s what it all comes down to, until someone can bridge that gap and get that level of range for the same cost the same amount of performance then ultimately a lot of people are just never going to stop looking at Tesla first and Tesla only.
Now the other part of that story that you’re underlining is the supercharger network and no one’s got anything really quite like that.
Tesla was really out first in trying to kind of standardize the idea of having a coast to coast and now a global charging network and to make it really easy, they integrated the supercharger network into the infotainment system of their cars, right from the beginning.
So, If you were trying to get from A to B, and B was further away than than your car could go on a charge, it would automatically route you to a charger.
This is stuff that we’re starting to see, and more and more cars coming to market.
Pollstar, for example is integrated into Pollstar too.
But this is something that Tesla’s had for a really long time and Even if people don’t need to use super chargers as often as they actually think they do.
Just having that security blanket makes people much more comfortable about driving their cars and driving them further.
Most people Commute I think 18 or 20 miles to work back and forth, so you don’t need a 200 mile, you don’t need a 300 mile, you don’t need 350 miles out of an EV by any means.
Most people will not go that far, more than they do once or twice a year Still knowing that you can and knowing that turtles get that network coast to coast and not to worry about having 15 different membership cards in your car to use different charging networks or searching across different things to find them knowing that it’s all there it’s all easy this huge level of competence that desire to have One interesting thing that I’ve noticed about supercharger network is that, it was there and it was there early.
And that made Tesla’s viable for apartment dwellers, which was something that a lot of electric vehicles struggled with in the early days.
If you have an apartment you don’t necessarily have access to parking or even a parking garage and the ability to go to a supercharger once a week, your car up after, if for a half an hour, while you sit in it and read newspaper or a digital around on your phone.
And then be set for the week, that basically made Tesla vehicles viable to a very large audience of urban dwellers who were interested in electric cars, but did not have access to charging infrastructure or did not have the ability.
To plug their car up for six hours overnight in the garage and I think that momentum has allowed them to carry forward.
I know a few model three owners and model three owners is where you’ll find most of the normal people who bought a Tesla.
They’re not necessarily excessive believers.
That’s not a mission for them.
And I know a number of them have cited the supercharger network.
But also as far as I can tell, I’ve never used it.
So there’s something really interesting about having it in your back pocket knowing it’s there but maybe never having or maybe only once or twice ever having connected to it.
So this is a confidence asset as much as an actual one.
If you look at the European market, where
The Tesla is definitely a forerunner, they’re they’re definitely a strong player, but they’re not necessarily the only strong player, which is sort of the case here in America.
You see that European electric buyers are more willing to pick up a car that has around 100 miles.
Because the Supercharger Network didn’t get that early start there, and therefore, they didn’t get that groundswell of people seeing Tesla’s all over the place, so that when automakers like Mitsubishi or Reno showed up with their 120 mile electric vehicles that were more affordable than say a Model S at the time Then the early adopters in those networks didn’t have as much of an incentive to spend more money on the Tesla.
And they could because the established supercharger network wasn’t there.
If they’re going to be plugging it at home anyway.
Well, you may still get the 120 mile car as opposed to the 200 mile car that costs $10,000 more.
Alright guys, let’s go inside the car now, Tesla has a pretty radical cabin design especially the model three as it came along almost entirely screen centric almost devoid of knobs and buttons and stocks as you were, as you decried Tim in your first review you were you were pretty much put off base by that initially has your attitude toward Tesla’s cabin design softens since those initial days Definitely has they’ve actually made quite a few improvements since then to make it bigger a lot easier to live with.
You know, they did things like bringing things that were buried in the sub menu menus up to the top so the easier to get to my big concern are remember when.
When I was first testing the Model 3 right after they first come out was I was driving in a misty morning in San Francisco, in the Bay Area.
And it was just enough rain that I needed to use the wipers, but it wasn’t enough that the auto-wipers were being triggered And I also had to make a call to Delta to change a flight at the same time but because I was on the phone, I had to dig through five different sub menus just to hit the automatic wipers, to turn them on.
And that to me was completely unacceptable, but since then they, you know, they’ve reorganized the menus to make it so that you can do that with one tap, they’ve enhanced the way that the steering wheel controls.
For example, so you can change your cruise follow distance on the wheel now with the other knobs that are on there.
So we definitely made things better.
But I definitely think that Tesla has still got a little bit too far away from tactile controls.
There’s definitely both a simple pleasure of reaching down and touching a button and pushing a knob.
