Tech Won't Save Us - The Tesla Crash is Only Beginning w/ Edward Niedermeyer

Episode Date: February 9, 2023

Paris Marx is joined by Edward Niedermeyer to discuss the rollercoaster ride of Tesla’s share price, the escalating regulatory and legal scrutiny the company faces, and the challenges it faces in the electric car market.Edward Niedermeyer is the author of Ludicrous: The Unvarnished Story of Tesla Motors and a co-host of The Autonocast. You can follow Edward on Twitter at @Tweetermeyer or on Mastodon at @[e-mail] Won’t Save Us offers a critical perspective on tech, its worldview, and wider society with the goal of inspiring people to demand better tech and a better world. Follow the podcast (@techwontsaveus) and host Paris Marx (@parismarx) on Twitter, and support the show on Patreon.The podcast is produced by Eric Wickham and part of the Harbinger Media Network.Also mentioned in this episode:Argo AI shut down in October and Apple pushed back its car project again in December.California found “Full Self-Driving” was a misleading term and couldn’t be used in Tesla marketing.A Tesla engineer testified that a 2016 video to promote Autopilot was staged.Tesla is facing a number of Autopilot cases in the coming months, including an important one in Florida.Liza Dixon wrote about “autonowashing”.In January, Tesla admitted it was under investigation by the Department of Justice.Tesla’s Head of Autopilot Software testifying he doesn’t know what an operational design domain is presents serious red flags.Chinese car companies are planning to significantly expand vehicle exports, as BYD is already selling more vehicles in China than Tesla sells globally.Since recording, Elon Musk was found not liable in the “funding secured” trial.Support the show

The picture that's more and more clear is that, you know, the autopilot full self-driving piece of this has been fundamentally kind of a criminal enterprise from day one. We don't even have a regulatory system around this stuff. We have a framework, which is this SAE level system, and they've been breaking it by telling people the car'm your host, Paris Marks. And this week, I have a returning guest, Edward Niedermeyer. Ed is the author of Ludicrous, the Unvarnished Story of Tesla Motors and a co-host of the Autonomcast. He was also on the show in February of 2022, about a year ago, on episode 103, if you want to go back and listen to that one, where we also talk about Tesla and Elon Musk and all these other topics. Now, it won't be a surprise to you to hear that Tesla has been in the news a

lot lately. Its share price fell off a cliff, and there have been a lot of questions about the future of the company, not just around its electric vehicles, but also around many of the other promises that Elon Musk has made over the years and, you know, increasingly more recently in order to ensure that investors stayed interested in the company and that the share price would continue to go up. But there seems to be a perfect storm brewing when we look at the different factors that could be affecting Tesla in the years and months to come. We can look at the growing competition that Tesla is facing from's full self-driving system that were claimed to, you know, allow the car to drive themselves, but never actually allowed that to happen. And now more regulators and the Department of Justice, the Security and Exchange Commission, and not to mention a number of lawsuits, are going to be scrutinizing that question in the year to come.

But on top of that, public opinion has also been turning on Elon Musk. And since Tesla's value, since the interest in Tesla have been so tied up in him and the cult that formed around him and the general kind of positive impression that the public had of him, that can also have consequences for Tesla. So I was very happy to have Ed back on the show so that we can discuss these things because Ed reported on Tesla for years. Ed has been following all of these issues. He's incredibly knowledgeable about the company itself, but also the broader electric vehicle industry

and autonomous driving space that the company has been engaged in. So this is a really great conversation to further dig into the issues with the company, the problems that Elon Musk and Tesla might be facing in the next year or so, and also to try to understand where this might be going next as Tesla faces tough times, but also where self-driving and that whole technology might be going, but also the electric vehicle industry as a whole as governments put more and more incentive and more and more pressure for a transition away from the internal combustion engine to electric vehicles. Just a final point before we get into it. In this conversation, Ed and I talk about the San Francisco trial that was going on about the 2018 funding secured tweet. At the time we recorded, there was no decision in that trial. But afterward, the jury found that Elon Musk was not liable, further backing up the points that we made in this conversation. I really enjoyed this conversation, and I think you are going to too.

