The Fuse

Musk’s Master Plan Part Deux Hinges on Scale, Timelines, and Tesla’s Undervalued Workforce

by Leslie Hayward | July 29, 2016

“If Part One of Elon Musk’s master plan was like putting a man on the moon, Part Two is a lot more like colonizing the galaxy.”

When Elon Musk debuted his Master Plan: Part Deux, critics came out of the woodwork to point to the plan’s seemingly insurmountable vision and huge flaws. “If Part One of Elon Musk’s master plan was like putting a man on the moon, Part Two is a lot more like colonizing the galaxy,” said Jessica Caldwell, director of industry analytics for Edmunds.com. “As is typical, Elon Musk has laid out a grandiose plan for the future with no time frames and few specifics and no mention of how and when Tesla will be profitable,” said Michelle Krebs, senior analyst at Autotrader. The market’s reaction leaned negative: Tesla’s shares dropped 3.40 percent in morning trading the day after the announcement, and the stock has slid roughly ten percent over the last few months.

Autonomous driving is quickly being seen as more of a “when” than an “if,” and the idea that advent of autonomous drive will naturally lend itself to widespread vehicle sharing has become ubiquitous in industry and policy circles.

These criticisms make it sound like Musk’s Part Deux had no touchpoints in reality—however, each component of the plan is rooted in either trusted and proven technologies, or business models that many industry experts assume will soon be the norm. The master plan includes solar panels and distributed storage, expanding into new forms of vehicles like busses and pickup trucks, achieving autonomous driving, and creating a platform for carsharing through which users can offset the costs of vehicle ownership. None of these things currently exist in the scope and form of Musk’s vision, but that doesn’t mean they’re stuff of science fiction. The powerwall, combined with Tesla’s acquisition of Solar City, puts step one within reach. Electric busses and pickup trucks are engineering accomplishments that will hinge on continued drop in battery prices, but electric delivery trucks and busses are already being developed and sold by a number of startups like Proterra and Smith Electric. Autonomous driving is quickly being seen as more of a “when” than an “if,” and the idea that advent of autonomous drive will naturally lend itself to widespread vehicle sharing has become ubiquitous in industry and policy circles.

So, if each individual component of Musk’s plan is within reach—or even inevitable, depending on who you talk to—why is it being compared to intergalactic conquest? A lot of the criticism have to do with timing: Right now, Tesla is under investigation from 3 federal agencies, and the company’s image and the reputation of its autopilot technology has been marred by the death of a Florida man which occurred in a Tesla Model S while the autopilot function was activated. But more importantly is the fact that Elon Musk, in announcing Part Deux of his plan, said that Part One is “effectively complete,” when in fact Tesla has yet to accomplish the biggest hurdle—manufacturing its cars at scale. The completion of the famous Gigafactory is being rushed, but it needs to be perfect for the company’s Model X and Model III to come to fruition.

As Musk’s biographer Ashlee Vance has noted, Musk may not be great about meeting deadlines, but he does generally accomplish what he promises to do.

Of course, there is a general sense of trust that Elon Musk can achieve the impossible—he started the first successful automotive OEM startup in nearly a century, he’s inventing reusable rockets, and is a generally inspiring figure. As Musk’s biographer Ashlee Vance has noted, Musk may not be great about meeting deadlines, but he does generally accomplish what he promises to do. But as the vision gets grander, the likelihood of accomplishing these sweeping goals diminishes. Also important is who is watching the deadlines. In the past, the consequences of a missed deadline were limited to the press and a small handful of early adopters, versus the 400,000 excited customers who put down a deposit on a Model III, who can rescind their deposit if the car isn’t delivered within the time frame that they seek.

The essence of Musk-skepticism is that he needs to focus on delivering what he already has—ultimately, completing Part One of his master plan—before expanding to grandiose visions of next-generation cityscapes. This is well put by Daniel Gross at Slate, who argues that Musk needs to think more like Henry Ford rather than Steve Jobs.

“Ford started his professional life as the manufacturer of expensive sports cars that were toys for the rich. But he thought he could make more money, build a bigger company, and have more influence by democratizing the car. The Model T, first introduced in 1908, was the vehicle for this master plan. Ford focused for years, intently, on automating the manufacturing process, devising and tinkering with assembly lines endlessly, and being a general pain in the ass to his employees, fellow executives, and stockholders. He wasn’t starting other companies, or proposing new business models, or adding bells and whistles to the existing Ford products. He was figuring out how to use gravity and electricity to take costs out of the operation, ensure sufficient levels of standardization and quality, and make a car that people could afford in an hour.

Of course, throughputs of assembly lines and the price of tires are less sexy and fun than rockets, reimagining the electricity grid, and transforming the idea of what a car is. But if Tesla blows the Model 3, it won’t have the resources or license to pursue the whiz-bang stuff in Musk’s new master plan. If Musk’s effort to build a Model T results in an Edsel, the company won’t have much of a future.”

Musk has personal engineering talent to accompany his business acumen, and the success of his companies has rested in no small part in his heavy involvement in the day to day on the factory floor. But Musk can also rely on a talent pool of hungry engineers that Henry Ford could have only dreamed of—Ford Motor Company at the time the Model T was developed was staffed by workers marking $5 per day. The demands on a CEO in Ford’s time versus the tasks ahead for Musk are an apples to oranges comparison, and part of the problem in how the media and pundits are evaluating Tesla’s path forward is that they assume it all comes down to what Musk individually can deliver. This attitude devalues the incredible talent and effort of Tesla’s workforce. Of course, Musk himself has been known to take some of his most dedicated workers for granted in the past—he’ll need to take a talent-first approach in order to achieve his vision. That may in fact be the key to turning the entire Master Plan into a reality.

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