But there’s also some safety aspects as well.
And especially if you are someone who’s maybe not as familiar if you’re not in the iPhone generation, if you’re maybe predating that a bit, you might not have the same muscle memory, the ability to reach out and touch a touchscreen like you might go down to reach down to just the volume, for example.
So I think that there is A breaking point but I think it’s a generational thing as much as anything, so newer younger buyers who are coming to Teslas are not gonna have any issues at all with a very [UNKNOWN] focused way of doing things, and we’re definitely seeing that has taken over the market.
Everything from [UNKNOWN] to the upcoming Mach E for example are largely touchscreen based It’s such a radical diversion of religion, If you look at Tesla versus let’s say any portion with that.
That’s fine down the console with a million buttons on it.
And you wonder okay.
You can’t both be right, Antoine.
What’s the future in terms of you think the of the perfect mix.
Of an interior interface between the buttons centric on one side and the totally screen centric on the other what feels right to you after all the miles and all the cars you’ve jumped in and out of?
I think it’s a balance in a blend.
Something are better handled with voice.
You’re talking about things like adjusting your temperature.
Things like getting a navigation destination for any sort of voice assistant sort of thing.
A lot of things are better handled with voice.
Some things like a volume knob are never going to be replaced by a touchscreen and I mean they will be but they’ll never be as good Being able to tactically tactically reach down and just whip the volume down when you need to talk to somebody outside of the car or on the phone or what have you.
So I think that’s the only real things that Yeah.
They’ll be sort of like a swing.
We’re seeing the swing really towards digital and i think that you know, on some level I think that Tesla is swinging heavily towards digital because I think they’re trying to get away from deep integration with a lot of sort of tier one suppliers.
They don’t wanna have to pay somebody for a windshield wiper stalk if they can just put that on the touchscreen and then jiggle it around on the interface as they see fit.
I think there’s definitely a cost savings, and it makes their vehicles easier to build.
And when you’re Tesla And your vehicles have historical pretty bad build qualities for the first couple of years you want to remove as many areas that you can have a problem with it possible.
I think that’s the real reason that Tesla’s pushed so heavily towards [UNKNOWN].
But what I hear you guys telling me is that Tesla is generally skating to where the puck is gonna be in terms of consumer satisfaction and expectations.
They won’t forever be This odd buttonless thing, but that’s where we’re going and that will be something that most consumers will generally start to say, yeah, that’s as we’re talking about today, great.
Well, it’s sort of like the Apple effect.
Apple got rid of the headphone jack and everyone whinged and moaned about it and then the rest of the industry did the same and now you just sort of deal with it.
And we’ve been dealing with it for so long that You have a generation of people who are just going to be used to it.
It’s no coincidence that people call Tesla, the apple of the automotive industry.
Tesla does things and it’s sometimes baffling.
And for better or worse, a lot of times you see the industry sort of chasing that trend.
If Tesla can get away with no buttons in the model three, then what’s to stop the next battle maker from going like, well, why don’t we try to get rid of the button?
Now this brings us to something that you brought up.
Before we did our taping today, which is, I guess under the category of Tesla’s demeanor.
Scrappy company, as you call it, and as we’re talking about now, a pretty headstrong company.
Is that in a conservative business like automotive marketing and building, is that a, an attribute or is that an Achilles heel they have to deal with It can definitely go both ways and we’ve seen it definitely go both ways.
You know, think comes to things like build quality panel gaps, things like that.
Obviously them just kind of the willingness to put a car out there this may be of subpar quality, but just to get it out onto the market, regardless of that It’s something that traditionally wouldn’t fly for any other automaker, but ultimately, Tesla fans have shown that they’re willing to accept things like that in order to kind of move quickly and break things to continue the apple slash Steve Jobs thing.
And that’s really what Tesla is doing and trying to do.
It’s really interesting to watch them just kinda plow forward, figure things out, and then kinda pick up the pieces as they need to later on.
But that extends all the way down through the way that they’ve even put together the crash testing facility.
I was lucky enough to visit that, I think it was last year.
And instead of having this massive, bespoke facility like they have at Volvo or General Motors, for example, Tesla basically took half of a warehouse and installed a crash test lane there, and they didn’t even go to the industry standard companies to provide to the motors that actually drive the cars down the crash test lane.
They took the motor and the battery pack out of An old Model S that had been crashed and turn that into basically a pulley system to drag the cars down the ramp, wrote custom software to control the thing.
