It is a measure of the difficulty of entry into the American car industry that not a single mass-production company has got underway successfully in the United States since Gaston Chevrolet, Henry Ford and Horace Dodge started what would become General Motors, Ford Motors and Chrysler in the 1920s. It is a further measure that nobody until Elon Musk came along has ever been able to start a successful electric car company.
The trials Musk and his brainchild Tesla have gone through may not be over, in fact. Despite having delivered the first quarterly profit in two years in the third quarter of 2018, Musk, on Jan. 2 said the company missed its targets, delivering 90,700 vehicles during the 4th quarter and disappointing Wall Street despite its efforts to ramp up production. The stock promptly fell by 10 percent.
The travails Musk himself went through in 2018 are enough to merit the title of Hamish McKenzie’s new book, Insane Mode, published in November 2018 by Dutton. As widely reported, Musk got himself sued for defamation by a Thai diver trying to rescue a trapped football team, spurred an investigation by the Securities and Exchange Commission for an incoherent video interview in which he either did or didn’t smoke marijuana, broke into tears during another interview, and was eventually forced to take on new independent directors among a long list of other travails, many self-inflicted.
Nonetheless, according to McKenzie, Musk is “more important to society than [Apple founder Steve] Jobs ever was. While Jobs did the world a great service by putting powerful Internet-connected computers in our pockets, Musk was operating on a different plane of purpose. In attempting to transform transportation and radically improve space travel instead of developing another photo-sharing app or the next Flappy Bird, Musk set an example for a new generation of entrepreneurs.”
McKenzie temporarily left journalism in 2014 and 2015 to go to work for Tesla. Despite that, he says, his 303-page book is no insider’s tale. And despite Musk’s apparently well-deserved reputation for mercurial behavior and his legendary predilections for ridding himself of staff – or staff ridding themselves of him – there are unfortunately few tales of such sturm und drang in this book.
“In these pages, I strive to present a fair and clear-eyed view of what’s great about Tesla, and of the very real challenges it faces,” he says. He describes the Musk story as “not just about Tesla. It’s about something much bigger. It’s a story about how one determined Silicon Valley start‑up changed the entire auto industry, along the way inspiring a slew of well-funded imitators from California to China. It’s a system- level view of a technological and economic transformation that will affect the lives of everyone on the planet. It is the story of a revolution that Tesla started.”
Musk’s own tale is compelling. A South African youth who was bullied so badly and beaten so badly by other kids that he was temporarily unrecognizable, he escaped to Canada with his brother and without his parents, came over the border, got into the prestigious Wharton School. There was little in his early strivings that would have put him on US President Donald Trump’s agenda as meriting a chance to immigrate to the US – other than the fact that he was white, albeit from what Trump would have called a shithole country.
His early successes have been covered extensively – after Wharton, he dropped out of a Stanford University doctoral program to create his own startup, sold it to Compaq, founded an online bank, merged it with Confinity, which became Paypal, which was bought by eBay in 2002, making him a billionaire at the age of 31.
At that point, McKenzie writes, Musk was seized by the ambition to revolutionize the car industry. Tesla, he says, “is a vehicle for an idea: that we humans have better ways to power our lives than to burn a dinosaur-era compaction that dirties the air and skanks up the chemistry of the atmosphere.”
Tesla is an energy company. “This is the story of how the electric car became a Trojan horse for a new energy economy. I believe it is the most important technology story of the twenty-first century.”
The US auto industry had been trying for years with considerable success not to build an electric car despite the efforts of government and environmentalists to get them to do it. That is a disheartening story that McKenzie tells – of Detroit engineers wedded to the internal combustion engine and apparently doing their very best to sabotage anything else. General Motors built one of the ugliest cars on the market, the EV1 (below) to halfheartedly fulfill a California state requirement to clean up the state’s fleet.
Then Musk came along and built an electric roadster on a Lotus chassis that not only proved an electricity-powered vehicle was viable, it was glamorous. (“Insane Mode” is actually a setting that propels Teslas from 0 to 60 at astonishing speed.) That was followed by the Model S. McKenzie pulls no punches about the S. After winning a phenomenally good Consumer Reports rating, Tesla nearly blew it with production problems – door handles that malfunctioned, squeaks, rattles, a back seat that was likened to a bench.
In the end, the S survived most of those troubles and has in the sold hundreds of thousands, with an ecstatic coterie of prospective buyers awaiting the production of more of them and the new models that followed. Hong Kong has become ground zero for sales, with car buyers snapping them up at a record rate.
Other carmakers have sought to get into the arena, many of them from China. But as McKenzie points out, too often Chinese tycoons were simply unprepared for the challenges, starting without enough capital or with substandard organization. The most publicized was Faraday (Volt? Tesla? Faraday?), which McKenzie analyzes at length. The company, founded by Chinese billionaire Jia Yueteng, was seeking to market a futuristic SUV called the FF91, which has appeared at numerous car shows, but has never seen moving. After the book was published, Nick Sampson, a co-founder and senior vice president of product strategy, and Dag Reckhorn, the company’s senior vice president of global manufacturing, resigned. It is unsure whether Faraday will ever get onto the road.
That doesn’t mean the Chinese aren’t fully committed to the electric car industry. McKenzie has done serious homework, flying to China to meet with a long series of executives fully committed to production. They are likely to move ahead of the Americans, who except for Tesla show little commitment. The Big Three automakers want to build gas-guzzling pickup trucks.
In fact, the attitude of the US carmakers – and the fossil fuel industry – is disheartening. Other than the Chevy Bolt, there is little that appears encouraging. In recent weeks, the Big Three have pretty much turned to the pickup truck industry and as a possible recession looms, they are likely to ignore electric vehicles. As McKenzie notes in detail, the profit margins aren’t in electric cars.
There is considerably more to the Musk story – Space X, his battery plants, a new Shanghai production line, that as McKenzie points out, does make him one of the most fascinating industrialists of the past century. This is a book worth reading to learn not just Musk’s story but that of the electric car industry and, beyond, the contest to save the planet from rising temperatures, the most important story of all. It is unsettling that the electric car industry and its most notable protagonist, Elon Musk, are moving so fast that this book, published just two months ago already needs updating.