Jeremiah 29:11

Sorry nor more high performance electric.........and it looks like we can blame that on the bean counters. When will those guys realize you can't run a company on just beans.



Tesla cancels new model, fires CEO, will lay off large part of workforce

Oct 16 2008 10:14AM

Read the grim news here. I hope my pals that work there make it through the layoff, but I am not encouraged. Any tech worker can read between the lines and see what is going on. After thousands of hours of free overtime and I am sure 100s of all-nighters, the tech staff has made a workable electric vehicle. Now the finance guys that seem to run the world have decided to fire all the engineering staff and go into “harvest mode”. They are blaming the economy and credit markets, but the real reason is that they mismanaged the project. But things are never the finance guy’s fault. Ever. Things like sales and advertising will be kept up, but all those people who lived and breathed the technology to get the car working are deemed expendable. My buddy John saw this at Seagate a decade ago. The “brilliant” finance whiz kids determined that if they fired the entire R&D staff the quarterly numbers would go thought the roof. Things were pretty rosy for a good six months. Unfortunately, the design cycle of a disk drive is about six months, even a decade ago. So after that six-month period of looking good, Seagate tanked. Since all the good tech people already had good jobs at decent companies, Seagate never really recovered, even to this day. Finance people are as narcissistic as the rest of humanity. They want to surround themselves with people just like them, not tech types or manufacturing people. So companies load up on finance weenies and run the company into the ground, just like GM, Ford, and Chrysler have done the last 50 years.

I guess the founder and moneyman behind Tesla has finally realized what I knew all along: It is easier to design a space ship than a car. Especially an electric car. Elon Musk, the founder who got rich on Papal should know, he is also funding SpaceX, a rocket ship company. I am not trying to take anything away from rocket scientists, but the car market just has higher expectations. Once you design a car to go down the road at 35 miles an hour, well that is about 5% of the design effort. Then you have to have it go 1 MPH and 100 MPH. Then you have to have it accelerate and brake well. Then you have to get the NVH (noise vibration and handling harshness) to be world-class. Now you have a car that maybe, just maybe 10,000 people might buy. Then you to design all the “comfort” features, air conditioning, radios, telematics, navigation, radar avoidance and oh, I forgot to mention you have to hit pollution and safety targets or you can’t sell it in volume. So once it works and once it is comfortable and once it is legal, that still is not enough. You have to make it pretty. So it better have great styling and magnificent paint job. Tasteful use of chrome and accents and everything else including how the radio antenna looks. But that still is not enough for the fickle consumer. Once you have it work and be comfortable and look pretty, you have to make it cool. It can be hep or groovy as was explained in the movie Fear and Loathing in Las Vegas, but that is not enough, it has to be cool. This is why BMW can sell a low-quality compact car for 40 grand. And up. This is why Range Rover can sell the lowest quality vehicle in the world year after year. It’s cool. An engineer would say it’s a piece of crap, but as long as the emotional American public see it on Nature Channel specials, well then they think it is cool and will buy it.

And don’t forget that thanks to the Japanese we all have expectations of fantastic reliability and quality for our cars. It has taken 30 years, but the US auto business has finally managed to make at least a couple cars with the quality of a Japanese econobox sedan. Finally, and this is what is killing Tesla, the car has to be dirt cheap relative to the value and engineering it contains. Let’s hope that the people that buy Teslas are far enough removed from this little economic hiccup we are in so that they keep buying. Tesla has shipped about 25 cars and that is great news. I hope they make it, but I will be much less enthusiastic about their survival if they fire all my engineer pals in order to keep the cash-flow positive.