And you know, the cost savings were probably huge if you ignore all the engineering kind of went into make it work anyway.
But I think that was really a great example of how Tesla’s looking at things differently, trying to cut costs, trying to make things simple and trying to basically do it their own way.
And in the end, very successful
This brings us to Elon Musk.
Is he the right guy for the foreseeable future or is he one of those incredibly fiery innovators who needs to know when it’s time to get out of the way, move to just a chairman role and bring in a more mature groomed CEO without getting into an MBA discussion.
What do you guys think about his.
Appropriateness as we move into this next decade.
When it comes to Ilan Musk, this is almost like a religious distinction of whether or not you agree with Ilan or don’t.
I definitely think that his vision and his drive and ultimately his kind of clumsy PR skills have ultimately driven Tesla to where it is today.
But I definitely feel that Tesla could probably go even higher and even farther with someone who has we’re operating a little bit differently I guess let’s put it that way.
I think as a cheerleader in chief and as a figurehead of the company, he should always be a part of it in some way or another.
But definitely I think as the company continues to grow and as Ilan has got his There’s so many other projects out there from SpaceX to Hyperloop, and everything else, that ultimately someone who’s really, really focused on on the day to day at Tesla could really help to drive the company forward.
And that’s, I think, more crucial now than ever, because, as we’ve alluded to companies, every other company in the world is really investing strongly in a V’s And the company’s potential is going to get incredibly huge over the next few years.>> I really want to plead the fifth on this one, but I’ll answer it.
I’m not an Elan fan, Elon, the internet personality.
I’m not a fan of, but I don’t think Tesla would be where it is without him.
It’s so much of the company’s personality of what it does, right?
Is Ilan boldness and his ability to or his willingness to do stuff that maybe doesn’t necessarily make sense to maybe push things in a direction that doesn’t make sense, but is the direction that things need to go in?
As a kid willingness to try things and to fail are worthy of admiration.
That said, I think someone needs to kick him off Twitter for a while.
[LAUGH] I’m pretty sure that the investors and the board want him off of Twitter.
But, you know, there’s no accounting for his personal life.
But I think that as far as could Tesla be what it is without him?
I don’t think so.
Let me ask you this.
This is a total little niche sidebar but people still have this discussion, Antwan.
When the glass broke on the cybertruck on the demonstration, was that a stunt?
Or was that an accident?
Now you asked me if it was done.
My brain goes Yes, definitely it is done but it seemed like an accident at the time.
There is no way of knowing it.
There’s probably an accident, but the cybertruck is already so much of a meme that they didn’t really need to do something else to make it the object of ridicule on the internet and get attention because it’s shaped like a doorstop.
So, I think that sort of speaks to Yeah, it was probably an accident.
The joke is the truck itself.>> Core Tim, we’re watching the battery day presentation and then.
A few weeks ago and all the sudden there was a discussion of, yeah, we’re gonna roll out some degree of level five to a certain percentage of our owners this year.
We’re all going, what?
Level 5 in 2020 in any way, shape or form
What did he say?
I’ve been friendly enough with various PR folks [INAUDIBLE] over the years, and there have been quite a few, to get a little bit of, or enough of an insight nayway into how some of these events come together.
And the Apple stuff absolutely, your’e right Bryan.
Those things are absolutely Timed and scheduled and perfected down to the millisecond, the Tesla stuff, they’re a little bit more flying by the seat of their pants when it comes to pulling these things together like trying to pull some of these events together with no warning at all.
There have been times where the PR department has gotten the most of the events were happening when musk tweeted out that they’re happening.
So I’ll tell you guys that there has been more than one or two times
Certainly in the earlier days when Model S was the only car that was out when Tesla was nothing but a cult, you had to be a believer as you guys have mentioned Tesla and Ilan believers were really dominant in the earlier years.
There have been more than one time when I’ve been cornered at conferences or auto shows, by a few Tesla.
evangelists who kind of wouldn’t let me leave until I agreed with them that.
Tesla is the greatest thing since sliced bread.
It’s almost getting into a scariness to it.
Are we now at the point where Tesla is appealing more to normal people than to believers or are we still largely in the believer cult moment Tim It’s definitely transitioning away from the unbeliever cold moment.
I remember the you know, that the heyday of the iPhone versus Windows Mobile days and when there was really, really a deep divide between smartphone users at the time, and the.
The nx we’re used to seeing comments back then was crazy.