And if you do, you can leave a five-star review on Apple Podcasts or Spotify, or you can share the show on social media or with any friends or colleagues who you think would learn from this conversation. And on top of that, if you want to make sure I can keep having these critical conversations where we dig into important technological issues with expert guests like Ed, you can join supporters like Adam from Boston, Martin from the UK, and Agatha from Germany by going to patreon.com slash techwontsaveus, where you can become a supporter. And with that said, enjoy this week's conversation. Ed, welcome back to Tech Won't Save Us.

Yeah, thanks for having me again. Absolutely. You know, we had a fantastic conversation around Tesla last time you were on, which I guess was probably about a year ago now, maybe a little bit less than that. And obviously, a lot has happened between now and then, whether it's with Tesla itself or with Elon Musk specifically, you know, he never misses an opportunity to be in the headlines and to have people talking about him. But there's so much I want to get to. This is going to be a really kind of jam packed conversation. We'll see if we can get to all of the things I want to touch on. And I want to start here, right? Because

around the end of last year, and you know, even into the beginning of this year, Tesla's share price was a big story, right? Because it into the beginning of this year, Tesla's share price was a big story, right? Because it was on kind of a precipitous decline through 2022, lost about 70% of its value, I believe, that year. It's come up a bit this year, you know, after some things that Elon Musk has been saying about the company and where he sees it going, you know, try to juice that investor interest again. What do you make of that story and the rollercoaster ride that Tesla stock has been on over the past year or so? Yeah. So when it comes to Tesla stock, I mean, this was the piece of this all that I had no idea coming in. You know, I'd always never really thought about the fact that my reporting about car

companies was something that was as important to, you know, Wall Street traders and stuff as it is. And as soon as I stumbled into the Tesla story, I was immediately accused of being a short seller and just realized like, oh, wow, there's this whole world around this. And one of the hardest things for me as I sort of was accepting that was like, OK, like the stock price is going to proceed from the facts of what's happening with this company, right? Whether that's the financing. And then obviously, it's not always going to be about the economic performance right now, but some expectations and things like that. Over the years, what's become really, really clear is that Tesla stock has a mind of its own and that they're sort of one of the reasons that this cult around the company and the

stock and around Elon Musk is so necessary is because there has to be this process of translating these movements in the stock into some kind of narrative that makes sense for people. That's how the logic works. And this is why it really has reached a point where talking to people who are interested in it from a stock market perspective, I just almost don't do it anymore because we're just coming at it from opposite ends. And I think one of the things that we've seen again and again is bad news will come out

and the stock will go up. And we've seen things around sort of like gamma squeezes and things like that, which is a very like this arcane market thing where people buy. And there was just recently some reporting where I don't have the numbers in front of me, but basically Tesla options, right?

So not just buying and selling the stock, but buying options on Tesla stock. It's one of the biggest options markets out there next to like the S&P, which is a very broad indicator of where the economy as a whole is going. Tesla has become, it's like a horse race or like a, you know, a scorpion fight or something. It's just something to gamble on. And as something to gamble on, it's become more important. It's become disassociated from any of the fundamentals.

And it just is its own thing, which has to be, again, like sort of translated back into some kind of sense that humans can like talk about and build a consensus around. And I think that right now, what we've seen over the last year or so, so in the real world of Tesla's fundamentals, all kinds of problems building, right? Like clearly sort of their demand is slowing and, you know, so they've had some strong growth, but clearly like either margins or volume is going to start to slow down. There's a lot of issues around autopilot for self-driving, which I know we're going to talk about and all these things. But really, to me, where I see the correlation happening, just trying to make sense of that

