This website has been skeptical of Tesla Motors’ claims for their lithium-ion-powered Roadster since day one. While some readers think we’ve “had it in” for the California-based car company, rest assured TTAC is an equal opportunity muckraker. Anyway, yesterday, when Martin Eberhard revealed that he’d relinquished Tesla's top job, we held fire to avoid accusations of smug satisfaction. But Eberhard’s email to Tesla customers piqued our interest. As Tesla has yet to deliver a single customer car, by thy words thy shall be known.
Eberhard begins his e-sayonara by expressing his personal pleasure at helming Tesla for the last four years. He then outlines the management shuffle: “This week I move from the CEO position to become President of Technology, and I remain on Tesla’s board of directors. In my new job, I will focus on the final details of the Roadster and on advancing Tesla’s leadership in our core technology. I will also be able to spend more time with you, our customers.”
Ah, those pesky “final details.” Presumably the new Technology Prez (a title missing from any other automaker’s personnel files) will be focusing on the electro-mechanical minutiae that have prevented Tesla from meeting its first two deadlines for customer deliveries. Eberhard’s claim that he’ll be advancing his company’s “leadership in our core technology” is classic Tesla: asserting technological leadership— not competence, leadership— without showing the goods.
Meanwhile, Eberhard’s promise to “spend more time” with his customers is more than slightly perplexing. Spend more time with them doing what? There are no demo cars. Again, given the delays, I’m thinking Martin’s about to become Tesla’s Hand-Holder General.
Next up: Eberhard's explanation for why he was shunted from the top slot. “We at Tesla need leadership with that same kind of passion and talent for operations – passion that will secure Tesla’s future as the next major automobile company. I initiated an intense CEO search some time ago, but the board and I have yet to find the right person to fill this role – even as Tesla continues to grow and its operational needs become paramount.”
Eberhard is saying two things here. First, his move was planned a long time ago, and, therefore, does not represent any kind of management crisis at Tesla. Second, modestly enough, Tesla can’t find anyone with his passion and talent to run “operations.” Judge for yourself, but this journalist does not find either of these claims remotely plausible.
Common sense suggests that the timing of the transition, hot on the heels of yet another delay in Roadster deliveries, indicates that someone with money lost faith in Eberhard’s ability to git ‘er done. Hubris aside, there are plenty of current and ex-auto industry execs who could handle Tesla’s operational needs. And the appointment of an interim CEO after “some time” tells us that either the choice was actually made in haste, or there is ongoing conflict in the boardroom.
Now, about those deliveries…
“We are still planning to start production of the Roadster by the end of next month and deliver the first cars to customers this fall. We have a good chance of meeting this goal, but to be fully transparent, I want you to know that while it is within our reach, it is not yet fully within our grasp.”
That is one major piece of sophistry, or, if you prefer, a textbook example of weasel words. Eberhard’s insistence on seasonal deadlines– rather than dates– has got to worry those [erstwhile] customers who’ve signed checks to Tesla. By the same token, a “good chance” is not a statistically relevant term. But both qualifiers pale next to the obfuscatory majesty of Eberhard’s metaphor.
If something’s within your reach but evades your gasp, uh, what does that mean? You could get it to in theory but you can’t in practice? How very reassuring. The addition of the words “yet” and “fully” is what takes this Zen koan to the next level. Jeff, Murray, Anthony and Greg should enjoy so much wiggle room.
Eberhard eventually gets down to brass tacks, identifying Roadster crash testing and durability as the remaining stumbling blocks. Oh, about that crash testing, “there is always the chance that something unpredictable occurs… in which case we would incur a delay to address the issues.” And regarding reliability, “The results of this testing are critical to the schedule.” But if there are testing-related delays, “I will let you know.”
Even if everything goes according to plan, Eberhard says Tesla’s looking to produce one– count it one– car per week; you know, until they get the bugs out.
Eberhard concludes by promising that “the end is in sight.” But not within view.
[Link to email via Jalopnik here .]
I would hope that stuff like this shows people just how hard designing good cars really is. It took Toyota years to get to the top and it’ll take Ford and GM years to fight back. These silicon vally tech heads think they know better. If cars were made like computers, no-one would buy them. I’ve built computers for a living and it’s somewhat unfathomable how crappy this hardware is (DOA ram what the hell is that).
