Tesla is Choosing Hype Over Substance

Paris Marx: Ed, welcome back to Tech Won’t Save Us. I feel like you’re our resident Tesla correspondent at this point.

Edward Neidermeyer: The story continues to roll on and it just never stops being interesting, does it?

PM: You can certainly say that about it, at least interesting is a good word. Of course you’re back on the show because when I first reached out to you, we had this news that Elon Musk was changing the strategy, getting rid of the plans for a cheaper vehicle and going all in on robo taxis. But in the lead up to this interview, as we’ve been scheduling it, a ton of other things have been happening. And so I think that there’s so much that we can get through in this conversation. So I just want to start kind of bigger picture. What do you make of what is going on with Tesla right now? As we see, the share price dropping, as we see these massive changes in strategies, as we’re starting to see these mass layoffs at the company, what do you make of all of this happening in this moment?

EN: So I think for a long time at Tesla, there’s been this sort of push-pull between the things that they do well, or that certainly that people like about their products and their marketing and their positioning and things like that. Yeah. And the products themselves specifically, and then sort of the hype part of it, the stock hype, right? There’s Tesla as a company, which I think there’s good and there’s bad about, and then there’s the hype, which enables them to do the good things, the things that people that like about the company, but also are really ultimately as time goes on the source of the bad. I think the high level way to think about what’s going on is that we really reached the point. And I keep referring to sort of the simulation and simulacra, Baudrillardian thing. It’s the fake part of Tesla has become more real than the real part of Tesla. I think that’s really kind of in a nutshell, where we’ve landed.

PM: Which does seem like a big shift, right? Because it did feel like in the past few years, Tesla was selling a ton of vehicles. It’s numbers were going up. It seemed like it was headed in the right direction. And then in the past, like year or maybe not even year, it seems like there has been a real shift there where obviously it’s numbers are declining. It’s facing some real headwinds. And all of a sudden people who maybe don’t look at Tesla as often are saying, wait, there’s no real new vehicles in the pipeline that are looking like they’re going to really take off. There doesn’t seem to be a clear strategy for where this company is going. And as you say, so instead of addressing those concrete questions about the business part of Tesla, it does seem like it is doing this tried and true thing that Musk has done many times before and heading into the hype, but increasingly, at the expense of the business, rather than giving it extra time, it needs to actually address those problems.

EN: So, and the way you frame this is really good because it’s really important for people to understand what sort of happened over the last couple of years. I think it’s really easy to look at the situation sort of having deteriorated over the last 12 to 18 months and sort of now acceleratingly so and, and conclude that this is sort of like about Elon Musk popularity, right. And like him getting into Twitter and all that, that is clearly a factor here. There’s no doubt, like looking at the sales data from California, for example, I think is probably one of the best indicators of that. But what people really need to understand is, is sort of before that.

That we were in this really unique period for the auto industry that actually really made Tesla look a lot more sort of concretely established as a car company than they really were. And I think it’s worth sort of unteasing some of that. It really was the collision of two things in particular. One was Tesla’s success mostly as a stock, but also of course as a company up to that point had just Sort of taken on a life of its own.

And we’d seen this not just in sort of how Tesla was covered by the media, but then investment wise, you see all of these new EV startups being funded. This Idea that you, that it makes sense to try and start up a new car company, which before Tesla, again, it’s hard to overstate how crazy that idea was. It became normal. It became like: Oh, Tesla’s success was sort of taken for granted. And right at this moment, they bring out the Model Y, which in terms of where the market is, that sort of crossover segment is, is the meat of the market. It’s the volume product. It’s frankly, it’s what the Model 3 should have been from the get go probably.

And right when they launched it, this really unique thing happened during COVID, which is that for the first time that anyone can really remember the auto industry was sort of structurally undersupplied. And that was a product of two things. It was: people had money, right? And people had money and we’re trying to get out of their houses and get out and get away and, and go out to nature and escape people, right? It was a huge response to the COVID. And then on the other hand, you had all these supply chain disruptions because suppliers were seeing their factory shut down. You couldn’t get certain kinds of chips. There were structural things there too, where video game sales were going out, going crazy.

And they use a lot of the same chips that are in In cars increasingly. And so you have these problems on the supply side and this boom on the demand side where people are now willing to pay well over MSRP and, Tesla’s constantly changing their prices. They’re ramping it up. And so, during COVID you saw Tesla selling mostly Model 3s and Model Ys for average transaction prices were really high. I think as a company, it was in the $70,000s range, which includes some Model S and Model X, but that’s, even then, was a very small part of the business. Their volume was exploding, and their profit margins were exploding. And for a critic like me of them as a core car company, it kind of forced me to shut up a little bit.

And I think others as well, because at the end of the day, the hype comes and goes. It mostly comes when Tesla needs it. And when Tesla is doing well as a company, a, they don’t need the hype as much. But B, you can kind of just ignore it, like if some people want to speculate that Tesla’s are going to drive themselves, they can and they’re not going to, but they can. At the end of the day, though, if the business is making money, it doesn’t matter because they’re not relying on that lie to to sort of stay alive.

And so what we’re seeing now, it’s really important to understand. It’s not just Elon Musk is getting less popular. Therefore, as cars are selling less, therefore Tesla’s going in trouble. That’s a factor. But what’s really happening is, is that this total fluke moment during COVID that could not have been orchestrated better to make Tesla look like a profitable car business is now over. You also put your finger on a really, really important factor during that is that even when times were flush, when they were printing money, basically by their standards, certainly they were not investing in new product. And so not only are the sales unwinding now, but the question of what are they going to put out there? That’s going to start to turn this around is frankly the real question going from here.

PM: Think you’ve laid that out so well in giving us a good understanding of what has happened structurally over the past couple of years and why it looked like Tesla was doing so well. And now why that has shifted, right? Not simply because of. of Elon Musk and his personality, but of much deeper and, and more problematic factors for Tesla. If we’re thinking about how it’s going to address these things. And to your point about the Models, Tesla was supposed to be making the semi truck years ago and it’s still not in mass production. The cyber truck of course was finally released at the end of last year, but we know that there have been serious production problems with it. In Austin where not many people are actually getting their trucks. It seems like it’s going to take a long time for them to get delivered. And of course, the ones that are out there, we’re seeing a ton of manufactured defects with the Roadster.

They’re supposed to have a new Roadster, this kind of expensive sports car that it used to make. That’s years behind schedule as well. And then of course, as you say, there’s no new Models of the S or the X or the three or the Y, major, more mass market vehicles, especially the 3 and the Y at a time when they are getting increasingly old and are in need of an update. But that is not happening. And what we see is that none of that is really in the pipeline.