stock price in relation to these other things, is that a lot of it seems to be kind of caught up into this broader investor psychology. So now the fluctuations tend to really track these sort of wavering, emotional rollercoaster that the market and traders really track like these sort of wavering emotional roller coaster that the market and traders are going on about sort of like, what is this post quantitative easing era sort of like going to actually look like? Are we going to get a soft landing? Is inflation going to get under control? So in a lot of ways, I think like the easiest way to think about Tesla's stock price movements right now is that it's almost like a macro indicator. It's like an index almost of like the relationship

between the broader economy and the political system and everything else and sort of tech as this idea that's been huge. So I think it's a very relevant topic to, you know, the kinds of things that you discuss because, you know, this has been such an important relationship for not just America's economy, but culturally, politically, all these other things. And Tesla is basically sort of like an indicator for that. And if you think of it as like, you know, a social media poll or something where people are voting it up and voting it down, that way of thinking about it makes way more sense than trying to like go back to the fundamentals and like create causal or like rational links between what's actually happening with the company and what the stock is doing. Yeah, like I remember during 2021 ish, like, people would say, like, it seems like Tesla

is more of like a meme stock, because that was something that was going on at the time. But it feels like there's this kind of push and pull, especially when we look at Tesla, when we look at what's happened with the share price over the past year or so, between like, what is Tesla, right? Is it a tech company that is judged based on its potential future, you know, prospects? Or is it a regular company that is like a regular auto company that is based on its actual fundamentals, right? That is based on its current performance and what it's actually doing. And it seemed like, you know, as the share price was declining so much, it was like the market was judging it more as a regular company rather than some tech company that was going to have this explosive

growth and absolutely transform like, you know, transportation. And was saying, this is just another car company that's now making electric cars rather than the traditional cars that companies have been making for a long time with internal combustion engines. But, you know, it's just selling a car at the end of the day. And it seems like that's always kind of the push and pull, the question of what is actually going on. Yeah. So I think our relationship with tech as an idea is in itself not just a rational thing. Some of it is, right? Because companies have come out of the tech sector, like Google, like Apple, that just have these economics that just blow everything we've seen out of the water in terms

of profitabilities and margins from software and things like that. And so clearly, tech and the software business in particular has created sort of new economic rules that are obviously very appealing to capitalists, right? Because there's just massive margins. You build a good piece of software, you can scale it endlessly. As soon as you paid off your development cost, it's basically all profit. This has been a transformative thing. We've sort of had a psychotic break almost from that truth is this idea that that logic, by virtue of being part of the Silicon Valley ecosystem, can be applied to other things like making cars, right? And I think in some ways, I've really developed covering the story, a real appreciation for what they call the animal spirits of the market. And I think that that's

more and more what this relationship with tech is from a capital market perspective. And I think of it as when you're going through a midlife crisis and all of a sudden, young people become very appealing. It's this kind ofpe, right? And it's because it's their vitality and their beauty and their potential. And I think that's what it is. It's that we see that these people have this potential that for us is no, you know, as an agent, by the way, I should preface this. I turned 40 like a month ago. So, you know, this is just thinking a lot about age. Maybe I'm projecting a little here, but I think there's something to this. And I think what's going on right now with Tesla stock in particular is that we're battling

with this, like, you know, after 10 years of being infatuated with Tesla, the markets are having to come to terms with the fact that the story is constantly changing. You know, very little of what was promised and what got people super excited. Like, you go back and you show the things that Musk was promising and people just forget about it because we're constantly, it's that allure and that animal draw of wanting to believe in this like future of infinite possibilities. He also just always has the new thing in the window so that you don't think about the thing he hasn't delivered, right? Because there's always something else that for you to focus on and to distract you. Exactly. And at the same time, you know, you have traditional car