Sounds like Tesla needs a helping hand from the SAE Challenge X student engineers.
Sorry, I couldn’t resist.
“Tesla can’t find anyone with his passion and talent to run “operations.””
Tesla missed out on Nardelli. Nardelli would have SixSigmaed that lithium pack.
Where’s Gerald Wiegert when you need him?
“This week I move from the CEO position to become President of Technology, and I remain on Tesla’s board of directors. In my new job, I will focus on the final details of the Roadster and on advancing Tesla’s leadership in our core technology. I will also be able to spend more time with you, our customers.”
This is business speak for, I’m pretty good at building cars but don’t know the first thing about running a business so the Board gave me an offer I couldn’t refuse: take the demotion or we’ll fire you outright.
Changes at the helm like this are usually accompanied by internal financial audits so the new CEO can insulate himself from any mismanagement perpetrated by his predecessor. This guy better hope he can explain ever penny he has collected from investors and spent. If not, expect more salacious headlines out of Tesla in about 3 or 4 months time.
I don’t know much about Eberhard’s bio, but his background as an engineer and R&D guy suggests to me that he probably knows little about complex manufacturing or strategic management, skills that are sorely need for this gig.
Tesla has done a great job of building public consciousness of its product and greasing the hype machine, but I continue to wonder whether this is just an updated version of the Vector. The Vector was another high profile quasi-kit car that got lots of buzz, but never put much rubber on the ground. A pure electric poses substantial challenges, and I’m thinking that this one is more vaporware than hardware.
Let’s set some facts straight. . .
First let’s talk about these many problems that “have prevented Tesla from meeting its first two deadlines for customer deliveries”.
The original schedule called for first deliveries around Jul/Aug of 2007. That was changed after Tesla had to replace the transmission with one from a new supplier. This change was reported many months ago, and it moved the delivery schedule to about Oct/Nov 2007, where it stands now. That’s one delay.
What other delays have their been? Answer: None that I’m aware of, and I should have heard about any further delays since I have my deposit down. That’s a grand total of . . . One delay. One schedule slip, which everybody has known about for the last roughly eight months, and is now very much Old News. Yet, Robert Farago somehow twisted this into Martin Eberhard being ousted “hot on the heels of yet another delay”. That’s not even an exaggeration. That, from where I sit, is a falsehood. I might even call it a bald-faced lie.
When Martin writes about their odds of meeting the schedule, here’s how I read it. . .
They haven’t yet completed crash testing and durability testing on the Validation Prototypes. If the cars pass these tests and no further modifications are needed, they should be on schedule. If some of the tests go badly, changes will have to be made, and that will take time. There’s nothing mysterious about this. If a Toyota fails its crash test, then Toyota has to go back and change it. If a GM fails its crash test, then GM has to go back and change it. It’s no different for Tesla.
“Of the Roadster’s revised range limitations or battery recharge times, nothing.”
Actually, in the email Martin did mention the revised range, somewhat obliquely. His words: “We’re waiting to publicly announce the results of our EPA range validation tests until all the results are in, but I’ll let you know in advance you will be pleased. You are going to love this car.”
Of the revised battery charge times, he said nothing. Why is that? It’s because, as far as I know, the battery recharge times never have been revised. When the Roadster was first announced, they were saying full charge in 3.5 hours. Today they are saying full charge in 3.5 hours.
tonybelding: This change was reported many months ago, and it moved the delivery schedule to about Oct/Nov 2007, where it stands now. That’s one delay. From a news report on the introduction of the Tesla: "We kept getting requests from people saying, 'How do I get on the waiting list?' And we'd say, 'We don't have a list.' And they'd say, 'Look, I'll send you the money, just put me on the list.'" Eberhard says he caved in, created a waiting list for the first 100 cars, and they sold in three weeks, for $100,000 each, with delivery due early next year. http://www.guardian.co.uk/environment/2006/aug/22/motoring.lifeandhealth This was written Aug 06, so "early next year" would be delivery in early 2007. Then… The company, Tesla Motors, will start taking orders tomorrow and hopes to begin delivery by mid 2007. http://townhall-talk.edmunds.com/direct/view/.f0dc98d/0 And now, We are still planning to start production of the Roadster by the end of next month and deliver the first cars to customers this fall. (from email cited above) First early 2007, then mid 2007, and now fall 2007. That looks like at least two delays to me.
tonybelding: Fair comment on my remark about range and recharge times. I have removed the reference to the Roadster's range (which has been downgraded from 250 to 200 miles but not revised since) and recharge times (which I inaccurately suggested had been revised, but which remain to be proven). As for the number of delays, I stand by my words.
