“Silicon Valley Decides It’s Just Too Hard to Build a Car” – What About Tesla?

Bloomberg just published an article Silicon Valley Decides It’s Just Too Hard to Build a Car, by Keith Naughton , Alex Webb , and Mark Bergen, October 25, 2016. That make Elon Musk’s achievements with Tesla Motors that much more amazing! Tesla is a Silicon Valley company, and Tesla is producing amazing cars. The article points out that the Silicon Valley companies can’t get the real-world driving data that the conventional car companies have. And conversely the conventional car companies can’t hire the software experts to build the systems needed for the autonomous cars of the future because Silicon Valley firms are more attractive places to work. Yet attempts at partnerships between companies in the two industries remain stalled.

Meanwhile, Teslas have driven over 100 million miles with Autopilot active, so Tesla is gathering far more detailed data than the conventional car companies. By contrast Google’s much-touted self-driving car program has driven 1.5 million miles over its entire history – Teslas log 2.6 million miles a day on Autopilot. And Google says Google’s Robo-Cars Hit 2M Miles, Confirm Driving Is Dadgum Tricky. That’s why our proposal is to have Autonomous Vehicles run in enclosed Autonomous-Ways, or A-Ways, excluding human-driven vehicles, pedestrians, animals, debris, and weather. A-Ways greatly simplify the requirements on the autonomous driving system, and greatly improve the safety – in 94% ± 2.2% of crashes the driver was the critical reason, NHTSA DOT HS 812 115, February 2015. And even better, the A-Way can provide power directly to the vehicles, essentially eliminating batteries, which are such a drag on electric vehicles.

Having worked in Bell Labs, which at the time was part of the largest private company on earth, AT&T, and subsequently in several startups, I have a perspective on the challenges facing the conventional car companies. I even directed modeling efforts as part of studies leading up to the AT&T divestiture in 1984. Bell Labs was a great place to work back in “the day” but now startups are far more fun and satisfying.  

My view is that it is incredibly difficult for a large company to make the transition to drastically different technologies. On March 28, 2008, I was in Sacramento, California to make a statement at the California Air Resources Board meeting on the Proposed Amendments to the California Zero Emission Vehicle Regulations. After the session I was being interviewed on video, and I predicted that the big 3 car manufacturers would go bankrupt, as I had been predicting quietly for several years – the interviewer promptly left, presumably because he thought I was a crank. Thirteen months later I was proved right, ok 2 out of 3 isn’t bad, and Ford only dodged the bullet by presciently mortgaging all its assets in 2006. My comments weren’t based on the economy, that was just the trigger, but that the companies had ignored the changes taking place in the car industry, especially the need for higher quality, and the difficulty in changing a large company.

Now I predict that the conventional car companies will have great difficulty adjusting to the combination of autonomous driving, and the smaller numbers of vehicles due to sharing. I don’t know whether they will go bankrupt or just fade away to bit players. All those companies are making claims they will have autonomous cars by a variety of unrealistic dates, yet have no real experience. I’ve been managing research and development for my entire career, and built two high tech companies, and Tesla is the only one doing it right, IMHO.

Tesla tries things in the real world, and then rapidly modifies their system, based on the new information. That rapid cycling is essential for building complex systems. The conventional car companies are still stuck on annual model cycles, which might be appropriate when you are just bending metal, but don’t apply to high tech systems. Look at how long it has taken the car companies to come clean on the airbag and other disasters, and how long it takes them to actually fix the problems – this is a recipe for doom and oblivion.

Chevy now says the Bolt won’t be production limited to 30,000, and they could meet demand of 50,000 cars per year, reasoning that the annual sales of electric vehicles in the US so far is barely 30,000. Did they somehow miss the 276,000 people who signed up for the Tesla Model 3 in the first two days? Or perhaps they are siding with the naysayers on whether Tesla can meet the demand, despite the videos of their automated production line? Or are they conceding that they can’t compete with Tesla? Go Elon!