- Since Tesla CEO Elon Musk arrived on the scene, he’s been called a visionary.
- Recently, however, Musk has shown that he prefers short-term thinking.
- The upsurge in Musk’s Twitter activity is the most alarming evidence that he’s backing away from long-term thinking.
“Musk is a long-term thinker in a short-term world, but his runway is running out.”
That’s Dylan Byers at CNN, offering some insight into why Tesla and SpaceX CEO Elon Musk has seen Wall Street and the media shift from praising his every utterance to questioning his (often broken) promises.
I’ve been writing about Musk for more than a decade and have frequently credited him with being a visionary who’s in business for the human race. My argument has been that you either accept this about the guy or don’t.
I’ve lately been rethinking that position, in light of Tesla’s inexcusable inability to competently mass-produce cars and Musk’s refusal to see himself as a business leader who owes something to his investors.
I don’t think long-haul stockholders have gotten a bad deal: Tesla shares are up nearly 1,000% since the company’s 2010 IPO. But why have they outperformed pretty much everything in sight, as Tesla has lost billions, missed deadlines, and passed on opportunities to create a steadily profitable, if much smaller than predicted, business?
Faith, pure and simple. The belief that Tesla will somehow vindicate that lofty return with massive profits and huge market share relies on Musk’s sales pitch – a pitch that is supposed to be studiously long-term, but that’s often reliably vague.
Maybe Musk is a short-term thinker who’s good at change
This raises a troubling question: Is Musk truly a long-term thinker? Or he is a short-term thinker who has the crucial skill of changing his story on a dime to suit his audience, thereby generating the illusion of long-term thought?
I’m starting to worry that Musk is the latter. For someone who has composed two “Master Plans” for Tesla, he doesn’t seem to have a particularly coherent vision that can be broken down into details that actual people can execute (hence his flawed preoccupation with automation and his disdain for auto-industry best-practices in manufacturing).
Years ago, I gave Tesla credit for thinking beyond the goals of many startup electric-car companies. Tesla had a multi-vehicle strategy, following its first car, the Roadster: Model S sedan, Model X SUV, Model 3 mass-market vehicle. More recently, we’ve seen a Model Y crossover added, along with a Semi, and a new Roadster. There might be a pickup on the horizon.
Taking the Semi out the picture, that’s still not very many vehicles for a 15-year-old carmaker aiming to deliver a million units annually in the coming years to be contemplating. So where’s the real vision? Alarmingly, is there one?
Musk’s vision peaked in 2015
Musk’s visionary tendencies peaked in 2015, when he gave an influential speech in Paris demanding a carbon tax. This brought all his enterprises into focus: Tesla, SpaceX, and then-independent SolarCity (Tesla merged with that company in 2016). He presented a three-pronged effort to get humanity off fossil fuels and alleviate global warming.
That speech took place before Donald Trump was elected President and before Tesla went from being a niche purveyor of luxury all-electric vehicles to a carmaker with mass-market ambitions.
Neither development has been a positive thing for Musk. He’s clearly studied Trump’s Twitter obsession and realised that he can circumvent the automotive and business media by speaking directly to his millions of social-media acolytes. From where I sit, this has undermined if not destroyed the long-term thinking he used to be good at, reputedly.
If Musk has a critical flaw, it’s unearned didacticism. And that flaw has been more on display over the past six months than at any time in Tesla history.
Anyone who has listened to him joust with Wall Street analysts on quarterly earnings calls is familiar with a favourite tactic. Musk will drop out of nitty-gritty discussions of financial results to engage in ad-hoc lectures about maths, physics, and engineering. It’s classic misdirection. His audience already knows this stuff because it’s all a given in the auto industry and has been for decades. But he isn’t talking to his audience – he’s riffing for his loyalists, who know nothing about the automobile business but believe Musk is a once-a-generation genius who has self-taught his way into revolutionising rockets and road cars.