You must realize of course, that neither of those pages you linked to originated from Tesla Motors. . . and that you posted them in reverse chronological order! If we were to take them at face value, it would mean the schedule was first mid-2007, then early 2007! That’s not a delay.
This is typical of how things get garbled in press and blog reports. I’ve been repeatedly astonished by how often reporters get simple facts, dates and numbers mixed up. (Then I catch myself doing it, and realize how easy it is.)
Robert. . . If you stand by your words, then I ask you to expand a bit on their meaning: What is this other delay that is supposed to have occurred, aside from the transmission change?
Update – they’ve replaced Eberhard with Michael Marks, former CEO of Flextronics (electronics manufacturing service provider), and an early Tesla investor:
http://www.mercurynews.com/drive/ci_6607742
This is all very reminiscent of the Corbin Sparrow debacle, another gonna-be world changer from Northern California. Bricklin and Delorean come to mind as well.
” … I want you to know that while it is within our reach, it is not yet fully within our grasp … ”
Anyone who trusts the person who writes such nonsense deserves the disappointment they are almost sure to end up with. But shhhhh, don’t anybody trouble the True Believers.
tonybelding: When Martin writes about their odds of meeting the schedule, here’s how I read it. . . They haven’t yet completed crash testing and durability testing on the Validation Prototypes. If the cars pass these tests and no further modifications are needed, they should be on schedule. If some of the tests go badly, changes will have to be made, and that will take time. There’s nothing mysterious about this. If a Toyota fails its crash test, then Toyota has to go back and change it. If a GM fails its crash test, then GM has to go back and change it. It’s no different for Tesla.
If there are only a few routine and specific things left for Tesla before they can deliver, then why did Eberhard choose the vague “I want you to know that while it is within our reach, it is not yet fully within our grasp.”, rather than writing the more concrete, “If the car passes government crash tests and durability tests, we plan to deliver them no later than December 21st”?
William Montgomery: Changes at the helm like this are usually accompanied by internal financial audits so the new CEO can insulate himself from any mismanagement perpetrated by his predecessor. This guy better hope he can explain ever penny he has collected from investors and spent. If not, expect more salacious headlines out of Tesla in about 3 or 4 months time. Actually, the investors here are not passive investors. VantagePoint, Draper Fisher Jurvetson, Valor Partners, Compass Partenrs, Technology Partners — a who's who of big time venture capital funds. They don't dump money into their high risk investments and then sit back and hope for the best. They run the Board, get monthly financial and other reports which they then poke and prod at meetings (and outside meetings). They consult with one another behind management's backs. They probably get audited annual financials and so on. They are intimately involved in the business and know (and probably knew a long time ago) that Eberhard isn't cutting the mustard as a CEO, whatever his merit on the technology side. There won't be an audit because unless Eberhard and his CFO are outrigth defrauding them, the investors know at every step how much money is being put where. This is a simple management transition, and unlike in many companies it appears that Eberhard will actually get to stay on at Tesla. That said, your analysis that they were shoving him out of the CEO position is exactly right — that's how these things go down.
This is going to be extremely interesting to watch if there are crash test issues or any other delays/problems. Start-ups fail all the time – investors usually just take their losses and move on. But what doesn’t happen much is customers putting down huge deposits while the product is still in the development stage. That is a fascinating little wrinkle.
Tony: what are the general terms of the deposit? Are funds held in escrow until your vehicle is being assembled, or is Tesla free to spend the money on development work? Is there some drop-dead date after which your money is supposed to be returned, or is it open-ended?
operational needs become paramount = where is the beef money?
More then likely their sugar daddy’s are taking a big time haircut in their virtual profits. Come to think of it so are their potential customers.
The end is near might just be predictive linguistics.
Maybe they were for real and had a dream. The market environment changed now.