EN: There is a minor update to the Model 3 that just recently came out in this country. It’s been out in China for a while, but I think there’s sort of a similar one in the works for Model Y. And before that, actually the Model S. And the Model X got them first. So the Model S had the plaid. This is when you started to see that yoke you saw, it went from a vertical screen to a horizontal one. So it was a refresh of the interior. There was a little exterior styling that had this yoke that they thought was going to be really exciting for people, but I think has pretty clearly turned out to be just another one of these sort of style over substance things, which for Tesla is really like the story of the whole game. The important thing to understand is that, is that these refreshes. are not working.

PM: Is it clear to say they’re also much more minor than what we would usually see from other car makers when they do these refreshes, right?

EN: Absolutely. Yes, and it’s like the, the strength of Tesla styling has been that it is very sort of subtle and like actually quite handsome. Taste is subjective, but certainly the Model S for me has always been an example of a very like kind of subtly handsome vehicle. And because of that, they’ve been able to kind of keep making it and making it and making it. The problem is, is that when you start to do these little tweaks around the edges, it kind of doesn’t, it’s one thing.

If you have a very dramatically styled car, you can then sort of take the styling and in other different directions. And you see this in, in what are called mid -cycle facelifts in the traditional auto industry, you’ll build a car for three years and then refresh it and sell it for another two or three years. So you can stretch out what would otherwise be like a four year product cycle into five or six. And, and, you know, the auto industry has that down to a science and Tesla very clearly doesn’t. Because how you start your car really matters because it determines where you can then go with the styling.

And I was just in the Bay area, which is where you’re starting to see some of, it’s called the Highland update to the Model 3, and you can see why in China, both the Model S and now the Model 3, it refreshes, the people who have to have the newest, latest Tesla they’ve bought it. And so you do see when these refreshes come out a little bit of a bump, but they falls off almost immediately right back to where it was before.

And when you look at these vehicles. It’s easy to see why it looks the same. It frankly looks cheaper. And the crazy thing is, is that Tesla kind of tells its investors that that’s what they’re doing with these updates, right, is they’re taking costs out of the vehicles. And I think you can really see that. And it’s interesting because one of the keys to Tesla’s success all along the way here has been sort of this idea that investors and consumers are sort of aligned, right? Tesla makes great cars and therefore, people want to invest in it. And there’s no contradiction between giving great value to customers and then, keeping some of that value as profits to give to your investors.

And I think what one of the things we’re seeing with Tesla now, and this is one of the reasons I think we’re sort of entering an end game is that more and more, both in the way Elon talks, the ideas he presents, how he presents them, but then also in the vehicles themselves. Tesla has run out of opportunities to really kind of blow minds on the consumer level in large part, because they aren’t making the investment. They would rather show profits to investors than make those big investments into the product. And as a result, when they do come out with these refreshes, they’re very modest and they’re mostly aligned around making the cars cheaper to build so that they continue to show those profits to investors.

And when you look at these refresh vehicles, that’s what you see. You just see something that. It’s like: Okay, it’s different, but if you didn’t already want a Tesla, there’s nothing new for you there. That’s going to bring you into the brand.

PM: Yeah, that’s a really good point. And I want to get into this larger kind of strategic shift that is going on right now. But before that, I have to ask you about the Cybertruck , of course, right? This was Tesla’s entry into the truck market, which is, of course, huge in North America, it was obviously taking a very different approach than traditional automakers take with their kind of trucks that are meant for work uses, but are also very aesthetic.

A lot of people buy trucks and then never use them for towing or anything like that. Right. We have plenty of surveys showing that, but there have been a number of videos that have come out over the past number of months, showing problems with the cyber truck, showing it not working properly and off road conditions, getting stuck on beaches, but also defects where every Cybertruck has even had to be recalled recently because of issues with the accelerator and kind of the pedal and this kind of covering that it had on it.

What do you make of the rollout of the Cybertruck and how poorly this rollout seems have gone? So, there’s a couple of pieces to this. I think the first thing, I think the thing that people maybe aren’t as aware of that I think is super important as a way to like frame this whole phenomenon. It’s a fascinating and unique phenomenon, but the framing for it that I think really is important is, unlike in the past, like the Model 3 Tesla brought that product to market.

EN: I mean, when they announced the timeline for bringing the Model 3 to market, I was like, this is crazy. There’s no way. And like, in my defense, the way they brought it to market was so weird and frankly wasteful no other car company would have done it. And so like, I’m I don’t feel that bad about being wrong about it, but they did start producing handmade granted, but like they did start producing on that timeline, which was like 18 months, which is like, again, I cannot emphasize how crazy it is to go from announcing a product in early 2016 to building it in summer of 2017. Maybe it was end of 17 when they really actually started producing them either way. That’s crazy timeline with a cyber truck. That’s not the case with a Cybertruck, the development cycle on this was basically, five years. It was like on the long side for a traditional auto industry development cycle.

Now, the reason the auto industry takes that long is not because they’re spending the whole time Getting the design of the car, right? The design of the vehicle is only a, maybe half of that or whatever, and it’s going to vary from company to company and all that, but it’s the design, right? You design it and then you validate it. And you don’t just validate the vehicle itself. Like that we’ve designed this in a way where it’s rugged and reliable and holds up to cold and heat and wet and dry and all these sorts of things, but you also are validating the production system and making sure: Hey, we can build this at this quality, at this rate for this cost that we can then sell it for profitably.

And as I’ve said, endlessly, right? Like the, the auto industry is this measure twice, cut once business, because once you buy that tooling, you’re stuck with it. Right. And it’s very expensive. So what’s fascinating here, the real failure of the Cybertruck and I love the, the internet phenomenon that the Cybertruck has become, I’ve never seen anything quite like it. And it’s, it’s its own fascinating phenomenon. But I think the framing that’s really important for people to have about that is they took as long as any other car company developing this product. And it’s still one of their most flawed rollout. Again, forget launching it into this weird cultural moment, like just in terms of the kinds of just like shockingly basic defects that they’re having, the performance problems, just how underbaked it is.

For them to have spent four or five years, this, what this tells us is exactly, it reinforces the point that we were just talking about, which is Tesla has not been investing in product. This thing has been some half baked thing. And, and I think part of it is Elon, like, I think one of the reasons the truck looks so weird and is so weird is that, is it clearly. It marks the point at which Elon isn’t listening to advice as much anymore. And he’s just sort of saying, I want it this way, make it this way. I don’t, I don’t want to hear your complaints. Yeah. In particular, this line that he was using that he took from his son that was in the Walter Isaacson’ s biography, that the future should look like the future.

PM: Right. And so, because he saw similar things in like “Blade Runner” and Back to the Future” and stuff, this is what he wanted this vehicle to look like, regardless of its market potential or what it would mean to build it.

