I didn’t attend the Tesla Model 3 launch. Did I have to? Everyone knows my position: If you actually want to #MAGA, Tesla is your company, and Elon Musk is your man. Even if you hate the whole enterprise, even if the Big One destroyed Fremont tomorrow, the world is a different and better place because of what Musk has built at Tesla.
What the Model 3 launch proves is that Tesla’s not going away. Not ever.
Don’t believe me? Let’s study the history of warfare, which is that of business plus death. One would think that with stakes as high as they are, lessons learned from the study of war would guide business more than it does, at least in the auto industry.
The French have always been celebrated for their Champagnes, but their greatest gift to the world is actually a better understanding of war. The Maginot Line — built in the 1930s to repel the German infantry & artillery assaults of 1914-18 — was overrun in 1940 by the German Blitzkrieg, or "lightning war." It wouldn’t have mattered if the French fortifications had extended to the English Channel, or if they had been fully manned; if it were pierced, armored columns could flow through.
Both during and after the war, the Allies expanded on Germany’s model of combined arms and maneuver warfare—and for forty years NATO and the Warsaw Pact prepared for a massive land war which would determine the struggle between capitalism and communism. Ready for the last war, France lost in Indochina in 1954, and was brought to a standstill in Algeria in 1962. The United States repeated this pattern in Vietnam in 1975 before the Soviets did the same in Afghanistan from 1979 to 1989.
Their foes — outmatched financially, logistically and technologically — were always fighting the next one. They had to, or fighting was pointless. As Donald Rumsfeld said, “You go to war with the army you’ve got.”
The upstarts conducted asymmetric war, defined by belligerents whose relative military power differs significantly, or whose strategy and tactics differ significantly, typically between a standing, professional army and an insurgency or resistance movement.
Traditional automakers have a century of experience behind them, backed by vast sums of cash, massive infrastructure, and supply chains in which every efficiency has been wrung out. You’d have to be absolutely out of your mind to launch a car company at any point after the closing decades of the 20th century, during which their dominance became seemingly insurmountable.
Which brings us to Tesla.
Learning The Wrong Lesson
Everyone knows Tesla has forced the universe of traditional automakers to embrace at least the the buzzwords of the future — Electrification! Autonomy! Mobility! — but doing so doesn’t necessarily guarantee success in a war that has only just begun. The legacy automakers’ public relations machines would have us believe they’ve absorbed the lessons necessary to survive in a new era, but nothing suggests they will all survive — or that the ones that do will resemble the companies we see today.
They think the lesson of Tesla’s success is to duplicate that which is relatively easy for traditional manufacturers: match functionality & specs, leverage efficiencies, built products, market, advertise, sell. Invest enough and they will catch up, eventually. Or so they think, because they see Tesla’s massive losses and as-yet unproven manufacturing capabilities as weaknesses that, on a long enough timeline, will bring them down.
The automotive sector is wrong.
I’m not suggesting the traditional rules of business don’t apply to Tesla, but business, like war, isn’t just about math. That’s why public relations and communications — propaganda by another time — is taught in both civilian and war colleges. That’s in part why the French lost Indochina, the U.S. Vietnam, the Soviets (and now probably the U.S.) Afghanistan.
Winning wars requires understanding not only the enemy’s weapons, but tactics, strategy and doctrine. Speed isn’t enough. This is where the traditional car industry is falling short. They’re just barely catching up with what they perceive as Tesla's primary weapon — electrified cars — and totally ignoring the rest of Musk’s war plan.
The industry’s metronome, like that of the Allies throughout the First World War and the early days of the Second, is a half beat slow, and set to the only sound they hear: product, product, product—which to them is still a car coming off an assembly line. The product of the future is more than a car plus whatever software they try to shoehorn into it; it's the sum of forces converging for decades, and well beyond their control. These forces include but are not limited to increasing political and cultural opposition to internal combustion, resentment toward traditional retail, rise of cheap connectivity, popularity of smartphones and apps, and the appeal of new technologies and inventor mythology.
These are akin to forces of nature, which Musk is harnessing and the rest are trying to fight. And fighting nature is always done at one's own peril.
Musk’s Master Plan Is Only Part of the Plan
Published in 2006, Elon Musk’s “Master Plan, Part 1” could not have been more clear:
- Create a low volume car, which would necessarily be expensive
- Use that money to develop a medium volume car at a lower price
- Use that money to create an affordable, high volume car
- Provide solar power. No kidding, this has literally been on [the] website for 10 years.
I’d have laughed too, if I’d read it at the time. Automakers scoffed. The first three seem obvious. Solar power? Stupid, right?
Actually, Musk could have been more clear, because whereas the “plan” laid out Tesla’s strategy, it ignored the doctrine and tactics.
The doctrine: electrify, starting with cars. Ignore all prior models for doing so. Make electrification cool, then affordable. Maximize vertical integration.
The tactics: Clean-sheet design. Direct sales. OTA updates. Proprietary charging infrastructure. PR, PR, PR.
Musk’s actual plan is a full-spectrum war not on the car industry, but on its business model, using a fully integrated (though as-yet only partially realized) doctrine, strategy, and tactics. All the industry saw from 2006-2015 was one component of his strategy, and that limited understanding was reflected in their failed preliminary attacks.
Behold, the Chevy Bolt, the failure of which I predicted in January of 2016.
Musk published Part Deux of his “plan” almost exactly one year ago. It says:
- Create stunning solar roofs with seamlessly integrated battery storage
- Expand the electric vehicle product line to address all major segments
- Develop a self-driving capability that is 10X safer than manual via massive fleet learning
- Enable your car to make money for you when you aren't using it
Now that the sector has woken up to Musk, they are attempting to attack elements of Part Deux before catching up with the tactics behind Part One.