companies, which, you know, obviously very imperfect in a lot of ways, but they know how to make and build cars in an economically sustainable environment. Sustainable obviously gets into a whole lot, but by the rules of capitalism and capital that we're going through here. And it ties very deeply into questions about what we're doing on a monetary policy and a macroeconomic level of do we keep pumping easy money into the economy so that we can kind of hold on to these dreams and these beliefs that if we throw money at stuff, that there's going to be new breakthroughs like the iPhone or like Google or like things like that, that open up brand new economic vistas. But I think with Tesla in the car manufacturing space, I think you have to at some point get realistic about the fact that like, at some point, you can't just endlessly bet on potential. At some point, you have to look and say, you know what, maybe these older folks may not have this unlimited potential in their futures, but they've learned a lot over the years. They've learned how to integrate with society. They've learned what a real relationship is, you know, in some ways. And that's been a difficult process, but they've gone through it over a hundred years. And I think like the real challenge that the markets are facing,

and again, it's tied to this broader macroeconomic thing, is just how do we sort this out? Because I think we want to have both, right, to some extent, but clearly we've way over indexed on let's call it, you know, the young sort of promise of, of youthful revitalization. I think that's a really good point though, because it also makes me think about the prospect of self-driving and what that really meant, right? In June of 2022, Elon Musk said that without self-driving, if they can't make self-driving work, that Tesla is worth quote, basically zero. And that also made me think, you know, especially as you're talking about the more traditional automakers, that especially in this moment, like in the 2010s, the latter half of the

2010s, when there was a lot of excitement around self-driving technology and, you know, there were a lot of narratives around, like, it's right around the corner, it's going to completely change how we get around, that a lot of the traditional like it's right around the corner. It's going to completely change how we get around that. A lot of the traditional automakers also kind of plowed into this space, put a lot of money into self-driving to try to catch some of that excitement, to try to catch some of that kind of investor interest so that, you know, they could try to emulate Tesla and what it was achieving to a certain degree, achieving in the degree of like share price and things like that, you know, not actual technological advancement necessarily.

And so I wonder how you see that as playing into it, especially in this moment now where it feels like, you know, I think we've already had a reckoning to a certain degree on self-driving technology and what kind of the realistic implementations of it are going to be. But especially now where we see autopilot, because it is the system that Elon Musk has still been pushing as like going to have these transformative effects that most of the other companies have kind of left behind and have kind of moderated their language a bit more. But autopilot and full self-driving, which are the features that are available on Tesla, have been getting more regulatory scrutiny, you know, more kind of scrutiny from the SEC, from the Department of Justice, from everybody virtually.

So what do you make of this kind of transformation and this change? So I think, I mean, you know, kind of tapping into the way of thinking about it that we were just discussing. I mean, I think, yeah, so there was this sort of, you know, upwelling of youthful energy and optimism about this technology from Silicon Valley. And clearly the automakers, it was a carrot and a stick for them, right? Like, the carrot was, we can get a piece of this. We can also now reinvent ourselves and be seen as youthful, right?

Like, it was sort of like plastic surgery or whatever, right? Rejuvenation. And the stick was, if we don't, you know, the capital markets will leave us for the young, hot thing, right? And so, they felt forced, I think, the capital markets will leave us for the young hot thing, right? And so they felt forced, I think, to go along with it. And I think it's a testament to how powerful these forces are that only now in the last year or so have the automaker stopped and said, wait a second, does this technology actually really fit our business model? And it doesn't, right? And if you

do driving automation technology the right way, and we've discussed this a bit, you automate tasks, right? And cars are general purpose devices. And so there was always this tension there that didn't really quite fit. And, you know, and again, like if you go out, you know, I don't want to get into the politics of plastic surgery, but it doesn't make you younger, right? It can make you appear younger. It can make you feel younger, but it does not turn back the hands of time. And realities continue to be realities. And so I think we've seen, and this is where I think, you know, where Elon is right now and his perception, and especially in capital markets, but I think to some extent, the political world is so important is because, you know, behind the scenes, and this hasn't been reported a lot,

but like the driving automation technology space has been shaking. Like 2022 has been a quietly devastating period for these companies. Some big names, basically everyone's done layoffs of some kind or another. We've seen companies like Argo go under, and believe me, 2023 will hold a lot more of that in the future. Investors have gone from being infatuated with the infinite promise. Again, this is the market thing of switching on a dime from greed to fear. And it's so fascinating to watch that happen when there's billions, literally billions of dollars and people's entire life work at stake.