And I think we transition slowly out of that to the point where it didn’t really matter what kind of smartphone you had.
People just didn’t really feel that much strongly about it.
I think we’re getting to that point now because Evie owners They still take pride in the fact that they’re driving Evie.
And so ultimately there’s pride and being in one camp or another.
As Evies become more common place at that point, it’s also gonna matter less which brand that you’ve chosen to because It’s less of an investment.
It’s less of a personal commitment.
It’s less of a risk honestly.
And as that risk goes down that that personal investment will go down as well, so we’ll see less of that vitriol.
But right now for sure.
The Tesla Canvas still very, very strong.
There’s a lot of musk believers out there who say that he can do no wrong And ultimately, I don’t think that they are necessarily doing as much credit to the company as they think they are to be honest with you.
I think that we wanna come to this from an objective standpoint, from a standpoint more about, that Includes quality as much as range for example, or as your average as a fan will only say, rain is better performance is better.
That’s really all that matters.
A lot of folks will say, look, Tesla is doing so well, especially in the US, as you pointed out in Taiwan.
They’re they’re the lion’s share of the business here, a little less so in other countries, but it’s such a small market.
Does that give us any pause?
That The entire market is still up for grabs, and Tesla’s destiny is not as certain as it looks right now.
It’s a small market, but I mean, it is the market with the most potential for growth.
And so, I think that piece of the pie is small now, but I think we’ll start to see the not only grow but the growth accelerate.
And and we’re seeing that as we’re seeing more infrastructure as more players get in on the charging side of things with companies like electrify America, Really putting a lot of energy, into building these DC fast charging stations that are as good, if not better in some ways and the super charging network, at the very least on par with the super charging network, and as people start seeing more options for vehicles, I think you’ll start to see That people who aren’t necessarily, people who aren’t necessarily Tesla fans who could be won over by an electric car.
People who for example want an electric car but want something a little bit more luxurious than the Model X, who want an electric car but maybe don’t want to spend as much as a Model X on an SUV We will start to see, people looking at the IDs, for people looking at the Mustang Maki.
And when they have more choices as far as style, as far as technologies, as far as price, I think we’re really just going to see that piece of the automotive pie start to grow, and I think As automakers start to put more money and to get more vehicles into that space, we’ll start to see.
I think that at least the talk that a lot of the automakers are talking is that they’re gonna start shrinking the part of their gasoline said pie.
To accommodate for that.
Tim, you remember when the personal computer market was really first starting, it looked like Apple was going to rule the roost in terms of market share.
The Apple two was the computer, and then they ended up being a relatively small player over the course of history.
So does Tesla have the risk of being that early launch, darling, that ends up looking at the market that got away from it?
Yeah, absolutely they do.
There are plenty of examples in the consumer electronics side of things where companies have really had these amazing impacts to form and develop market and then ultimately have just not iterated quickly enough to put up with all the competition that’s out there.
If you look at the smartphone market again, you look at rim blackberry phones, were Were it for smartphones for a long time.
And it was pretty hard to imagine them not being it.
But ultimately as as Apple came along and and launched that phone, everything changed and that was the end of it.
So it’s a little hard to know, you know.
Can Tesla continue to maintain this momentum going forward?
Can they maintain this leadership?
That I think is the big question going forward?
I think one of the things we were hoping that they would do would be to really get that low cost model three on the market and really kind of leverage that and we see where that went to.
But Tesla still hasn’t been able to get that $35,000 model three on the market in any major numbers.
And then I think is the big question if they can’t get their cars to be affordable enough to down to the price of an average new car for consumers here in the US, that I think is going to be limiting their ultimate growth.
And so that’s still the big question on my mind.
The competition they’ve got coming up is unbelievable.
Everyone is going after Tesla and whether or not they can make it again I think all comes down to cost and right now they’ve not proven that they can make a truly low cost, every man’s Evie, that’s what they need to have.
All right, well I’m sure many of you who are watching right now some of you are standing up and cheering and others have.
So if you have veins bulging on your forehead out of rage.
I mean, that’s what’s so interesting about Tesla.
It still remains very polarized, but most importantly, it starts a lot of broader conversations about the direction of the industry.
And perhaps, in that metric alone is maybe the most successful role that it will have that we can already bank on, as it is such an important rallying point for this massive turn.
We’re seeing in the auto industry.
I’ve been talking to Roadshow’s Editor-In-Chief, Tim Stevens, and Reviews Editor, Antuan Goodwin.