Much has been written about Elon Musk and Tesla’s rise to prominence, but few authors have explored that journey as extensively as Ed Niedermeyer.
Niedermeyer, author of “Ludicrous: The Unvarnished Story of Tesla Motors” and director of communications for the nonprofit Partners for Automated Vehicle Education, has spent years exploring the company’s history and the decisions it has made, and along the way he has made a few friends and many enemies. And that’s OK because Niedermeyer believes there are plenty of lessons automotive startups can learn from Tesla.
“To me, Tesla is this case to study and I’m just interested in learning the lessons we’ve found there and you have to look at the stuff they’ve not done well to really understand that,” he told Kevin Hill, executive publisher of FreightWaves, during the opening keynote address on Day 2 of FreightWaves’ F3 Virtual Experience on Wednesday morning.
Niedermeyer pointed out some of the mistakes he believes Tesla (NASDAQ: TSLA) has made, but also talked through the impact Musk’s company has had on the auto industry.
Watch: Ed Niedermeyer discusses Tesla
“Tesla has overcome a lot of challenges,” he said. “Their whole philosophy, and this is what the book tries to illustrate, is the approach they are taking – that high-tech startup approach, which is about getting talent together in an unstructured environment and having this creative problem-solving.”
That approach works well in some cases – design, engineering and maximizing drivetrain performance – but it’s not good in areas where structure is needed, Niedermeyer noted, pointing to Tesla’s well-documented supply chain issues.
Finding the right approach
“Where they’ve stumbled, it’s not Tesla being bad, it’s that every approach is going to have strengths and weaknesses and the weakness of that freewheeling startup approach is that lack of structure, is that lack of regimentation,” he said. “The reason the auto industry is seen as this lumbering, lagging, dinosaur legacy – pick your insult – is because that is what works in the auto industry.”
One interesting aspect about Tesla that Niedermeyer noted is how similar it is to the early days of legacy automakers. He said that those early automakers reflected their owners, much like Tesla has become synonymous with eccentric owner Musk.
“If you go back to the early days of the car industry, it was these charismatic, larger-than-life characters who ran these companies that really reflected who they were as people,” Niedermeyer said. “It was cool. It was exciting, and a lot of what Tesla is doing is just bringing back this excitement that has been missing from the car industry for 100 years. But there is a reason that all went away. There’s a reason the industry consolidated and they became these giant global companies with management structures and boards.”
Tesla’s journey has been filled with many highs and many lows, and Niedermeyer said that the company got caught on a “fundraising treadmill” and needed to make short-term decisions and big announcements to keep that funding coming in. The result is that Tesla never addressed weaknesses that would have benefited its long-term fortunes.
Survival, but at what cost?
“Yes, they’ve survived. They’ve pulled off some incredible heroics to survive but that is incredibly wasteful,” Niedermeyer said. “They are not efficient as a company because they are constantly stuck doing these heroics and I think this next generation of startups needs to learn that lesson.”
He pointed to Rivian, which is set to go public Wednesday, Lucid and Canoo as companies that seem to have learned lessons from Tesla and taken a more pragmatic approach to growth and funding.
Niedermeyer also criticized Tesla and Musk indirectly for their focus on building “flashy” products but not necessarily products that are fully tested or needed.
“I think the Cybertruck and the Semi both illustrate one of the fundamental weaknesses Tesla has, which is it’s so dependent on one man,” he said. “[The Semi] was not something they were getting all this input from truckers … [on] all the problems they had. It was not a serious business in an attempt to solve business problems with the product, it was, ‘Let’s make something cool and flashy.’”
The same issue exists with Tesla’s Autopilot self-driving tech.
“There are a number of unresolved safety and regulatory issues around [automation] and there is a good chance Autopilot could be recalled again, and people are concerned about it,” Niedermeyer said, adding that “we need regulators to come in and end it because it’s just embarrassing for everyone at this point.”
In a more lighthearted moment, Niedermeyer pointed out that Tesla was among the first “meme” stocks, and internet fame certainly helped the company grow.
“It took me awhile to realize how big of a factor that was – the online dynamic – because I come at it very much from let’s understand this company,” he said, acknowledging that while plenty of people have objected to his critical reporting on the company, “many other people are out there talking about the positive things about Tesla, things they like as consumers and parts of the ownership experience they like.”