Because one minute, investors will say, yes, we see the infinite future potential of this. And the next minute, they're like, well, we need a business model in six months, guys, or else we're pulling the plug. Especially when interest rates start to rise and access to cheap money goes away. It's amazing, like, how, you know, a couple macroeconomic factors change, and all of a sudden, the way people think about their psychology shifts in really fascinating, fundamental ways. And that's happened. And that's what makes it all the more interesting that Elon, and he was just on a quarterly earnings call, he's not backing off on any of this stuff. He's still saying, the Tesla that you bought in 2016, well, he's kind of fudging the 2016 part. behind the curtain as much as I have in the driving automation tech space, is that the contrast between the people who are legitimately seriously trying to deploy this technology and have always had a more realistic relationship with Tesla, they're struggling to fundamentally change. And Elon's not even trying to change at all. And I think that it's for the same reason that Tesla has always taken more risks with its approach here, which is that all of these companies, whether it's the car companies

or the big tech companies like Google or Apple or any of the others, they have businesses to protect. So they have to think seriously about the risks that they incur. And that's fundamentally different than Tesla because Tesla has always been the stock promotion aspect of Tesla has always been much more important than the business. The business itself has never been so big that it can't be at risk. And guess what? It always is kind of precarious and at risk anyway, because the profit margins aren't that good. And so I think Tesla's sort of emerging as this new kind of tech company where,

because they don't have that really just like undeniably solid economic machine the way Google and Amazon and Apple have, they've kind of ended up getting stuck in this startup mode where everything is always at risk and every risk is always justifiable and the future upside is always unlimited and the actual operations never really matter. They've just managed to take that mode, which is the standard way that millions of startups operate, but bring it into the public markets and reach a size that is just totally unprecedented. And now that they're there, what comes next and how we off-ramp from this kind of situation is not clear at all. No, totally. And part you know, part of the reason

for that is also because of this aura that was created around Musk so that, you know, everything he touched was golden and had to kind of explode in valuation and interest and all these sorts of things. And just to kind of back up your point as to what you were saying, you know, last year we saw Argo AI fold, which was funded by Ford and Volkswagen. We also saw Apple further push back its timeline on its car that it's been working on for years. It's interesting in, I don't know if you've read Trip Mickles' book After Steve, but he mentions in that book that, you know, after kind of Steve Jobs dies and Tim Cook takes over, they're really kind of looking for like what the next big thing is going to be. And Tim Cook doesn't really have like much kind of insight into this or isn't really hands on with it in the way that Steve Jobs used to be with the different products. And so one team is like wearables is what we should be doing, you know, Apple Watch, things like this. And another team is like, what if we went into cars and self driving cars, because this is the moment when the hype is really kind of at its max with

that. He was like, Yeah, let's just kind of go for it. Let's try to do both. And it's like this car project has just kind of been like limping along for like almost a decade. Actually, I think like Apple is a fascinating counterfactual to Tesla because I think they're one of the only players that as far as we can tell from the bits that we put together that, you know, the goal has been similar to Tesla, which is to a car that you buy and you own. And again, when I first started

hearing about Apple car stuff, you know, years back, I wrote a, I was contributing to Bloomberg view at the time, Bloomberg opinion. And I wrote a piece that was like, there's no way they're going to do a car. It's going to be a service. It's going to be like the Apple tier of Uber, basically. It was at the time, like how that made sense, but no, like it became increasingly clear. They were going to make and sell or have someone make and sell a car to you. And I think, again, this is the exact contrast that I was talking about. You know, Apple has, I think, especially since Steve Jobs passed, has had to worry about its credibility. And so part of them not talking about this stuff is the traditional Apple secrecy.

