BenBella Books Ludicrous: The Unvarnished Story of Tesla Motors

A necessary critical, but fair, look at Tesla.

Written critically but is informatively. Did not change my views about Tesla.

Very well written and informative. A must-read if you follow Tesla.

I only really care about cars.OK, I also care about my family, but not any more than I care about cars. They’re right about equal. So I read this in, dunno, two days.It’s very very good.Despite being super-brief, it manages to cover1. the full history of Tesla from when it started all the way to the Model 3, including milestones, triumphs and setbacks2. the business thesis / business model surrounding the firm3. Elon Musk’s role as savior, cheerleader, dreamer and dodger4. a collection of the sundry controversies surrounding Tesla, that the author deals with quite fairly and even-handedly, I thoughtEdward Niedermeyer stays away from a couple things: (i) the fair valuation of the company’s stock and (ii) any comparison at all of its products with other cars. I can 100% understand why, if I’m honest. You don’t need to buy his book to find out about all that. Hydrogen never gets mentioned either, not even once.The author is very knowledgeable about the business of making cars, very knowledgeable about Tesla and in my view he actually likes Tesla, the car company, despite the fact that he has little time for Tesla, the business, or the aggressive tactics of Elon Musk.As he takes you through the company’s history, you live three times through the fact that (all while pretending that it will re-invent manufacturing itself) Tesla has repeatedly chosen to mass-produce awesome prototypes from the ground up, rather than acquire experience in the true essence of building cars, which is 1. to design a product so more than half of its content can best be farmed to specialized outside suppliers and 2. to conduct this orchestra of suppliers in the process of putting together cars with minimal violations of pre-agreed tolerances.This he drums into you good. At the same time, you are left in no doubt that it took the genius of Elon Musk to see the promised land in the business plan of the firm’s original CEO and run with it.Niedermeyer is tremendous at putting things in context!On page 210, recognising that Tesla has changed the world by creating from scratch the market for premium electric cars and alluding to both the oncoming onslaught of German battery-powered rivals, but also to the mobility revolution heralded by Uber & Lyft, e-scooters etc. (to say nothing of the autonomous revolution fronted by Google’s Waymo) he offers deep insight:“its place in the history books is secure, but its present is coming under direct assault from more experienced, pragmatic automakers. At the same time, its future is being disrupted by a fresh crop of innovators who are leaving the entire idea of the car behind.”Personally, and precisely because I love cars, I actually don’t think Tesla (or any other car company, for that matter) is under any threat from autonomous vehicles for at least a generation or from tax-paying taxi services, but as an author Niedermeyer does hit it on the nose: if all those pie-in-the-sky companies have any merit, Uber does not really deserve any of their valuation to rub off on it: its main appeal is that of the brand that banished the Prius to the taxi rank and pioneered the desirable, conspicuous-consumption electric luxury car for the holier-than-thou, technophile “in-crowd,” stealing a march on Lexus, Mercedes, Audi, BMW and Jaguar.In a concluding chapter, he sticks the knife in a bit more. First, echoing his main business theme in the book, he deconstructs the whole “touchscreen” approach to car interiors that Tesla has followed, likening it to the fins that once adorned American cars: much as in the time of the space race it was cool to have a car that aped the rocket, he says, the strategy of sticking a massive screen with cheeky Easter eggs smack in the middle of a car’s cockpit may appeal to the iPhone generation, but probably brings safety drawbacks and will prove to be a technological dead end.I think the jury’s out on that one. It’s far from unthinkable that the massive touchscreen is here to stay. Volvo’s promoting it and they do know a thing or two about safety.His other beef is with the perils of “continuous improvement” of the product, as exemplified by “over-the-air” updates of the software. In his view, stuff needs to be safety-tested every time. I reckon I’m on Tesla’s side on this one. Yes, a regulator should look at the company’s approach as a whole and should establish that a “safety-first” ethos truly is in place. But cars and software will carry on merging and today’s system decidedly does not work. Tesla is pushing the boundaries and, yes, they may not always be acting in the best manner (precisely because they are constantly on the edge of a financial contretemps) but I disagree with the general principle that the author applies here. We simply need to update the process of certifying cars in a way that nobody is afraid to transmit a safety improvement (or, indeed, any other improvement) “over the air.”The final knifing he deals probably strikes closer to the heart: in a few short paragraphs he totally deconstructs the environmental appeal of the electric car revolution. Even on Tesla’s own numbers, it turns out, i.e. if we were to accept that Tesla cars have saved the planet some 4 million tons of carbon, if that’s what we got as a society for the 19 billion that’s been sunk by all stakeholders (including the state) into Tesla, that amounts to an outlandish USD 4,750 per ton (versus, say USD 600, tops, per ton from much-maligned carbon capture for fossil-fuel plants).If it’s the planet you want to save, he says, this is on the margin an awful place to invest.And that’s where he leaves it, kind of.So a fantastic book, but because the author does not discuss the stock price, I think he does not deal with some other important issues:1. making cars is a low-return, capital-intensive business with massive overcapacity, strong labor unions, national champions, far too many competitors and is subject to the vagaries of fashion2. the future course of the business is highly uncertain; we do not know which technology will prevail and manufacturers need to invest in multiple technologies as well as in political influence3. it is governments, worldwide, that have been supporting the car business, for longer than a decade now, because they are afraid of the consequences for all the workers that must be laid off when the car business as a whole inevitably hits the wall; for instance, the ECB has purchased tens of billions of bonds issued by VW, allegedly to “aid the transmission of its interest rate policy,” in practice to save them after the Diesel scandal4. if Tesla ever is to make it to the five million cars per annum mark that is the minimum scale for profitability, it will take Tesla many more rounds of investment to get to this point where it will be able to compete with these heavily-subsidized wards of the state5. even if Tesla succeeds, the prize is not worth anything6. Tesla is already valued both as if it’s won AND as if the prize were worth winning(In short, I don’t think you should own the stock or any other car stock, but really not them at all)But if you’re into this stuff, Ludicrous is a must-read: it’s short, it’s to the point, it’s punchy and, on balance, it’s fair. It sure tries hard to be.

It's important to know that this does not put into jeopardy the concept of electric cars. In fact, Niedermeyer clearly highlights the benefits of EVs.However, it dissects every spurious claim by Tesla. That's important. Even the holiest of visionaries need to be challenged for the great good of its customers. A fascinating read, essential for anyone with the slightest interest in the automotive industry.