The most recent example of this has been his Twitter attacks on the United Auto Workers and those at Tesla who tried to reorganise the company’s Fremont, CA factory, apparently in an unsuccessful effort. The factory was, however, once a union shop when it was jointly owned by General Motors and Toyota prior to the financial crisis.
Musk is often more wrong than right
Musk’s rap here might look fresh if all your Elon information comes from Twitter, but he has dissed the UAW before in the context of arguing that the union bailed out on its workforce in Fremont during the financial crisis and that Tesla swept in to rescue it.
Tesla was able to buy Fremont – known as NUMMI when GM and Toyota ran it – for a fire-sale price largely thanks to the global financial meltdown and the bankruptcy of GM: the bill was $US42 million, for a plant that was worth over a billion on paper. NUMMI was at one time called Fremont Assembly, but it was reinvented in the 1980s so that GM and Toyota could learn from each other; GM would gain insight into the vaunted Toyota Production System, and Toyota would gain a better understanding of the US market.
The California location made sense, given Toyota’s popularity in the Golden State, but in the end, having a plant west of the Rockies didn’t compute for GM, and in any case, the factory had been an albatross pre-NUMMI and GM only got two vehicles out of it, the Pontiac Vibe SUV (a rebadged Toyota Matrix) and a Chevy version of the Toyota Corolla. The entire Detroit car business is concentrated in the Midwest, and the foreign “transplants” have built nearly all their new plant on the US South.
Fremont was an idiosyncratic outlier before Tesla showed up – and it still is. It’s not even clear that the UAW is all that enthusiastic about the organising effort there, which has been rumoured for years. It seemed to pick up speed in late 2017, but now looks to have petered out.
Nevertheless, Musk has tweeted about how Tesla both can’t do anything about Fremont organising while simultaneously arguing that his workforce doesn’t want to and insisting that the UAW sought to destroy both GM and Chrysler during the Great Recession, a nonsensical allegation that’s really little more than a rehashed anti-labour talking point from the gang that wanted to pull the plug on Detroit back in 2009 so that the UAW could be finished off.
Wasting time on Twitter
The dreary exercise of parsing everything that’s wrong with what Musk thinks – or doesn’t think – about automaking, running a car company (he says he actually hates management), and labour is evidence of just how far from being a visionary the man has marched.
He has to have better things to do than tussle with random interlocutors on Twitter, even if he thinks he can leverage the platform to override negative press and constant pesky questions about why Tesla has failed to make any money in 15 years while burning through billions in a surging auto sales market that has set new records in the past three years.
If short-term thinkers didn’t have Twitter, they might need to invent it. It’s an ideal format for half-truths and outright deception because it lacks anything that resembles argumentative structure. Rhetorically, it’s guerilla warfare or punk rock: thrilling, but also the opposite of anything strategic.
Musk plays it like a fiddle because it’s the communication equivalent of what has always been one of his most impressive skills: getting people to give him money. If you’re looking for the greatest pitchman in the history of American business, Musk might be your guy.
Then again, even the greatest pitchmen can have their promises scrutinised, once they haze of misdirection clears. That other person who loves Twitter and who now occupies the Oval Office pumps out an endless stream of Twitter propaganda because his longtime calling card – Master Dealmaker – is obviously a ruse. Trump has been hustled by everybody from the Detroit Big Three (on rising fuel-economy standards) to the North Koreans.
The tragedy of Musk sacrificing vision for cheap thrills is that much of the good news about Tesla is getting lost in the process. The forthcoming high-performance version of the troubled Model 3 will be a $US78,000 luxury sedan to join the $US100,000-plus Model S and Model X vehicles in the Tesla lineup. Tesla could now build 200,000 to 300,000 of these annually and probably become quite profitable by 2020 with a “rightsized” premium business.
That’s just one positive development. Not that you knew about it if you’ve been avidly awaiting Musk’s next distracting tweet.
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