I think that is absolutely part of it. But they're not, right? No one's going to be like, oh, I'm not going to buy a MacBook because I'm going to wait for the car. Like they don't have those traditional Osborne effect issues to worry about. So I think a lot of it has been, we just want to get the product right and get it out there. And that's what a business does. And they're a business where they're not going to the capital markets and hyping them up to get the capital to pay for that. They're just choosing to arguably waste their money on it, which is they're more than welcome to do. They're hiring, you know, they're employing smart people to do interesting work, like more power to them. But it distinguishes that approach, which I think is the serious approach from what Tesla is doing, which is, again, to me, Tesla is fundamentally a stock promotion business that operates as much of a business as it absolutely has to. You know, and again, some of this is unfair, like they've done

some great things. We talked in our last episode about it. But I think at this point, you can see in how these different companies are approaching things like Tesla is fundamentally what matters is the stock promotion and everything about the business can kind of be put at risk because it's not as important as the unlimited future upside. Yeah, it does feel like if Apple, you know, didn't have basically unlimited money, like any other company would have canceled that project long ago. But Apple, like, it doesn't matter, you know, it's what, who knows what they're spending on it, some 10s or hundreds of millions of dollars a year, but it's like, you know, that doesn't matter compared to all the other money that they make and

all the money that they have in the bank and that they were able to bring back to the US, thanks to Trump's tax cuts, you know, a few years ago. You know, just talking about autopilot to kind of wrap up this conversation about self-driving, I wonder what you make of the increased scrutiny that autopilot and full self-drive have come under more recently. You know, we have California saying that, you know, they can't use the term full self-drive in marketing anymore because it's seen as misleading because, you know, the cars don't actually have, you know, they can't fully drive themselves, which I don't think is very controversial to say. I think Tesla would even admit that. And, you know, we also have a number of court cases that are coming up in recent months

based on crashes that happened with Tesla using autopilot, you know, a number of years ago, but are finally kind of making their way through the court systems. And then using autopilot, you know, a number of years ago, but are finally kind of making their way through the court systems. And then we also have, you know, Tesla admitted in a recent filing to shareholders that the Department of Justice is looking into autopilot and full self-driving. And of course, there was this story recently that you will be very familiar with about a video that, you know, was released in 2016, I believe, that claimed to show autopilot working, but that we now know or that we've known for a while if we read your book, that was completely staged and totally fake. That's one of the things that really kind of has helped to blow up Tesla's share price

and to make it look like it's something more than a car company. So what do you think about where all this is going? Yeah. So I mean, I think the autopilot and full self-driving part of Tesla, it was a relatively small piece of the book, The Ludicrous, that I wrote, but I think it has absolutely become really fundamental and central and one of the most important parts of this. The reason we're in this place with autopilot and full self-driving is that it's very difficult for people to actually understand what's happened. And I say this, like, it's been difficult for myself. It's taken years for myself to really pull back all the layers and really actually understand

what was going on. And then, you know, it's another challenge to the how do I explain this to like people? And it's very difficult. I'm still trying to figure that out. But essentially what happened was, you know, Tesla took technologies that existed. Adaptive cruise control had been around since the 90s, and lane keeping assist had been in

limited forms available, not quite as long, but had been around. What it did was put those together and created this new class. And what crystallized this, I was just talking for the other podcast that I do, the Autonicast, with Kelly Funkhauser from Consumer Reports. And we were talking about how Consumer Reports, which is this sort of traditional mediator between the auto industry and the public, right? And it has this independence and credibility. It has to work with automakers to a certain extent, but it really takes its independence

and credibility important. And really like what they've had to do was to sort of accept that Tesla kind of just stepped into this wild west. And it wasn't necessarily they completely invented a new technology, which I think is what people think they did. But it's that they took these technologies and created a market segment. They created a type of product out of these existing technologies that became very popular.