When evaluating a company for funding, a chief element of concern is the quality of the CEO and his or her match to the requirements of the business. Excluding any aircraft designers and fabricators that might be still engaged in the Bay area, no one in Silicon Valley has any experience building a product at the level of manufacturing complexity, service life and regulatory compliance associated with making consumer automobiles as a mass production item. So, as one who works in the technology investment field, I’ll say that Eberhard or anyone else would be gauged for their “perceived forward span of executive scalability” before a single penny goes in. No matter how technically astute Eberhard might be, on that score he’d start out with investors estimating no more than 18 months, if that, given the discontinuities between launch (i.e. demo) and delivery requirements. Then, upon funding, I’d watch to see whether he is chewing up that perceived window of scalability faster than the clock is, or whether he learns fast, adapts, and buys himself more time. Following the news out of Tesla, it wasn’t too difficult to conclude that Eberhard has been burning perception faster than time. At the beginning of such a liaison, the investor has to look the founder in the eye and ask, “How will you react if the board believes you hit your limit as CEO, necessitating a successor?” The outline deal for how the eventual management change will be packaged is made then. The founder’s only correct answer to that question is, “I work for the board and I’m driven by shareholder value, not ego.”
Tesla was/is supposed to be The Automobile 2.0 company; the rebooting of a business that software guys considered slow and dumb. And yet, if Boeing built jets to the reliability level of any Silicon Valley commercial software (not to mention Web applications), we’d have a thousand aviation fatalities a week. Well, this rebooting of the auto business is going to involve more work than building Yahoo, Google and Oracle combined.
Literally seconds before seeing Robert’s article, I had finished reading another article covering Nokia’s warning to its cell phone customers that 46 million lithium-ion batteries in customers’ phones are suspect and may overheat. The company stopped short of recalling 46 million batteries, but warned that about 100 incidents so far are cause for concern, and that they will replace consumers’ batteries on request. The batteries in this case are Matsushita’s. Sony, Apple, Motorola, Nokia, Matsushita have all reported overheating and quality problems associated with lithium-ion, particularly while charging. These are tiny-to-small low-voltage cells. Is there any question that this battery chemistry is not yet ready for ganged, high-current, mobile applications?
This all lends credence to GM’s caution about promising delivery of the Chevy Volt. The external dependency on a battery chemistry precludes temporal precision. However much as I dislike the needless complexity of parallel hybrids, the Volt idea of a series hybrid is attractive and preferable to an exlusively plug-chargeable electric. Although, one thing in favor of the Tesla is that it forces a 3-1/2 hour stop for a thick steak at Harris Ranch when driving up to Silicon Valley from L.A. That’s enough time to oxidize a couple of Manhattans and get back on I-5 sober.
Phil
If there was a clear timeline for when the Tesla is supposed to be ready for prime time, then Eberhard would simply say so. The vague timeframe, compounded by this rendition of musical chairs, fuels speculation that there is trouble in paradise. A plausible explanation for the lack of a clear timeline is that they really don’t know when it will be ready. What is the definition of “is”?
“Within our reach, but not yet fully within our grasp?” This highly literate phrase, coming from a car manufacturer, could not help but set off my ‘unattributed quotation’ detector.
Don’t get me wrong; Mr. Eberhard’s casual appropriation of Robert Browning’s prose (“Ah, but a man’s reach should exceed his grasp, or what’s a heaven for?”) should raise no hackles, but in its unique context it might raise some eyebrows.
Why? Because Mr. Eberhard’s very words were carefully chosen to echo those of Nicola Tesla himself, as portrayed by David Bowie, in last year’s film “The Prestige.” How convenient that the outgoing head of Tesla (c) should quote Tesla (the man), quoting Browning the poet? How better to wrap oneself in the mystery and mythology of the famed inventor?
Much more eloquent than quoting John C. Delorean, or Malcolm Bricklin, or Jerry Weigert, I suppose.
“Luther:
August 14th, 2007 at 2:29 pm
“Tesla can’t find anyone with his passion and talent to run “operations.””
Tesla missed out on Nardelli. Nardelli would have SixSigmaed that lithium pack. ”
Sounds like this is exactly the type of person they could use to whip people into shape and focus them on producing what they promised.