EN: Yeah, and a good designer would have said: Listen , okay, I get it. You want this wedgie truck conceptually. It is actually kind of cool, right? Like the brew baker box, which is basically ripping off. Like that was a really interesting kind of vehicle. And, and I think there’s as fun as it is to hate on the Cybertruck. I think there is like a kernel of, of a really interesting idea to it, but a good designer would have said: Listen, Elon, A, is this a product we want to launch into the full size truck market? And so that would have been more of a product planner guy, right? It would have said that the full size truck market is in terms of volume and profit, the most important vehicle segment we can be in, in the world. If we get this product, right, and we make it something that appeals to this buyer, this could be something that keeps our company alive for our next wave of growth, that funds our next wave of growth. That’s what the product development strategy kind of marketing folks would have told him if he’d listened.

And then on the design side, a real designer and Franz von Holzhausen is a real designer. He’s also just Elon’s bro now. And as a result, can’t tell him what a real designer should have said, which is, listen, man, I get what you’re going for conceptually. It’s great. We’ve got the makings of something really cool and unique and next level here, but like how we do this matters.

And I understand you want it to look like a low poly video game thing, because nothing else looks like that, but I’m telling you like both on a design and an execution level, that’s really flawed. Great wedge designs, if you look back to the seventies, when [Giorgetto] Giugiaro and these other people were innovating these kinds of looks that you clearly fell in love with right around the time your personality was frozen in carbonite, that when you look at these designs, they have these subtle things to them, these little curves, they have different panels that match up in ways so that you can, if you don’t have everything quite matching up, the eye kind of moves past it and doesn’t get stuck on it. And either the people at Tesla know that they can’t say this stuff or they say it and they know that Elon’s going to ignore them and it doesn’t matter either way. Whatever opportunities were there for the Cybertruck , they got blown. And I think it’s the combination of underinvestment, like we discussed, but then also Elon’s ego now reaching the point where I just don’t think anyone can tell him anything anymore.

PM: I think it’s fair to say that that has always been there to a certain degree, right? We’ve seen in the past that some of the delays in the vehicles and some of the increased costs in the vehicles and the difficulty in production has been a result of Elon Musk’s decisions around design and the things he wanted in the vehicles and then those not working out properly and it completely messing up the production process. But this is kind of taking that to a whole new level.

EM: You’re exactly right. This goes back to the Roadster. The term back then was elegance creep, but it’s interesting, right? It was elegance creep. He did make the product more elegant. Like I think there was a risk that that first Tesla roadster would have kind of just been much more obviously taking a Lotus Elise, which is a car you could buy and just slapping a battery and electric drive train into it. That would have had some success fans. There would have been fans for that. But it wouldn’t have launched a brand the way the roadster did. And I think, even though that elegance creep that was absolutely, it came from Elon, it doomed that product to never be profitable. And so it like the master plan of: Oh, we’ll use the profits from this to fund the cheaper one. He kind of screwed it up from the get go, but it did establish a brand. And I know he worked with designers as well, and there was collaboration. He had input, but fundamentally there were designers behind the wheel on that project. And I think his input, because it did help build Tesla as a brand, and if it hadn’t been there, Tesla might not have survived past 2008, 2010. I don’t know, whatever, certainly to launch the Model S, that wasn’t a guarantee.

And I think that the fact that he did have some positive impact on the designs, this is why he thinks of himself as product architect. And I think this is why now he’s built up in his own mind, the idea that he is a design God. And with the cyber truck, sort of like with full self driving where full self driving was the point at which, these sort of hypey things that were all sort of like within the realm of reason and not quite over the line to like blatant fraud, like that crossed over with full self driving. I think. On a product design side, we saw a similar thing, like sort of that exit velocity, right of got hit with the Cybertruck.

PM: Definitely, now I want to transition into talking about this bigger, like strategic shift, right? Because you were talking about the master plan there. And if we go back to that, the idea has always been, we make the expensive car and that funds the cheaper car and that funds the cheaper car and that funds the cheaper car. And I feel like initially the idea was that the Model 3 was going to be kind of the cheaper car, the mass market car, but of course, now we’re talking about a Model 2 because that was not able to come in at the price point that I think was initially expected the Model 3. And so the expectation has been for quite a while that Tesla was going to make this cheaper mass market car that was going to be much more affordable for people and that was going to launch it into kind of a new level of scale and growth where it could be selling many more cars than it is even with the Y and the Model 3. Now, in Walter Isaacson’s book, of course, he talks about how there was division within the company on this, that Elon Musk wanted to go for a robotaxi and not to build the Model 2 or to have the design team working on that.

And eventually, as you say, Franz von Holzhausen and some of the other folks went to him and said: Listen, we need to still do the Model 2. We need to work on this and we can do it alongside the robotaxi and use the same like vehicle platform for both of them. But then a little over a month ago, I believe it was or two months ago, there was a report in Reuters that in February, Elon Musk had officially canceled the Model 2 again and said that they were just going to go full on with the robotaxi, that that was the focus. And then in the recent investor call, it was unclear, I think it’d be fair to say, where Tesla is actually going with this. There was talk of more affordable Models, but it not being clear what that actually meant. So what do you make of this shift and what is going on in the company? And the question of cheaper mass market Model 2 car versus robotaxi, putting all the eggs on self driving and what’s happening there.

EN: So Tesla’s had two master plans, right? There’s master plan, the original top secret master plan. And then there’s master plan part deux.

PM: And now the third master plan, of course from last year, I think?

EN: Yeah, which I think is kind of more of an evolution of, I see it as sort of the big shift between one and two, because it really directly addresses this. And I think that, yeah, it was part three was where he really sort of clarified the implication of part two, which was, we don’t have to build this low cost car going way back, covering this company. And certainly like the work that went into writing ludicrous, like one of the big points of all this was it was not Tesla can’t exist as a company or whatever. I’ve always felt that as a premium high end Silicon Valley Porsche or whatever, there’s a huge opportunity for Tesla to be a business. I think. It was an interesting marketing choice to sell, especially, and it shows how far this brand has come, that their earliest customers were kind of this wealthy, guilty liberal type that kind of felt like you can’t just buy yourself a nice car.

There needs to be something more there. And honestly, like, in retrospect, I think they could have just sold electric and just said: Hey, it’s a nice car, but it’s electric. But they had to do this other thing, which was like, you’re also helping fund the next gen like poor people. So they were going to have a nice electric car too. And I think that was, it helped a lot, but I think in retrospect, it probably wasn’t super necessary. And the important thing was, and this was the point of ludicrous was like: Okay, if this is the goal, if your goal is to change things in a really profound way and do that by offering ever more affordable vehicles.

