Speedbumps on the Path to the EV Revolution

The painful lessons learned when bringing paper innovations into the real world

A Tesla that was involved in a fatal crash while in Autopilot mode

Tesla is like SpaceX. It is often the venture that people point to as evidence of Elon Musk’s vision, if not genius. But, unlike SpaceX, it is where we start to see the negative consequences of Musk’s capriciousness. No doubt that electric vehicles (EVs) today owe some of their success and popularity to pioneering work at Tesla. But innovators can often have their heads too far in the clouds. Without countervailing voices pulling them back to Earth, they often fly too close to the sun.

Tesla being the most highly valued car company in the world is certainly nothing to scoff at. Explosive sales growth has turned the firm into the world’s fifteenth biggest automaker, albeit still behind Chinese electric firm BYD. And though it made Musk very wealthy, even in its early days, the firm itself lost some $862 million in 2019 and only turned a profit in 2020 by selling pollution credits to its competitors. Tesla has since enjoyed three years in the black, but increasing competition in the EV sector has some investors worried about the firm’s longer term sustainability.

To some Tesla no doubt looks like a resounding success, but to others, it must look like a bubble waiting to burst, a case where actual substance lags behind the growth of hype. What exactly is the difference between Tesla and SpaceX?

Musk’s attempts to be revolutionary sometimes fizzle out spectacularly. For instance, Tesla was unable to meet its original production goals for the Model 3, because Musk insisted upon automating more of the process than other manufacturers. Other car companies, like Fiat and VW, had already decades of experience with automation and concluded that some processes, like final assembly, were just too complex for robots--at least for now. Automation provides diminishing and sometimes even negative returns as it is applied to a manufacturing process. As Tesla's overautomated factory struggled with stoppages, the company resorted to assembling vehicles in a large tent located in the factory’s parking lot.

The tent that Model 3’s had to be built in to meet deadlines

Other issues signal a company culture that puts a premium on innovation but not nearly enough on reliability and safety. Tesla's vehicles used to have nearly double the industry norm in quality control issues, albeit improving to just 34 percent higher than average last year. And Tesla is notorious for having the most dangerous automotive plant in North America.

And then there is the recent recall of two million Teslas. The vehicles touted “Autopilot” feature doesn’t exactly perform to the level implied by its name, requiring the firm to install software to ensure that the driver still has their hands on the wheel. A 2022 pileup (see below) was caused by an autopilot-enabled Tesla that, according to the driver, suddenly applied the brakes. Even worse for Tesla, the National Transportation Safety Board doesn’t even think the firm’s proposed Autopilot fix will even work.

If there is one word that describes Musk’s technological style it is hubris. Depending on whom one asks, cases like the overautomation of Tesla’s factories either shows Musk’s willingness to be daring or his unwillingness to learn from others. The Autopilot recall brings back memories of Musk’s days working on a forerunner of PayPal, where he also overpromised and underdelivered. While it is often said that “Fortune favors the brave”, E.F. Schumacher also quipped, “Any intelligent fool can make things bigger, more complex.”

Such hubris has fueled an underappreciation of the complexities involved when translating “paper innovation,” sophisticated models and simulations of technological potentials, into real-world creations. Musk doesn’t have decades of NASA research and development to help guide him for EVs, which is why he has made far more mistakes with Tesla than with SpaceX. He doesn’t recognize that he has a massive lack of experience to make up for.

Musk’s woes with his Tesla factory could have been avoided by breaking up the process into smaller chunks and not trying to advance electric vehicle technology and revolutionize the manufacturing process at the same time. Musk’s approach was akin to switching to a convection oven while you are still working out the kinks in your sourdough bread recipe. Likewise, could have avoided the Autopilot recall had he simply talked and listened to a pilot about how “hands on” flying still is, even with decades of advancements with automation.

Readers who have followed Taming Complexity from the beginning will have a feeling of deja vu. We have analyzed many similar cases. Albuquerque officials planning a bus rapid transit system tried to be innovative in too many places at once. Renewable energy is no longer so nimble and adaptive, now that we try to build it at gargantuan scales. Project managers routinely fail to deliver projects on time and under budget. Musk’s errors are almost ubiquitous in the technology world, for too few people recognize the challenges of complexity and our ultimate reliance on learning via experience. If only…

At the end of the day, it is difficult to dispute that Tesla has had an outsized impact on the auto industry. Despite the relatively small number of vehicles actually sold by Tesla, Musk has helped push other auto companies’ to include electric cars in their vehicle portfolios, practically through the sheer force of his personality. Tesla provided momentum to the idea of electric cars. We can’t know how much longer it would have taken for the industry to evolve, absent Musk’s charismatic championing to help people believe in electric vehicles.

But belief in innovation can take on a life of its own, blinding us to very real problems standing between us and technological advancement. We too often forget that we can more easily imagine progress than actually realize it. In the next installment, we look at this tension in one of Musk’s more recent projects.

NOTE 12/30/23: Updated dated references regarding Tesla’s reliability and factory safety.