Opinion: NYT Pundits Finally See Tesla As It Is

As I wrote a week or two ago, the outside world is finally catching on to what automotive journalists, industry analysts, and car enthusiasts have long known about Tesla. This week, two columns in The New York Times showed that well-known pundits like Farhad Manjoo and Paul Krugman are catching on/catching up.

The usual caveats are necessary here before we dive in: Manjoo's and Krugman's opinions are theirs and don't represent the institutional opinion of the Times, just like my opinion doesn't speak for all of us at TTAC. Nor do I have any economic interest in bashing Telsa or its head, Elon Musk -- I don't, to my knowledge, own stock in competing automakers or oil companies. My opinion of Tesla is based on years of observing the company as a journalist (and, briefly, as an analyst). Finally, in the spirit of full transparency, I will say I at times agree with Manjoo's and Krugman's opinions -- I am not attacking them because they are on "the other side" of whatever my politics are.

Hopefully, that preamble will stave off bad faith and/or uninformed arguments in the comments below.

Ahem.

Anyway, Manjoo wrote last week that Americans, in his view, are finally seeing that if they want an EV, they have options other than a Tesla. He also argues that Musk's erratic stewardship of Twitter is driving buyers, especially those who care about what their car brand says about them, to shop elsewhere. Meanwhile, Krugman argues that building EVs is not a "network externality" business -- meaning that unlike Apple, which can ensconce users in an ecosystem of its products and features, Tesla (or any other EV builder) can't really do much to keep buyers in its clutches over the long run. Tesla buyers can, and some will, buy an EV from another automaker when it's time to trade in their Model 3. Short of doing something like having the only available charging system, Krugman argues, Tesla (or, again, any other automaker) can't capture consumers in its own product ecosystem. Krugman also argues that Tesla became so valuable only because investors "fell in love" with the story of Tesla/Musk as a company/person who had an innovative vision, instead of looking to see if the company could live up to that vision.

Haven't most automotive journalists been screaming from the rooftops for years that Tesla was being overvalued based on a story of hope as opposed to reality? I did that was Nikola and got roasted, though, in the end, I can say "I told you so", at least to this point.

To be fair to Tesla and Musk, the company did do a few concrete things. Despite having all sorts of quality and production problems, Tesla did bring several EV models to market while other automakers were dipping their toes into the market. Outside of Nissan's Leaf, automakers were a bit slow to build mass-market EVs, instead focusing on models that would sell only in certain markets, or that didn't offer enough range to really sway most buyers. Tesla/Musk was smart enough to position the cars as "cool" luxury vehicles that wealthy early adopters would buy. If celebrities were bopping around Hollywood in Model Ss, that gave the brand cachet. Sure, the Leaf was cheaper and a pretty good overall vehicle, but it wasn't "cool." No celeb was buying one.

I also give Tesla credit for building out a good charging network and closing it off to other cars (it will soon be open to competing cars). That obviously gave an incentive for EV buyers to shop Tesla -- the charging network wasn't just accessible and reliable -- you had to buy a Tesla to use it. Oh, and you wouldn't have to fight with owners of other brands.

Still, there were always red flags with Tesla (a company that Musk didn't even found). The constant quality and production headaches, for one thing. It's true that ANY startup in the auto space would deal with these challenges -- building cars at scale and making money while doing so is VERY HARD, and a lot of industry outsiders don't understand how difficult it is -- but the struggles should've put a damper on the irrational Tesla enthusiasm, at least until the company showed it could rise to the occasion.

Especially since it has been clear for some time now that the legacy manufacturers, who have a century of experience when it comes to designing and manufacturing vehicles at scale, would be bringing more EVs to market. Once the legacies stopped being cynical and limiting their EV efforts to small-volume units that were meant more to give them cover against (fair and mostly accurate) criticisms of their tendency to build gas-guzzling SUVs, as well as to help them meet CAFE standards, they showed that they could build EVs that are just as good as any Tesla. They could also sell those vehicles for lower MSRPs and with fewer quality issues.

Meanwhile, Musk and Tesla couldn't even get the Cybertruck to market in the promised timeframe.

If Manjoo and Krugman had spent any time reading sites like this one, or even the news sections of the big car-shopper-oriented digital and print pubs like Cars.com or Consumer Reports they'd probably already know this. Hell, their own paper of employment once had a robust autos section -- and that same paper exposed some Tesla (and general EV) flaws during an infamous road trip that turned into a controversial article.

Again, I am not a Tesla (or Musk) hater. I am paid, however, to see reality, especially as pertains to the automotive industry. The reality when it comes to Tesla is that the brand made EVs seem cool, especially among a subset of influential and wealthy consumers, and the cars are class-competitive in terms of luxury features and performance, at least in my limited experience when it comes to driving and riding in them. It's also the reality that the brand has struggled with production issues, quality issues, false advertising for "full-self driving" (no fully self-driving cars exist, no matter what Tesla says), and myriad other controversies. So many that Wikipedia has a full page.

And the reality as pertains to Musk is that he is/was a great salesperson for Tesla's cars but he's also a mercurial boss who at times has appeared over his head during his tenure at Tesla. He's smart, no doubt, but he's not infallible. He seems to be in over his head at Twitter, for sure.

Elon Musk and Tesla spent a long time -- the better part of a decade, at least -- as the darling of the automotive industry, at least in the eyes of certain pundits and investors. Those of us who had a healthy skepticism, however, had an inkling that once the legacy OEMs really started to invest in EVs, Tesla would have a fight on its hands. We certainly didn't think that Tesla was going to dominate the industry or take down the GMs and the Fords and the Toyotas of the world just because the company offered up a few luxury EV models.

I give Tesla credit for the things it has done well, and I think it's reasonable to suggest that Tesla's early successes, real and perceived, probably were at least one factor in speeding up the legacy automaker's shift to EVs. It wouldn't be the only factor -- government regulations and incentives (real and proposed), an overall consumer preference shift towards EVs, improvements in technology, and other factors all play a part. But Tesla is a factor.

It's just too bad that pundits like Manjoo and Krugman -- people who have platforms larger than I -- didn't see this coming earlier. It took Musk's Twitter troubles (and in Manjoo's case, test drives of the crop of legacy OEM EVs) to wipe the rose color off the glasses.

I know I wrote about this from a slightly different angle not long ago. But it's worth harping on because we live in a world where startups that are supposed to "disrupt" legacy industries come along every so often, and if you raise reasonable skepticism based on real-world evidence, you get branded a hater. It happened with Theranos, and that ended with the founder in prison. It happened with crypto, especially FTX (remember those Larry David commercials from this year?), and now the FTX founder is facing prison.

I am not saying Tesla will fail, nor am I rooting for it. Personally, I generally believe that more competition is better for companies and markets, and again I think Tesla has been one of the factors spurring EV growth among the legacy OEMs. I am, however, tired of investors, consumers, and pundits/media falling for too-good-to-be-true stories. It's time for us to think critically.

And it's time for powerful pundits with large platforms to spend more time doing due diligence as opposed to coming to the correct conclusion years too late.

[Image: Tesla]

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