Culture matters and where you’re sort of seat of your pants, Red Bull-fueled sort of hackathon kind of style that’s been baked into Tesla from the beginning that can work right in the high end where people want creative and novelty and new and pushing the limits and all that kind of stuff. But at a certain point, as you get down the price point, those values become totally inimicable to like what you’re trying to do. And it becomes all about spreadsheets and order and timing. And it becomes this very boring. I mean, the car business is boring because it has to be because otherwise you don’t ring out the cost of both the design and the manufacturing of these cars. And Tesla has never wanted to be a long term slow, but steady, boring company. And so I’ve always been, and this is the main point I make in ludicrous. And I feel like five years after it came out, almost it’s really being validated here. Like this is not a company that’s really built for that culturally.

And I think it’s a real shame because if you look at it, if you look at what’s happening in the EV market. Tesla is the company that should be leading the charge down market, right? So they had, pre-COVID they had something like 80 percent market share, you know, it’s, we haven’t said of the EV market share granted, which is not super big. And there’s an interesting parallel to me to actually General Motors of the seventies and eighties where General Motors had like over 50 percent market share in the seventies. And they got complacent. They like Musk, you know, is different because, because it wasn’t this sort of tech startup stock pumping kind of thing. But at the time their executives were focused on stock and they got lazy and complacent and they basically were living off their market share, right? So their market share would go down a little each year, but it was still bigger than everyone else in the industry. And the profits would go back to shareholders or whatever in order to keep that price up.

And it wasn’t going back into the cars. And meanwhile, as energy prices spiked, all of a sudden American consumers were like, listen, we need. Modern affordable cars. And the Japanese came in and blew them out of the water. And it was decades of decline before GM finally hit the point where they had to have the bailout and get rescued. The Tesla situation is different, but the complacency is very much the same. They are not investing in their product because they think they can just kind of tweak it endlessly and they can hold on. They can make small investments and show profits and like, hold on to their growth. And I think, what’s happening now is, is just, it’s proving that, that simply can’t be done.

So I think Model 2, I’ve always been skeptical that this was something that the, the company was seriously going to be able to a invest in and B do. And if you think about Model 3, and there was sort of a preview of this in that that was supposed to be their affordable car and it did, it was more affordable. It did expand the market, but they sort of rushed it to market so fast and screwed up on the manufacturing. They wasted billions of dollars with these automated production lines that were never going to work when they launched it. They had to start with the high end. This is why Tesla is always, it’s a fashion business. They charge as much as they can. Even when they’re saying, even when they’re telling investors in the public, this is going to popularize EVs for a whole new market share. When it comes out, they still leverage the exclusivity of it.

PM: You see that as well right now with the Cybertruck too, where it’s the Cyberbeast, the $100,000 or so vehicle, which is the one that they’re really selling, not like the lower price point.

EN: Yep. And they did this with Model S too. They said the Model S was going to start at $50,000, right? Cause so half the price of basically what the roadster had done. And so they tell that to investors to say: Look at this progress we’re making in our mission and expanding the market. But then when the product comes out, they start at the high end. And by the time they get to a certain point, right. With the, with the Model S they said, well, it only has 150 miles of range. Nobody wants it. So we’re just going to discontinue it and did it with the Model 3. There was a $35,000, right. It was supposed to start at $35,000 when they announced it. That was the headline. And then they finally, start working through the performance and then the long range and then the medium range. And they’re like slowly working their way down there. And by the time they get there, they’re like, well: We’ll sell you the $35,000 one, but only if you call us and order it off the special menu, like it’s the secret menu, like it’s In-N-Out Burger or something.

And it just sort of went away. And it’s because the Model S was not really actually engineered to be a low cost car. And this is why now they’re doing these refreshes to continue to bring the cost down. It’s because they didn’t take the time to engineer it that way from the get-go. And so with Model 2, I think. It was just pretty clear that that this is not a company that knows how to make affordable cars. What it is a company that knew how to do was pump the stock. And it makes sense in that sense that the robotaxi is where they’re going because it’s in a way the perfect Tesla vehicle because they don’t have to ever sell it to anyone.

They can do the big show. They can hype up the investors. They can get the pump and then sort of like the semi-truck is a great example of this. They put a couple of metal fleets. I actually saw one on the road. And when I was driving back from California the other day, it was actually driving, pulling Cheetos apparently. And so you can kind of be like, Oh, they exist. Tesla’s done it. They’re a player in this EV semi space, but again, it shows, right? More and more, these products are about the stock, they’re not about actually putting vehicles on the road. They’re not about expanding the EV market. And the bummer of this is, is that Tesla with their sort of headstart on technology, which I think is, it’s hard to quantify. I think it’s maybe more ephemeral now than it was before, but they certainly on paper had a headstart on technology. Huge one. They have 2 million units, almost 2 million units of scale. This may be where they top out, but they have a scale advantage over everyone else in the EV space.

Their market share in the premium space has gone from like 80 percent to like, I think it’s around 50 percent and it’s just getting absolutely munched by this wave of competition. Economics tells us that Tesla should be the company that leads down market, right? They should leverage all of these assets that they have that no one else has in order to genuinely expand the market in ways that other players can’t do by going and making a really affordable car that opens up a whole new realm of buyers. The fact that they’re choosing not to do that is really interesting. And I think, I think a lot of it is just the stuff we’re talking about, the stock pumping part of Tesla sort of overtaking the reality of the car business. That’s clearly a part of it. There may also be some good reasons that they’re not doing this because frankly, I think making affordable EVs is a lot harder than a lot of people think.

PM: Yeah, that’s a good point. And I want to ask you specifically about that, right? Because if we’re looking at Tesla and not really moving into this more mass market segment, I guess, because, it has the Model 3 and now the focus is on robotaxis, rather than building a Model 2. We’ve had Ford recently was talking about making lower cost EVs cars, rather than the bigger vehicles that they’re making now. Of course, there’s a lot of talk about the Chinese electric vehicle automakers like BYD and, The increasing kind of international moves that they are making into Europe. And you just assume eventually they will come to North America though. I don’t believe they’re here yet. And they’re of course making much more affordable electric vehicles over there. Where do you think that this EV market is going to go then? Who is going to be the big competition that Tesla actually faces? Or will that look different say in North America than it will look in China where Tesla is already dealing with the competition from those Chinese automakers?

