By coincidence had a chance to speak to an auto analyst today (spouse of someone I work with). He previously was head of GM powertrain NA and other high GM executive positions. Never got into who he worked for now as I was more interested in what he thought of Tesla. He is obviously negative on Tesla as most of us here would expect. (Apologies in advance as my writing isn’t as eloquent as many of you here)
The questions I asked was related to what I hear the most from people that are negative on Tesla and what I think has the most implication on Tesla. He is very bullish on EV and he understands we are seeing a major transition to EV. He loves the speed of Tesla P cars and thinks it’s ridiculous the acceleration is faster than Ferrari & Lamborghini costing ½ the amount.
But why negative on Tesla? Many answers to this question but the major issues is he thinks EM holds too much influence to the day to day task, product design, engineering and the direction the company is headed. He thinks Tesla is into too many directions from EV to energy storage to solar panels to autonomous driving to making all sorts of parts in house. His issue is that the core product isn’t even perfected yet and Tesla is already doing so many other things. He spent a lot of time at the Fremont factory and wasn’t as impressed as we think the factory is. He said Tesla had many more times the number of employees as GM and makes many more time less vehicles. He does not think Tesla has perfected making autos (far from it) and all the quality control (QC) process related isn’t incorporated. If you go there you will see all dark hair (meaning young) employees which is good in a way but there is still a need for grey hair (experienced) people he says. You just don’t know what you don’t know. He gave an example of a young production employee he spoke to. This employee had no background in making cars asked him what he thought of Tesla’s production line. He can see the employee really wanted him to say how great it was. It is the greatest complement if a company can be said to make a product like an auto company production line. This is the major reason why no analyst believes M3 will be made on time, will have many delays and have production QC issues. From what he saw he does not think Tesla is a world class auto maker capable of producing GM/Toyota quantities.
Gigafactory is a very expensive project building a very old battery found in laptops. He assumes (never been to site) the production line is similar as in Fremont and therefore isn’t impressive. He does not think much advantage will be had here. He thinks places like China will underprice Tesla in the future and the world largest building will be empty. He compared this to Motorola having a factory in IL which was supposed to make the Razor flip phone now empty but beautiful campus. You can see some comments here on TMC to be pretty accurate as an ‘auto guy’ wouldn’t know Tesla Energy.
Ride share and autonomous driving. He 100% believes this is the future in 5-10 years. He is as bullish as we are here on TMC. He thinks EV will be the mode for ride sharing and autonomous driving. He even said I’m looking out my window at a full parking lot since
9AM and these cars can be used in a ride sharing network if it has autonomous capabilities. He say companies like Google and Uber will be the leader in this arena. He doesn’t think a company like a Google will be beat and Google doesn’t have to spend the Cap Ex on building cars when it can partner up and have another company build it. He see in-house hardware/software autonomous development as a negative. He sees out sourcing and using off the shelf hardware as the way to go.
I’m forgot a lot of our conversation as he had a lot to say…
Lots of take away here. We here are not the only people that think/believe EV is the future seems like most everyone thinks so too. We just have different perspective on who can do it better. Making cars is that hard and Tesla hasn’t prove it is able to pump out the number they are predicting. Makes a lot of sense to me now why Tesla SP would drop when it announced it moving up the timeline making 500K car by end of 2018 from 2020. Now I have more understanding how some people can be so negative on Tesla of which many is reasonable. I can rebuttal many of his argument but it wasn’t what I’m looking for as I think we should take it from the prospective of seeing what the short seller’s viewpoints are. Definitely does not change my long positons in anyway. A little more caution? Yea sure maybe. Hopefully I can talk to him more as Tesla achieves some of the milestones.