I live in Silicon Valley and made a good living doing the start up thing and I can say with certainty that I would not want to own a car which is the product of this culture. Big egos, big talk, corner cutting and a cavalier attitude towards the marks, er customer, is the order of the day. Make the sausage and get it sold is the attitude along with Fix It In The Next Rev.
The unbounded ego of the big VCs is a matter of legend as well. The problem is, they believe their own bs and are never accountable when it all goes bad. It wasn’t long ago that the Segway scooter was going to be the answer to personal transport. John Doer and the rest of the crown princes of the valley are 95% crap, 5% reality. Bah humbug!
Ashy Larry gave a nice synopsis of how VC’s work. To add to that, it’s not unusual for VC’s to dump the founders (who are generally product-oriented but not business savvy) in favor of one of their own.
So it’s possible that this handover may not be such a big deal. They may have kept Eberhard in the driver’s seat (no pun intended) as long as they have in order to have a good spiritual face for the company — up to now, they’ve been selling a dream, so that’s most important. If the car is actually going to get built, they’d need someone with more manufacturing knowledge to get the job done.
Still, something doesn’t quite smell right, and I’m with Mr. Farago that delays have been an issue here. Eberhard’s background is in technology, a field which is notorious for creating hype in advance of product releases, only to release those products before they are completely ready so that the initial buyers effectively serve as paying beta testers of the earliest release. The problem here is that you can’t do that with cars, and I hope that these tech guys realize that this thing better be pretty solid before it ends up in the hands of paying customers. (Refer to Andre Agassi’s brief experience with owning a Vector as an example of what not to do.)
Tesla’s in trouble. They’re falling behind Moller
http://www.moller.com/files/M200_Production_starts.pdf
The CEO doesn’t need to have that much manufacturing knowledge — that’s why you hire competent operation people.
I suspect that he might be a typical engineer: poor delegator that can’t let go of his project. He was probably not good at ceding operations control (getting the hell out of the way) so they gave him the boot.
Even if they deliver the Teslas that hve been ordered, the car is never goign to amount to much, because everybody is riding Segways now.
The CEO doesn’t need to have that much manufacturing knowledge — that’s why you hire competent operation people.
In a large corporation, that might be true. In a corporation in which the management of production is not so critical to the quality of the product, that would also be true.
But in a startup company assembling something as complex as a car, I would expect the chairman to be well familiar with operations. Without that intimate knowledge, costs can spiral out of control, quality problems may go unaddressed and critical decisions about how to source or build the parts needed might be handled inadequately.
Small businesses require managers who are extremely knowledgeable of the day-to-day workings of the business. As the business grows, that can be delegated downward, but at this stage of Tesla’s life, the chairman had better know how these components of the business fit together. In this case, the complexity of the product requires operational knowledge, as these present plenty of opportunity for critical errors. Building a car is a lot tougher than assembling a computer.
This is starting to develop some disturbing similarities to the case of Elizabeth Carmichael and the Dale.
It’s not as if they’re trying to break the laws of physics with the Roadster, but they are aiming for something which still doesn’t quite compute.
BMW were realistic, years ago, when they looked into electric power for their cars. To meet BMW driving expectations, they realized they would need to use capacitor charging, in order to have substantial juice available for acceleration, while still delivering the kind of power required to move a SAFE vehicle up to BMW standards.
They never solved the problem of how to recharge the capacitors in a viable manner, in order to achieve adequate range.
Just being able to out-accelerate someone once doesn’t cut it, if it means you just emptied your energy reservoir.
Tesla is trying to do it by achieving satisfactory acceleration in what can only be termed as an UNSAFE vehicle, given the physics of the beast. The name ROADSTER does apply, and we are (of course) at liberty to drive any damn thing we please, as long as it can be certified for the roads. But the Tesla company are slowly being forced to renege on their original spectacular claims, as real world physics and safety concerns intrude upon the initial wishful spec’s.
And that battery pack, consisting of thousands of lithium-ion small cells? Don’t get me started.
in this way, they unintentionally undervalue the name- brothers in the czech republic, because they also have Tesla company that makes radars, and for long time was the only manufacturer of decimeter range radars, capable of spotting stealth airplanes.