EN: Yeah. So I think you, you have to start thinking about this in China, because frankly, China, both as a market and as an industry has left us in the dust and continues to leave us in the dust on the EV side, at least. And I think the really important lesson to take away from this, once again, centers around Tesla, which is in this country for more than a decade now, electric vehicle electrification policy has really been Tesla’s the tail that’s wagging the EV policy dog essentially. There’s been this very seductive pitch and, and super seductive to American politicians that like, you don’t really need to do that much here. Really all we need to do is that see, look, here’s this adoption S curve, which by the way, is a classic, like the survivorship bias, the airplanes with the parts that get shot up when they land thing, right? Yes. The texts that we have technologies that were just Undeniably beneficial and have since been adopted on mass follow these really like specific adoption escorts. Yes. Does that mean electric vehicles will follow that? Well, Tesla convinced, and a lot of other people in Silicon Valley convinced the politicians that yes, they would.

And, the biggest negative as a politician about doing, like serious policy to encourage the adoption of EVs. It’s: Oh, these communists are taking away our choice and they’re forcing us into these vehicles and we don’t want it. And it becomes this, like, you’re fighting the American consumer and like, politicians do not want to fight the American consumer. And so when Elon came along and said, look, put enough batteries in these cars, it’s just a one to one substitution. The market’s going to take care of the, put a little cash on the hood. Mark’s going to take care of the rest. We wasted literally a decade thinking that that was policy. And I think really, if we, if we take, there’s a lot of interesting lessons to take out of Tesla.

But I think one of the most important ones that’s becoming unavoidably obvious now is that if you want EVs, you can’t just hope. It takes real policy. The market is not going to just make this happen. And I think that’s what we’re seeing right now, because what did the market do? The market piled into premium EVs, which was a supposedly where the profits are, But be also kind of where they had to go because the idea was you have to have big batteries, which means you have to have high costs.

So the problem is, is that we’ve created the only market for EVs in this country that we’ve created is totally overcrowded. It’s oversupplied. The demand only grows so much at this point, and basically everybody is losing money. If your adoption strategy depends on market forces, the market actors that are like: Okay, we piled into EVs and now we’re losing money at the high end of the market, the logical conclusion is not going to be: Well, let’s get into the lower end of the market because what we’re going to lose more money. You know what I mean? Like if you can’t make money at the high margins, you’re not going to be incentivized to make money at the low margins.

Meanwhile, in China, the government policy has been much more far reaching, you’ve seen things like not just at the federal level, but and I think there’s a really broad, interesting lesson across all of the markets that actually local policies drive things in the car business way more than most people think. Cities in China required, if you want to operate a ride hailing service, sorry, it’s got to be all electric cars. Well, that’s a good way to get low cost electric cars out on the road. That’s a good way to stimulate demand for that. Well, We aren’t doing any of those things. And then of course, you have all kinds of policy help in the battery supply chain, going overseas, extracting, refining in China.

And, so China’s winning in China, Tesla’s already in trouble. And by the way, it’s not perfect there. The competition there is also so fierce that basically almost nobody’s making money BYD and Tesla are making money or have been, but there’s a price war and that’s kind of going away to zero. It’s a different problem though, right? Because it’s more mass market. And so you have all of these kind of competitors trying to see who is going to win out. And it feels like eventually there’s probably going to be some consolidation before, you figure out who is going to be kind of the dominant players. Yeah, exactly.

It strikes me much more as a healthy competition because you’re seeing competition for across the market. It’s not just everybody piling into 50, And kinds of premium vehicles. So Tesla continues to kind of get left behind there. Unfortunately, right? Like ideally the competition in China, Tesla would want to keep up with it and that would drive the investments in product that we’re not seeing, which would then spill over into the US and, but they’re not doing it. They’re choosing complacency. They’re choosing the stock price over the The health of their business. I don’t see BYD and other Chinese companies coming to the US anytime soon for geopolitical reasons, basically, you know, it’s interesting.

We’ve gone from a situation in the 90s, late 80s and the 90s and stuff, where basically everyone was a globalist, right? Everyone believed in free trade. And now all of a sudden, everyone’s a protectionist. Like both parties are not just protectionists, but also very, very like wary of China. And I think there are some good reasons to be wary of China. I certainly think that the US probably really does need to do a lot to encourage a sort of upstream supply chain here in the US because that’s really where the dependency is the greatest. And I would not like if I were making policy, I think it makes sense to have the Chinese come here in terms of stimulating consumer competition, right?

Kind of like just as the Japanese when they came to the U.S., which by the way, people forget there was a lot of anxiety, different situations. Japan was not a strategic competitor the way China is, but there was still a ton of anxiety in the 80s and 90s that Japan was just going to destroy our industrial thing, that they were doing it you know, by manipulating their currency, there were a lot of very similar things going on. And what really happened was they ended up building factories here. They ended up employing, employing Americans granted non union, but really their products. Forced the US automakers to ultimately, well, go bankrupt to be bailed out, but ultimately respond. And today, American automakers are genuinely competitive with the Japanese.

I think doing that on the EV side with Chinese is going to be really hard politically. And again, there are geopolitical factors to it that make some of that reasonable. Although some of it is also, I think a little bit just panic, but honestly, I think right now that it’s a really good question. If Tesla is not going to lead down market with their sort of commanding market and technological lead, I’m curious who is. Ford is talking about a skunk works project. I think that’s really smart, sort of their, they have a next generation truck. That’s sort of going to take over for the lightning and stuff. I think that’s probably pretty similar to what we’re seeing already. It’s just sort of a rationalized, I think the lightning and some of, a lot of the products that have come to market now have been rushed. And so I think that this next generation. The T3 platform from Ford is going to be kind of a refined and hopefully more profitable version of that. But this skunk works project is I think what needs to happen.

And, we still know so little about what’s happening there. I would guess if Biden wins this election, which I think he will, that projects like that, the sort of what are right now, longer term development projects to make sort of these platforms and vehicles that are low cost. It is going to be the focus. But I think what the implication is, is that instead of that S curve that so many people have predicted, and by the way, it’s funny going back and looking at some of the predictions that people were taking as gospel, not that many years ago, we’re going to see a real speed bump here. We’re already starting to see it.

I think it’s going to get worse before it gets better. And that’s why rather than sort of. Trying to resuscitate sort of this high fashion market that we have right now. I think we do need to let that sort of play out. I think we need the weak players to get knocked out. And if Tesla is not going to invest in product, that means Tesla too, just because you dominate the market.

If you’re not keeping up with competition, this is how markets work, right? For better or worse, you’re going to, you’re going to go. And I think that from a government policy perspective, this is a moment to take a real deep breath, really rethink on a structural level, what went wrong here? Why did this not play out the way everyone sort of thought it would, and then really make kind of frankly, moonshot, new deal, Hoover Dam level kind of investment that is not just oriented around this myth that if you make a product for rich people, someday it’ll get cheap enough for poor people. No. Can’t rely on that happening. You got to ground up an industry that can do this on a sustainable level, especially if you want us to not be dependent on China to do it.