The problem is that it became popular under false pretenses, right? There were sort of two core sort of forms of appeal. One is your car is driving itself, which it isn't. And again, I think now we're starting to see, one of the factors we're starting to see is Mercedes is coming in and they're saying, we're going to offer level three, which is called conditional autonomy in consumer vehicles,

which means essentially that when the system is active, and they're being very forward with messaging this part of it, which I think is helping explain what Tesla hasn't been doing, which is that when this system is active, which will only be in certain kinds of weather on certain kinds of freeways, basically, that are pre-mapped, is that when it's active, Mercedes is legally responsible for the system's actions. And again, this technology is difficult to understand, but that distinction is easy, right? A car is self-driving or a system is self-driving when it takes responsibility. I remember as a kid, I used to go camping with my dad out in central Oregon, and he would let me drive at age 12, 11, out in the middle of nowhere. And we'd get to a little town, we'd stop and pull over, and he'd get in the driver's seat,

and he'd drive us into town. So I knew how to drive with an automatic transmission and stuff, but I couldn't get a job driving. I mean, Uber didn't exist, but I couldn't get a driver's license. So I wasn't really driving. And you know what I mean? Like, it gets weird there, but that's essentially what's happening. So they sold a simulacrum of self-driving, and then they sold the illusion of safety as the other piece. And they've been lying.

And this is another piece where, again, I wrote an article in the Daily Beast in 2016 saying, like, these statistical claims to safety are bullshit. And we're finally getting, like like serious researchers writing these things in journals and stuff and getting a more credible foundation that hopefully regulators can use. That of course hasn't stopped Elon Musk from continuing to claim that it's safer than human drivers and all this stuff. Yeah. And I think how we reach a reckoning with that is going to be really difficult because thus far he really either can't or

won't back down from anything, which I think is, again, we were talking about sort of in this broader context of things, he increasingly stands out. So now what Consumer Reports has had to do is to say, okay, so now we're going to start ranking and reviewing this category that they've created. But we have to make this point that these systems can improve safety, but they can also not improve safety. And it depends on how you design and architect them, basically. And so, we're still at this weird point where consumers and stuff, especially the more pro-Tesla autopilot people, they look at these rankings. They're like, the rankings are

determined by how good your driver monitoring system is, whether or not it doesn't let you use it in certain areas. These things seem like reductions in capability, and therefore these systems are worse. And the ongoing communications challenge that we still haven't fully solved, but a huge credit to CR and IHS and the work that they're doing around this is helping people understand how these systems are designed and deployed and even how they're communicated about literally affect whether or not they can enhance, they have the possibility of enhancing safety, or whether they ultimately are just there to enable inattention and in fact, create totally novel safety risks. So we're making progress on this. And it started in 2020 with Liza talking about autonomous washing. And I think Consumer Reports and IHS is developing a set of principles around the designs of these systems where they can kind of boil down these sort of complex design issues into

basic principles of how a system is more collaborative and keeps the driver engaged rather than one that fools the driver into thinking that it's automated, which then makes them disengage. So we're making progress, but it's slow. And it's all having to be done by these sort of NGO kind of civil society type of groups. And government has been AWOL. So now we're starting to get to a point where I think the government is clearly facing more pressure to move forward on it. And I'd been hearing some promising things out of NHTSA, and I think they're going to have to do something. But more and more, and this was really reinforced in the last 10K that Tesla filed

because they were doing more disclosure around the DOJ piece of this. And as I've been thinking it through, it makes more sense. Really, if you look at what Tesla's done from the beginning, yes, they created a new product category, but they done it under selling fraudulent goods, essentially, right? Like the system was what it was, but the benefits that they were of the system were fraudulent, right? It was not self-driving and it was not safer. And in fact, telling the people that it was safer made it less safe. And so to me, and especially now,

so like we have the head of autopilot software saying he doesn't know what an operational design domain is, which is like one of the most fundamental pieces of this technology. And I think the picture that's more and more clear is that, you know, the autopilot full self-driving piece of this has been fundamentally kind of a criminal enterprise from day one. We don't even have a regulatory system around this stuff. We have a framework, which is this SAE level system. And they've been breaking it by telling people the car's self-driving, but telling regulators, oh no, it's level two driver assistance. And so I think more and more, instead of revamping the entire regulatory system, which is an idea that I've worked with different industry groups to think about and explore, and it's not easy.