As to tesla motors, i am no surprised, as always, whenever there is an American company and a tangible machinery, there is a problem linking them together.whenever it deals with selling something that has bolts`n`brains , it has problems, if us-based.
before you blame only management, have you noticed, there is no problems with running a us-based company that sells services or manufactures anything low-tech. wal-mart, hershey`s, colgate- palmolive ..etc. what a coincidence, only industrial hardware manufacturers somehow manage to attract `unskilled` managerial team.(ugh, and the beancounters at chrysler calculated that importing merc underpinnings would be cheaper than manufacture an inhouse platform, right?
Sure, you can blame greedy CEOs and management, but only partly. and it all comes down to ……hardware engineering capacity.
Anyways, tesla is a nice example, a paradigm , a small island of neverending promises, that portrays the whole detroit 3, only in smaller scale.
The warning of a possible delay by Eberhard is clearly an admission that there is definitely going to be a delay. A planned fall release while having not run any confirmation prototypes through crash testing is extremely agressive. No crash test has ever been passed flawlessly. At the very least design tweaks and testing will be needed following these tests.
Still, I see no reason to believe there won’t eventually be a roadgoing Tesla Roadster. Its not just a bunch of Silicon Valley techs and hedge funds running this operation. Lotus is heavily involved as well.
Buildin’ cars is hard!
Seriously though, I hope that Tesla Motors makes it. Unfortunately, I’m not so sure. I became a skeptic when they announced their second electric car (a mainstream sedan) before the first was even delivered.
Are the Tesla guys going to respond here, like they have before?
Although I’ve been rooting for Tesla, that last line of the email is, I think, damning. Someone who writes that has absolutely no confidence in fixing whatever the problems may be. An honest person who had confidence would say, “these are the problems, a, b & c. And this is what we are going to do to fix them.” I have a feeling that you guys are going to have a serious “I told you so” gloating session in the near future. Enjoy
Ashy Larry: Actually, the investors here are not passive investors. VantagePoint, Draper Fisher Jurvetson, Valor Partners, Compass Partenrs, Technology Partners — a who’s who of big time venture capital funds.
All the more reason for a changing-of-the-guard audit.
They run the Board, get monthly financial and other reports which they then poke and prod at meetings (and outside meetings).
By the time any Board of Directors or investors see financial reports, they have gone through multiple consolidations and have been polished by accountants and financial controllers (like myself). This summarization process creates opportunity for the inept or unethical to distort what is really happening.
They probably get audited annual financials and so on.
Even if they are subject to annual reviews by reputed accounting firms, that’s no guarantee. Shall we name some infamous companies that were also being audited annually? Enron and WorldCom quickly come to mind.
There won’t be an audit because unless Eberhard and his CFO are outrigth defrauding them, the investors know at every step how much money is being put where.
The investors only know what they are told by the accountants and finance gurus. How would they know if there was “outright defrauding” without an independent financial review? If financial malfeasance were obvious it wouldn’t be fraud, it would be simple theft.
Besides, audits aren’t just for fraud. They can also uncover negligence, mismanagement, inefficiencies, accounting errors, and other business risks.
This is a simple management transition
There’s no such thing. The new CEO is assuming fiduciary responsibility for the company. In addition to the ethical/moral implications of this, he has a legal duty as trustee of the company. No CEO want’s to go to jail for something his predecessor did because he/she was too stupid to authorize an audit when assuming control as chief executive.
unlike in many companies it appears that Eberhard will actually get to stay on at Tesla.
CUC International CEO, E. Kirk Shelton, was kept on by Cendant Corporation after the two companies merged in 1998. In fact, he was contractually slated to take over as CEO of the merged company after a year or two. Fortunately, he was not retained long enough to every take on that mantle. During a post-acquisition financial review, auditors discovered that Shelton had overstated CUC revenue by half a billion dollars over the three years prior to the acquisition. By the way, CUC’s external auditors, who conducted annual reviews, and Cendant’s Due Diligence team missed this little bitty error. If there are financial irregularities, Eberhard’s continued employment at Tesla might only be as permanent as Shelton’s at Cendant.