PM: Yeah, I tend to agree with you. And just part of the reason that it would be difficult for the Chinese automakers to come here now is that the tariffs are quite high on Chinese automobiles coming into the United States as well, which would be one difficulty. I think it’s much more likely that they’ll be available in Europe. I’ve already seen them available in New Zealand, for example. BYD has a factory in Hungary, of course, where it’s producing vehicles. So it’s much more likely there, but I think probably less likely in North America for the time being.

EN: They’re in South America, a number of not just BYD, I guess has Ford’s old factory in Brazil. You have a number of Chinese companies, both importing and now increasingly building in South and Central America. And I think one of the things that I look to that suggests, I think you’re right that counting on that to solve our problems and kind of save this market driven sort of strategy for electrification is not going to happen is because you already see the Biden administration essentially warning Mexico: Don’t give incentives to Chinese EV factories because once they’re in Mexico, then they’re in NAFTA. And then all of a sudden it gets really hard to keep them out of the market. I think it’s clear that politically the obstacles to that are, super, super strong.

PM: And if I’m right, BYDs are being sold in Mexico, but not manufactured, does that sound right?

EN: Yeah, but I think they’re, they’ve been looking at building a plan. They may even be already starting to build one.

PM: Good to know. So I want to shift back to this kind of broader strategy that we’re seeing with Tesla. One of the things that we’ve been seeing in the past week or so is that there are mass layoffs happening at Tesla, which really seems to be a cleaning house and Elon Musk kind of putting his stamp on the direction of where the company is going to go in the future, and it doesn’t look particularly promising. 20 percent of the company staff could end up being laid off in the coming months. You know, a number of those have already been laid off. And on top of that, there are a number of key figures within the company and key divisions that have been eliminated as well. Anthony Thurston, who was senior manager of the Cathode Materials and manufacturing at Tesla, Rebecca Tucci, who is Tesla’s head of charging. So the massive supercharger network that all the other North American automakers are buying into and, and adding Tesla standard to their cars so they get access to it.

That whole team has been gone. Now, electric reporting suggests that that is because. Tanuchi was trying to reduce the layoffs in her team. So Elon Musk just fired the whole team instead. Daniel Ho, who was director of vehicle programs and new product introduction. So he was the new product person, basically gone along with his entire team. So it doesn’t give you much hope for developing new products there. Allie Arabalo, his senior director of US HR has left the company. Senior Vice President Drew Baglino resigned earlier this month and sold off a ton of stock. Rohan Patel, which was Tesla’s vice president of public policy and business development also left. And last year Zachary Kirkhorn who was there for a long time and was the finance chief. So what is this kind of mass spate of not only executive departures, but also all these layoffs and hitting these key teams, new products, superchargers, cathode materials, what does that tell you about what’s happening at this company?

EN: Yeah, I mean, some of this has happened so recently as we’re discussing it, I think there’s still more reporting to come in. So I want to make it clear that I’m speculating about some of this, but I think at a high level, Tesla is a fascinating thing. And I’ve interviewed a lot of former Tesla people over the years. It’s just always a fascinating interview. There’s variations, but there’s always with everyone, this push pull between the good and the bad and people who are there have to basically from day one, decide to live with certain things. And I think, this is true for every job to some extent. I mean, we all have to accept things about the world that we don’t love or whatever, but at Tesla, there’s this unique sort of hyper version of this, where either you buy into the mission, although that is, I think, increasingly harder to do, right? Like the environmental mission, you buy into Elon Musk’s personal genius, also getting tougher, or you buy into the idea.

And I think this has been one of the more sustainable pieces of this that Tesla is a unique opportunity for you as an engineer to do creative stuff. I think that’s been a really reliable source of new talent and sort of keep people around, but these things, whatever it is, that is your reason for being at Tesla is constantly being challenged by other things. And that ranges from racism and sexism to just Elon won’t actually do the right thing. There’s no way to do your job right at a certain point. And this is why everybody ultimately relieves Tesla. And when they do, so many of these interviews end up like therapy. I’ve been like an hour and a half into some of these interviews. And I realized, wait a second, none of this is material for what I’m working on anymore. This is just me helping this person process their feelings.

And a lot of times, it’s a big part of it is like, like a lot of trauma and sort of codependence and stuff. It’s people get so sort of sucked in that they cease to be able to see the outside, the big picture, and that’s why it’s so often so fascinating to, for me to talk to, because I’ve only seen it from the outside. And we have these really interesting conversations about what’s really been going on. And people, a lot of times don’t even know what they’re actually working. I mean, they know what they’re working on, but they don’t know what it’s for like all kinds of weird stuff. So I think with that sort of framework in mind, I think, again, what we’re seeing is. A couple of things. One is I think people are losing their connection to the things that have kept them there in the past. Historically, I think it’s again, it’s harder to say if Tesla, we’re saying, you know what, doing a Model 2 is going to be really, really hard, but Tesla’s the kind of place to do it.

We’re hardcore engineers and we’re going to embrace that challenge. And we’re going to do it. I think you’d see the opposite. I think you’d see people flooding to Tesla. Young hungry engineers. And this is by the way, has kept is one of the things that’s kept Tesla going. Right. He’s not though. And I think that that sort of sets a weird tone. I think there’s also been a lot of people in tests. I know over many, many, many years now who know on some level that the company’s approach to driving automation technology. And to varying degrees, right, is either not great or kind of even a fraud. I think there are people who, who spent quite a bit of time at Tesla knowing that, yeah, it’s a fraud, but it’s not what I’m working on.

And I’ve got these other things that are so important that whatever. And I think that when Elon says we’re all in on this. I think that that is, it becomes a real problem because then it’s like: Oh, well, we’re all in on the fraud. He likes the fraud more. He cares more about the fraud than he cares about the hard work I’m trying to do to make the products better or whatever else it is. And so that’s really, really, disillusioning for people. And then on a more, on a practical basis, not only does Tesla have a driving automation system, they have a strategy, approach and, and sort of technical debt. And, they have stuff that they’re married to in terms of this technology. And yet it doesn’t work and it’s not doing what it should. And I think if you really understand the technology you know, it’s not going to. The practical questions of how you design a robo taxi in those circumstances. It’s hard. And again, I don’t want to get into the technical sort of aspects of that, but like, it’s not easy.

And it puts people, it puts very smart driven people in a situation where it’s like: Am I just putting on a show for Elon? What, am I putting on a show for someone else? I mean, what is it that I’m actually doing here? And again, that kills, I think, what’s been the most reliable and consistent way that Tesla’s brought talent in, which is you get to do exciting, cool work that nobody else will let you do because you’ll be stuck in some sort of top down bureaucratic hellscape, which frankly, legacy automakers are just for very good reasons.

