Tesla and Trump both thrive on chaos — but Elon Musk's car company needs to chill out if it's going to succeed (TSLA)
- President Trump and Tesla CEO Elon Musk have a much higher chaos tolerance than the average human.
- But as Tesla grows, chaos isn't helping to improve its chances to prosper.
- Trump is never going to change, but Musk has a chance this year to reset Tesla's paradigm.
I've argued that there are no minds on planet Earth more different that Donald Trump's and Elon Musk's. However, Musk is a canny operator and always has been — and it's clear that he's learned a few things from the Tweeter In Chief.
Trump loves chaos. His latest salvo — a petulant threat to shut down the entire US southern border with Mexico, thereby trashing the relatively robust but still fragile surge in the economy his tax cuts delivered — is a classic example. Nobody knows what the plan is supposed to be, including Trump, and he likes it that way.
Trump sows confusions and dismay so that all anybody winds up talking about is ... confusion and dismay. It's an unfortunate addiction because although his approval ratings are terrible by historical standards, his economy is the strongest in decades and he's been able to plod forward on a broad campaign promise that's become sort of invisible: extracting the nation from never-ending foreign wars.
Read more: Tesla is proof that the next 20 years in the tech industry won't be like the last 20
Don't confuse my positive view on those issues with a positive view of Trump. But it would be pointless to ignore Trump's extension of the post-financial crisis boom, and if I can find one thing to admire about the guy, it's that although he appears to like military pomp and circumstance, he's something of a pacifist down deep. Or at least he recognizes that stupid wars shouldn't be fought on open-ended timetables.
From Trump to Tesla.
What about Musk and Tesla? Well, it would also be pointless to ignore the all-electric carmaker's monumental achievement: creating ther first new American auto brand in decades. Tesla's first-quarter sales were up a staggering 110% from the same period last year, the carmaker reported last week.
Tesla is now manufacturing and selling three vehicles, and it has come to dominate the nascent electric-car market in just about five years. Even if its financial challenges end up dooming the company's mass-market ambitions, it still has a viable life-raft in its luxury business, with appealing profit margins to go along with it.
You wouldn't necessarily know any of this because the Musk/Tesla chaos engine has been in overdrive for more than a year now. I can forgive you if you've lost track of Musk's many, many controversies, but we got a reminder this week when his latest dustup with the Security and Exchange Commission had a hearing before a judge in New York (both sides were told to don their "reasonableness pants" and come up with a deal they could live with).
Musk is extremely good at designing, engineering, and serving as head cheerleader and top salesman for electric vehicles. I've driven everything Tesla has ever built, and the cars have all been great. That's a hard trick to pull off, especially for a guy who's on his first car company.
Musk is bad at the dreary yet necessary plod of auto manufacturing (he dislikes it so much that he's been actively trying to reinvent it for three years). His reaction isn't to step back and ask for help. Rather, it's to double down on the chaos.
This doesn't always lead to #TOTALFAIL. Musk's dream of a massively automated assembly line for Model 3 sedans ran into the same problem that every effort at massive automation has in the auto industry — it didn't work — and so Tesla quickly threw up a tented line in its factory parking lot. It wouldn't have looked unfamiliar to Henry Ford. And it was widely ridiculed.
But lo and behold, it worked fine and helped Tesla deliver almost 250,000 vehicles in 2018.
It's time of Elon to hire a COO.
It was a big, beautiful tent and Musk could have celebrated the seat-of-the-pants innovation a bit more. Instead, he went back to the nutty tweeting and the dank memes and along the way conducted a fairly low-key unveiling of Tesla's next vehicle, the Model Y SUV.
He doesn't seem to have it in him to change, much as Trump doesn't. And maybe he shouldn't. One does need to simultaneously hold two ideas in one's head about Musk: that he's a merchant of chaos; and that he's up there with Henry Ford and Enzo Ferrari and the small number of crazy, complicated visionaries who've created car companies.
Allow me to toss in a third idea: Tesla would benefit from putting the overall chaos in its past while accepting that Musk isn't going to renounce the madness. This is kind of already happening. Scrappy carmakers with out-there leaders don't usually manufacture hundreds of thousands of vehicles annually.
General Motors, for example, is a rigorously disciplined business that racked up over 650,000 vehicle sales in the first quarter. Even when GM has been in trouble — it did go bankrupt during the financial crisis, after all — it's essential character has never been chaotic.
The best way to hasten Tesla's maturation has already been widely discussed: hire a chief operating officer to effectively run the company while Musk changes nothing. That would've happened already if Tesla (and to his credit, Musk) wanted it to. And in truth, Musk has a capable, long-serving lieutenant in JB Straubel who has already assumed some of this responsibility.
Tesla could benefit greatly if Elon lays low for a few months.
I like to say that I'm more comfortable with Tesla's chaos because I've been watching the Elon Musk show for a decade and I've seen it before. It's not all that difficult to put the chaos in a box and focus on the business, which as I've already noted has enjoyed the most robust sales growth of any automaker in the industry and is reaping the rewards as revenues rise dramatically each quarter. Car companies are supposed to have massive amounts of cash flowing through their balance sheets, and Tesla is increasingly no exception.
Unfortunately, the business surge has amplified the chaos, raising the stakes. There is a viable strategy here, and it's called "layin' low." Does that mean Musk retired the Twitter handle? No, but it does mean that he could at least consider giving his chaos-lovin' side a few months off.
The business might actually compel him to do this. Tesla is probably going to post a lower profit for Q1, after two consecutive quarters with solid margins. The carmaker might even swing to a loss. That doesn't mean Tesla is tanking, but it does mean execution is more important than image. For his own and Tesla's sake, I hope Musk has figured that out.
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Contributer : Tech Insider http://bit.ly/2OVgA3k
Reviewed by mimisabreena
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Sunday, April 07, 2019
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