Eberhard got bumped because investors lost confidence in his ability to manage the company. There’s a reason for this. The new CEO will order a financial review to protect himself and prove that he has all of his ducks in a row. If Eberhard’s operational ineptitude extends into financial mismanagement or fraud, we’ll be hearing about that in a few months. If not, we’ll probably hear nothing and he’ll stay put.
Stay tuned – that’s all I’m trying to say.
Eberhard got bumped because investors lost confidence in his ability to manage the company.
Maybe, maybe not. In VC deals, founders are often displaced by the venture capitalists — it happens more often than not. Keeping someone like Eberhard at the helm would have been the exception, not the rule.
It’s possible that getting rid of Eberhard was always the plan, and that Eberhard has known this for a long time. He may have been kept in that seat for this long in order to dazzle media pundits and would-be customers with tech jargon and dreamspeak, something that he would be good and earnest with as a founder.
At this point, the hype has been generated and it’s time to get down to the business of making cars. I’m still not convinced that Tesla is ready to do that, but I’m pretty well convinced that Eberhard was never the guy who was going to do that. I still think that it’s probably vaporware, but a tech geek like Eberhard would need to go, regardless.
Tesla Motors is trying to let us have cake and eat it too, and they’re finding it hard to keep it all together.
I’m not rooting for them to go bust with their project, I just don’t find it viable or sensible, for a variety of reasons that are obvious.
That doesn’t mean that we always must choose sensible cars. There are lots of light weight overpowered cars out there that you wish you’d never crash in. But Tesla makes little sense to me because it tries to go fast as lightning with electricity, in a time when an energy crunch is coming, and while the only energy storage solution are volatile, small lithium ion batteries.
Taking a wild guess, and knowing what I do know about such batteries, I think they’re finding out it’s a bomb waiting to happen. I’m also guessing that’s why Toyota shelved the same approach.
So – add it up: lightweight, fast car — with a battery platform that is potentially unstable — and with an expensive battery back that will go from 100% capacity to 45% capacity in under a year … Are Tesla Motors customers oblivious enough? We’ll find out.
WM: By the time any Board of Directors or investors see financial reports, they have gone through multiple consolidations and have been polished by accountants and financial controllers (like myself). This summarization process creates opportunity for the inept or unethical to distort what is really happening.
This is all true — in a big public company. The Board/management dynamic is vastly different in a cash-strapped startup company. There, the finance department is basically the CFO and a controller — and I’d note that Tesla’s own website doesn’t even list a CFO or VP-Finance (http://www.teslamotors.com/media/company_team.php). The Board in a VC-funded startup is much more closely involved in the day-to-day management of the company, and there isn’t much chance for the finance folks (who are often serving quadruple duty as the heads of HR, Legal, and even operations) to do more than slap the numbers together into something presentable. Sure the new CEO will want to know what’s going on. Sure he/she will CYA. But I’d be willing to bet that the VC’s already know what has happened moneywise.
VXC’s take massive risks on companies with unproven products, based mostly on the potential of those products and the integrity and ability o the management team (or the ability of the existing team to recruit and bring in their own replacements). This is a routine transition in the VC world, happens all the time. It does not mean the company is going under, it just means that either (i) they always knew Eberhard wasn’t their CEO but wanted to fund before someone else got in, or (ii) they took Eberhard for the equivalent of a 24 hour test drive and found him wanting.
I do agree that this is only the beginning of the story and it bears close watching. If Eberhard really screwed things up, he’ll be gone. And there’s even a small chance that he is gone already in the sense that his end date was set, that this is the first step in his transition out. But it feels more like the classic situation where the techie CEO gets demoted back to somewhere where his techie skills are better served.
These cars are not vaporware. I visited their facility and saw working prototypes several years ago. Also, college students have been driving lithium ion electric cars for at least the last 6 years in the solar car challenge.
These cars are not vaporware. I visited their facility and saw working prototypes several years ago.
I have no doubt that they can get vehicle bodies and install batteries in them — that was never the problem. The issue is whether they build cars in sufficient volumes, that don’t require constant patching to be kept roadworthy, and whether they will have the charging and storage capability to be usable as promised.
This was Vector’s problem. They, too, had prototypes that were roadtested by the magazines and displayed at car shows. Much hype was created, and much drool produced by the enthusiast press. Some even put down deposits to buy them. But Vector was never able to deliver vehicles to paying customers who could keep those cars running.