PM: And picking up on what you’re saying there, like it really does feel, and it’s kind of been what we’ve been talking about throughout this conversation, that the focus is really on not addressing the core business challenges and on going full in on this hype, in order to keep the share price up and whatever, instead of addressing the fundamental issues with the business. You know, when I saw these layoffs, of course, any layoffs are terrible with all these people losing their jobs. But in particular, seeing him gut the Supercharger team at the same time as every automaker is adopting Tesla’s charging standard so it can get access to it. And of course, I think that this is a real strategic advantage that Tesla has. It’s like if an automaker and also owned a ton of gas stations all over the United States, right? And the world really, because Superchargers are not just in the US and to gut that team, just, it really doesn’t make sense to me.

EN: You’re right. And I think on an intuitive level, I think a lot of people are looking at this and coming to that exact same conclusion. One of the things that I’ve always looked for from Tesla is not just like how much Upside can you capture when everyone’s like hot for you, but this is a survival business. And what do you have that’s defensible and what is a moat that others can’t replicate? And the supercharger is the network is hands down the most sort of durable thing that Tesla has built that Elon Musk really can’t completely screw up other than firing everyone and starving it of resources, which it now seems like he’s trying to do.

It’s a complicated situation. And I think we need to get a few more facts before we can be real conclusive about what’s going on. But I kind of feel like it’s partly the victim of its own success, right? So the adoption, mass adoption of this North American charging standard, which is based on Tesla’s interface, essentially their plug and socket interface and Tesla opening up the supercharger to other companies as sort of part of that. It’s good for electrification. You can buy any EV now and you have way more choice in chargers and they’re generally pretty good quality chargers. The problem is, is not good for Tesla because it gives away the exclusivity. My colleague, Alex Roy on the on the Autonocast, he sort of is always says, you know, well, you know, there’s problems with the Tesla, but really it comes down to the charger.

And you hear this again and again, like: I don’t like Elon; I don’t even love the interior or whatever. There’s parts of the cars I don’t really care about, but like, I just need the chargers. Well, now that’s no longer something that keeps you in the Tesla family. Right now you can say: Bye, I don’t need to deal with that, I’ll go get a Rivian. I’ll go get a Volvo, whatever. And, and you still get access to those chargers. I also think that investing in growth, creating the Superchargers was like a really important thing for Tesla and the whole industry when it was done, which by the way, is. 2012 was when they announced it, right?

So it’s been around for a long time and it’s been something that really has helped Tesla become a viable company in a way. It’s like a feature that each car has. Which is weird because the accounting has never done that, right? You would think it would be part of the gross gross margin of these cars, but they don’t do it that way, which I’ve always thought was suspicious, but I think like Tesla itself, the way they do things is a very transitionary thing. They are the right company with the right strategy to go zero to one, to kickstart something, but just like countries and companies and religions and all kinds of other things have this certain kind of figure that is required to found them that founder figure is oftentimes not really the right person to, once it’s sort of established to kind of protect, protect what you have a) and then sort of accept what you have that growth from here is not going to be explosive. It’s going to be sort of a grind out fight. We have competition, of all these other sorts of things. And so I think that, that the supercharger thing, it betrays that if it’s sort of a fundamental belief of Elon’s, which is that if it’s not hyper growing or it doesn’t have the prospect of hyper growth in the near term, he just doesn’t care about it.

And I think that’s why he’s not just burning sort of the superchargers and I was, he’s bringing the superchargers to the ground. They’re Cutting back on everything, but just sort of maintaining what they have. So growth and technological development is gone. It’s the exact same thing you’re seeing with the cars. And I think in both of those cases. It’s because he just gets it that like the days of hyper growth and those things are over. And so he doesn’t really care about it. It’s like service service has never been the key to Tesla’s growth. And so he’s never cared about it. And so it’s always kind of sucked.

And I think what we’re seeing is these other things, the difference is, these things are core to Tesla’s business: Tesla doesn’t make revenue on AI. Tesla does not make revenue really from certainly robotaxis or really autonomous driving because they don’t have it. Right. And so I think it marks a really disturbing turn, like it’s behaviorally consistent, but it’s really disturbing that now. It’s like the core parts of the business. He just doesn’t care about them anymore because they’re just, the growth is not there. It’s like the Russ Hanneman in Silicon Valley, who’s like sort of this like extreme stereotype of the venture capitalist. He’s like arguing against the startup that he’s funding, getting revenue.

And the startup founder is like: I don’t know, man, I’m pretty sure making money is what companies are supposed to do. And he’s like: No, he’s like, if you make revenue, Then it’s never going to be enough and people are always going to want more. And then you have to give them more. Whereas if you’re pre revenue, you know, you’re a pure play.

And I think like that joke, it was satire whenever, I don’t know when that came out, but that’s exactly what we’re seeing here. And by the way, Not just for some startup that is like five really smart guys and like a case of Red Bull, but like a 2 million unit a year auto industry business. And like to build 2 million units a year of business in the car business is really an incredible achievement.

And to even consider pivoting away from that proves, I think that he doesn’t really know what he’s doing. He’s never really understood what he’s doing, doesn’t appreciate his own accomplishments. And that is terrifying because then we’re talking about billions, tens of billions, hundreds of billions of dollars of value, of real, actual value. Forget this, the overinflated value of the stock price, the actual real value of a 2 million unit. Car company, a brand that people have unprecedented allegiance to a charging network. That’s the biggest in the industry go all around the world. There is very real value here. And he see, and, and a kind of value that’s really hard to build as witnessed by all the other EV startups that are all basically gone now almost, and wouldn’t exist if Tesla hadn’t had been this successful.

So to be burning this down is incredibly dark. I don’t think people understand quite how nihilistic this is. And I think it needs to be a real object lesson for sort of future generations of. of entrepreneurs and policy makers for sure. Yeah. And the focus is on, as you say, robo taxis and optimist robots and things like that, instead of the core of the business and picking up on what you were saying there, I want to throw a few things at you as part of a final question.

PM: So basically what we’re seeing now is obviously These mass layoffs, you know, as Elon Musk seems to be kind of reasserting his position at the top of the company and what he wants it to look like. There’s this upcoming shareholder vote on moving to Texas from Delaware, the company’s kind of headquarters and a massive compensation package that Elon Musk expects in the tens of billions of dollars that of course the judge in Delaware, you know, kind of ruled against, and just these other bigger issues at the company where the share price is going down, the sales are not working out. We’re even seeing these, I guess, general and influential people start to talk about the core of Tesla’s business. You have been talking about it as a fraud for a while, but you see someone like Dustin Moskowitz, the CEO of Asana, former Facebook guy, asking whether Tesla is the next Enron.