Full Spectrum War
Full spectrum war also isn’t merely about adding electrification or software to the hardware that the legacies already know how to make or buy. The software ship has been sailing for twenty years, with increasingly tattered sails. The proof? If you wanted to make a fortune in the auto sector in the last ten years, all you had to do was invest in windshield phone mounts.
Electrification? Nothing in third-party networks can touch Tesla Superchargers for speed or ubiquity. VW’s and Porsche’s fast networks are years away. By the time they match Supercharger ubiquity, everyone’s EV range will have rendered charging speeds moot.
OTA updates? Direct sales? Franchise dealer networks are the doom of the auto sector, as they fight tooth and nail to survive, crippling manufacturer efforts to educate, market, sell, and support "new" technologies to customers who are already using them daily, on phones they can buy for a few hundred dollars. Tesla is pushing out updates as often as they can, and doing so seamlessly.
Clean sheet design? Chevy’s Bolt is fine, if you want an economy car with a battery. What is the industry releasing this year? Mild hybrids. Their dedicated EV platforms can’t come soon enough.
Autonomy? The legacy companies’ best semi-autonomy can’t touch Tesla Autopilot at its worst, and full autonomy is too far away to matter.
Sharing and hailing? Again, piecemeal investments and bet-hedging are doomed. Tesla’s strategy here remains to be seen—so why hasn’t anyone tried to get ahead before they do? GM should have bought Lyft when it had the chance.
The Model 3 just dropped. Where’s the competition? Nowhere, save in the minds of the Tesla shorts and legacy brand managers with two to three years to kill before something even conceptually equivalent hits the market—by which time it’ll be too late to stop Musk.
This is in part because Tesla already commands the global automotive PR space, without advertising. Several sources have told me Tesla accounts for 40 percent of all automotive news. (Ed note: Is that all? Seems like more.) This number isn’t going to go down. If you want to see propaganda, collusion, cyberwar, AI, bots, truth, lies, fiction, manipulation, hi-tech, old tech, and no tech leveraged, twisted, bent and wielded, forget Trump and the Russians. Every day my Twitter feed is clogged by Tesla supporters and Tesla trolls waging war with everything but guns. Tesla has motivated an army of online fans and enemies unlike anything the sector has seen since the rise of the internet. That can't be duplicated at any price.
All of it benefits Tesla.
Where is the auto sector in all this? Still hoping that spending money on attacking elements of Tesla’s plan will stop them.
Elon Musk is playing the long game, projecting far beyond the average tenures of the CEOs he’s up against. Unlike his peers, he’s personally invested, for life, in seeing this through.
Which brings us to the Model 3.
The Model 3 Launch
Even without having driven it I can declare it a triumph for Tesla, and a disaster for everyone hoping it would hurt Tesla’s stock price, momentum, or mythology. The mainstream press has been universally positive, despite virtually no mention that Supercharging isn’t included, a question that generated lots of coverage earlier this year. Questions over how many they can build on any schedule are of seemingly no relevance to those on the waiting list. Potential production delays? Ask Ferrari or Porsche about how scarcity affects demand.
The price? No one really cares. Tesla announced two models, with base prices of $35,000 and $44,000, straddling the now-stillborn Chevy Bolt. The real competitor? The BMW 3 Series, which isn’t fully electric but is precisely the customer Tesla wants to convert. Are BMW buyers seeking out base models? Does anyone? Not in the premium segment, which is where Tesla has always been.
The shorts are complaining that it was a fake launch, because the first cars delivered went to employees. This isn’t a defect in Tesla’s plan; it was a feature. Musk had to deliver cars. He did. The cars needed positive press. They got it. They cars had to impress the reviewers. They did.
The Model 3 launch was Tesla’s to lose. Unless one of them caught fire or exploded, it was just another flag in a brilliant PR campaign. Tesla, news, beat, story, stock price. Tesla.
Tesla. Tesla. Tesla.
How To Defeat Tesla
There is only one way to “defeat” Tesla: accept that there is no defeating an idea destined to overtake the first-world countries' car markets. Tesla has redefined the business of war in the automotive sector, and anyone who wants to survive must wage it as Tesla does. This requires more than duplicating the weapons of war; it requires mastering the full spectrum of warfare required to wield those weapons — all of them — effectively.
There’s another way to survive. That is to ignore Tesla’s war on first world markets — for now — and do as Renault-Nissan and others are doing (brilliantly) in developing markets like India, where Tesla’s opportunity is still decades away. Indian customers are just waking up to concepts of brand, packaging, and luxury, as evidenced by the success of the wonderful Renault Kwid, which at $4000 is as disruptive in that country as the Model 3 will be in the US.
Conventional wisdom suggests that the number of global automakers will collapse to six, or possibly just five. Those brands that survive have a lot of work to do if they want to prevent Tesla from being one of them. The rest need to focus on survival via monumental pivots, which must begin with understanding full-spectrum war in the modern age of transportation. Tesla, for all their first-mover advantage, has not yet won anything in the still-undefined “mobility” space except mindshare, which is ephemeral. Countless startups have yet to reveal their insights, and await acquisition by a wise OEM still flush with cash.
Tesla has another war to wage, and that is a financial war, and that war will be fought with itself. But that is for a future story.
I can’t wait to see what happens.
(FYI, I don’t own any Tesla stock. Why not? It would a conflict of interest. Also, I could be completely wrong. But I doubt it.)
Alex Roy is Editor-at-Large for The Drive, Host of The Autonocast, co-host of /DRIVE on NBC Sports and author of The Driver, has set numerous endurance driving records in Europe & the USA in the internal combustion, EV, 3-wheeler & Semi-Autonomous Classes, including the infamous Cannonball Run record. You can follow him on Facebook, Twitter and Instagram.