And mind you, Vector was going to buy drivetrains from other companies. Tesla has to go one step further and make an unproven technology workable for its drivetrain. A big, big step.
Does anyone know what happened to the other electric roadster, the Venturi Fétish? That car has seemingly been in development hell even longer.
This is all true — in a big public company. The Board/management dynamic is vastly different in a cash-strapped startup company. There, the finance department is basically the CFO and a controller — and I’d note that Tesla’s own website doesn’t even list a CFO or VP-Finance (http://www.teslamotors.com/media/company_team.php). The Board in a VC-funded startup is much more closely involved in the day-to-day management of the company, and there isn’t much chance for the finance folks (who are often serving quadruple duty as the heads of HR, Legal, and even operations) to do more than slap the numbers together into something presentable.
In my experience, smaller companies have much higher rates of fraud and/or financial ineptitude than large publicly traded ones. You just don’t tend to read about them in the papers because when they immolate they don’t burn as big as does the odd multinational corporation that goes down in flames.
Small companies tend to lack adequate professional accounting support. Books are often prepared by over taxed and under qualified staff. As you point out, Tesla doesn’t list a CFO or VP-Finance.
People running smaller companies tend to be more emotionally tied to the results and are therefore more tempted to fudge the numbers. I’m sure the Tesla principals, who are working on a product that will “change the world,” are not immune to these enticements.
Plus, it’s easer for small businesses owners/leaders to gain inappropriate access to manipulating the financials. Unless the VCs are in the general ledger system (assuming the company has one) reviewing every journal entry, they can’t prevent this.
So I remain highly skeptical.
There are no numbers to fudge at Tesla because there are no revenues and no profits. VC money has been going in and is being spent on R&D and hype. You don’t need sophisticated accounting to have an idea what is going on, just have a look at the checking and savings/investment accounts.
The problems are almost certainly the little matter of going from the idea/prototype stage to a real world product. Silicon valley lives on hype and promises and has a long history of making buggy products with limited lifespans. How many laptops computers or iPods do you think will still be working properly 5, 10 or 15 years after they were made????
I really am in two minds about this one.
On the one hand, I love the idea, and can see there would be a demand. The promised performance alone is enough to make me WANT one, something I can’t honestly any electric car has ever done before.
But what troubles me so much about the Roadster project is that none of the big boys share Tesla’s “vision”, and undertake one of their own.
There’s really nothing that original about the Roadster: it’s fast (Elise), light, (Elise), well built and engineered (Lotus) and desirable (Lotus Elise). Tesla is consequently a battery company as far as I’m concerned, the rest of the hard graft was pretty much already there. So the question is, why will Tesla break new ground in battery technology where no-one else can?
If I had to guess, I suspect the Tesla will make it to market in much of the promised format, yet be plagued by reliability problems. Such a hi-tech car is asking for it. That really underlines the crucial difference between an SV start-up and a manufacturer like Toyota – the latter would not put such a risky car on sale.
Tesla has been promoting the modern electric car, and they captured a lot of attention and imaginations through their PR.
Crossing the chasm from a concept to a reality is proving more challenging than they anticipated, or expected.
Tesla’s constant reference to being superior to “mainstream” automotive folks might have made them different, but also showed a certain “naivete” on their part.
I think the Tesla roasters will eventually appear, and they will be at least as reliabile as any as any other exotic sportcar (which is a pretty low bar), and quite possibly as reliabile as your typical Toyota (electric cars have way fewer moving parts for things to go wrong in).
Basically, the only real problem with the delays is the fact that these vehicles have already been sold. If there were no pre-sales, and the ship date slipped a year, no big whoop. However, I think the people who have already put money down realize the risks involved here. Also, the large number of celebrities and other notable people who are amoungst the pre-orders (both founders of Google, the Governator, Matt Damon, George Clooney, will.i.am from the Black Eyed Peas, and Flea from the Red Hot Chilli Peppers are just a few) pretty much means that the cars will be delevered eventually.
Celebrities are notoriously poor judges of character, venture operations, and finance in general. Almost all have been fleeced at one time or another, many to the tune of millions. The sheer number of destitute has-beens within the entertainment industry is a glaring reminder of this fact.