What does it all of this tell you about where this company is going, but in particular, whether Elon Musk can keep that position at the top of the company and whether the shareholders will ever kick him out in order to try to save what has actually been built there?

EN: You describe a lot of the things that make me think that we’re in the sort of late innings of this whole story. One other that I would, that would add is the government moving on autopilot. We saw that recall of 2 million vehicles in December, government just came out. We’ve had fatal crashes, including the day before this last earnings call or the night before another fatal autopilot involved crash, a Tesla owner being charged with, I don’t know, manslaughter or something like that. And now NHTSA is examining the over the air recall and whether or not it actually did the trick, which these crashes strongly suggested it did not. So there are a lot of things piling up right now. And I think like, even if you just take the autopilot and full self driving thing, you know, if your sales are already sort of going down and, and by the way, the only way you’re preventing your sales from going down any further is, is by cutting the price, suddenly being able to being told, and I think this is a real possibility that you can’t sell autopilot anymore, which is by the way, rolled into the cost of it. I think that alone would take Tesla right now, their business as it is right now, would take them into negative margin territory. And when you’re at that point, you don’t make it up on volume. You can’t just make and sell more cars if they’re all at negative margin.

And certainly full self-driving, if autopilot essentially gets nerfed into non-existence, you know, full self driving that, that Musk himself says he’s betting the company on suddenly becomes something that consumers can’t access or use or whatever. It’s not only are you destroying the demand, the desire to buy a Tesla, you’re destroying the profit margins on a Tesla that gets sold, and the stock price, which of course is sort of really what it’s all about.

And so, and so I think what’s interesting is it’s not just that all of these problems are stacking up because, you know, again, if you’ve been following this for a while, they’ve been stacking up for a while. It’s that there’s not an obvious or even a non obvious way out of any of these things. If the problem is fundamentally just a product-side problem, you could start investing now. Elon could have gotten on the call last week and said: Okay, we get it. You know, our sales are dropping, we’re going to spend. And by the way, the weirdest thing about all these layoffs is Tesla has, on paper, tens of billions of dollars in cash.

And there’s, there’s speculation, maybe a lot of it’s trapped in China. They can’t get it out. There’s speculation always of you can’t really trust any of Tesla’s books. And I think there’s good reason to believe that. But the fact that they’re not making the investment in the product, turning it over, saying we get it, we want to compete. And just you wait until what we have coming. Instead, it was sort of like, Oh yeah, we’ve got some new stuff. We’re not really talking about it. We’re not going to refute, you know, really the Reuters reporting about the low cost car. So you have that, you have no way out of this autopilot and full self-driving stuff. There’s nothing right. Their way out was: Oh, we’ll fix it with software over the air. If the regulator doesn’t buy that, forget it. So I think that’s the situation. I think what Elon has done a really good job of doing, particularly among folks who are part of the tech sector and kind of part of the established power structures more broadly is convincing them that like, and, and, and for years, I’ve had conversations with people where I sit down and I explain.

You know, they think: Oh, Tesla’s doing so well. And I say, well, here’s some things that maybe you don’t know about. And they’ll say, Oh, wow. Yeah. Like that’s really bad. Whether it’s about the manufacturing side or autopilot or whatever it is, I can educate people about it. And again, the more you get to people who are like bosses and investors and sort of politicians, whatever the core belief that all of this always runs up against is Elon will find a way out of it. And so I don’t think it’s, it’s not necessarily that the problems are really any worse or really any different, they’ve been the same. And, and this is the most gratifying thing about all of the blood, sweat and tears I put into “Ludicrous” is that almost five years, it’ll be five years this summer that it came out.

And I feel like it does explain the roots of kind of all of these things that we’re starting to see. And so I think what’s changing is that people are losing their faith that he can pull rabbits out of the hat forever. And I think that’s where the Twitter stuff does really come in, right? Like him flailing so dramatically in an arena that is. It’s pretty easy to understand as a normal person, right? And so I think that’s really the part that is going to end up on the stock side really start to affect him. You asked about the possibility of him losing his job. The problem is, is that he still has a hardcore fan base. And it is. Certainly when it comes to the board, you can’t even call it a fan base. It’s people who Elon has is the reason they are hundreds of millions of dollars richer than they were even just based on stock. They’ve already sold, you know what I mean? So even if they’re all their stock today goes to zero, Elon will still have made them richer than anybody in their entire lives. has or ever will again.

And so there’s a lot of loyalty there. And I think the scary, interesting, exciting part of all this is that there’s no sort of driver assistance on this runaway bus, right? Like Elon is clearly like he’s behind the wheel and he’s been sort of the equivalent of drinking from a bottle of vodka for a while now, right? Doing lines of ketamine off the dashboard. And the board is all sitting right behind him, looking over his shoulder. Like I’m sure some of the leaks that we’ve seen in recent months have come from some of them. And we’ve heard from ex board members even, and I’m sure there’s concerns or has to be, but there is no way for them to get him out.

And unless there’s a mass investor movement, and we’ll see what happens with the shareholder meeting. I’ll be Tesla’s never had a shareholder proposal that I’m aware of, like not a serious one that the board endorsed. Didn’t get passed, including by the way, this compensation deal that they’re trying to bring back. If there’s a real fight for this compensation deal, that might give me some confidence that there might be a bottom up shareholder revolt that may end up sort of reigning some of this in. Even in that scenario, though, the competition is so thick and fast in the space that Tesla is still going to look at like a couple of years of continuing to lose market share, maybe even lose money as they try and rebuild, and at the point that the one thing that has always gotten them through these kinds of challenges in the past is Elon pulling a rabbit out of the hat. When he becomes the problem, then what, who, what are you betting on? When you bet on Tesla, and especially because now they’ve had some really, really talented folks at this company over the years, and they’re all gone now.

So if you get rid of Elon, what exactly are you betting on? As we’re recording this, they could announce that Elon’s out and it would be Way too late as you know, an endorsement of their judgment or even to, I think, really prevent a lot of damage to this company. So I think as someone who’s never had any kind of exposure to the stock ever, it’s exciting because there’s no one there who’s going to stop this from running into the wall. And so I don’t, and I don’t see any effort seriously to prevent this thing from hitting the wall. And so I think the next year or so is going to be exciting for those of us who don’t have any skin really in the game financially, and it’s going to be really stressful for, for folks who want to hold onto this belief that Tesla is the thing that is going to let them retire early or whatever.

PM: We’ll be watching with our popcorn and I’m sure you’ll be back to discuss it with us! Ed, I always learn so much when you come on the show, not just about Tesla, but about like the history of the auto industry and all this stuff as well. Thanks so much for taking the time is always great to chat.

EM: Yeah, it’s always so much fun. Thank you so much for having me as always.