I think more and more, it makes sense to me, this is a criminal enterprise, and that we can't build a regulatory system, if we're even ever going to build a regulatory system, which is a question. There are people who want it, who do see it as a positive, healthy thing for the industry. But I think you can't build it around this level of deception and disingenuousness and bad faith. I think that Tesla's approach to this has to be treated as criminal so that regulators don't have to necessarily build a system that assumes or anticipates that what Tesla's been doing is normal. Because hopefully, once you prosecute that stuff criminally, people know, okay, there's a line there and we're going to go and play within the regulatory system. Otherwise, we potentially face a perp walk, you know? Totally.

And just to be clear about what you're saying, you know, the regulators are looking at it right now. One approach is to try to regulate the system and develop some set of regulations around it. But then the other side of things, the Department of Justice is also looking into autopilot and full self-driving. And so when you talk about it being criminal, that's what you're suggesting, that the Department of Justice route is the better way to approach it because what they've done here is a significant problem. It's not something that should be normalized. Yeah. And I want to clarify too, I think one of the reasons, I mean, there's been a number of reasons why regulators haven't moved more aggressively on this. One of them is just the entire culture around regulation and new technology in particular in this country. I think we need to grow some backbones around that kind of on a broad level. It's difficult sometimes to appreciate, but this is very challenging technology to regulate,

especially when you get into these very complex interactions of human behavioral psychology and technology. Very, very tough stuff. And I think one of the main factors that is understandable, and I think I'm being generous to the regulators here, what's held them back is there's a very real fear that if you act, that you create these precedents, right? And that what might be an appropriate course of action in one event may not, given who knows how this technology was going to actually evolve, may create all kinds of weird problems. And we've already seen, you know, like in California, you know, they just left out trucks for some reason. And now that's creating a whole political battle and, you know, and totally unanticipated that trucks were going to end up being one of the early use cases. You know, it shows how hard regulation is in this space. I've got license plates here from Nevada for autonomous vehicles because they thought in

2013 that they were going to need these things, right? Which they haven't. So anyway, so I think some of it on the regulatory side, instead of just responding to bad actors, you have to sort of build up in a systematic way of like, what do we actually want? What do we want to encourage? What do we want to discourage? When you get outliers like Tesla, I think that you have to just say, no, you've crossed these lines and you engage with this technology in bad faith. To me, it ties into the fact that they're a stock promotion and not a real company. Real businesses understand that they have something to protect and that regulating every other competitor is increasingly less and less. But traditionally, it has been a cost of doing business that people, companies accept. And I think hopefully if some good comes out of this,

I hope, and this broader shakeup in the driving automation space, hopefully one of the things that that leads towards is an understanding that, you know what, we may not want, you know, regulation, but ultimately there's a reason that all kinds of companies and industries have accepted it, even though it is a pain on a day-to-day basis sometimes. Yeah. And when we talk about other companies developing this, like as you say, there's still the question about how us as humans interact with these technologies and the effects that they have on us.

And it's known in many different sectors that there is kind of the kind of automation displacement or distractions that come with it where people just lose the ability to properly pay attention to what's going on around them when technology takes over certain tasks and they feel that they can rely on it. And so then that, especially when we start to talk about a regulatory question, that's where these things come in as to, you know, if automakers are putting out level three systems, what kind of impact is this having?

How should they be properly regulated so that we ensure that they're not causing safety issues in a way that, you know, an autopilot or something like that is, right? Yeah. And it's, I think the why, what are these systems doing? You know what I mean? Like why are companies developing these systems? And again, I think with Tesla, that's the key to understanding what autopilot and full self-driving have been. They've been, you mentioned the stock price. Q2 2013 was exactly when Elon started talking about autopilot. That was the very first time the stock started going parabolic. Again, in the autonomy day and AI days have been huge. Like some of the, they correlate

with some of the biggest movements in Tesla's stock price. Now it may not all be because of that, but I mean, literally he's become the richest person in the world by endangering people. And again, like, you know, there are other people doing this technology that aren't making those choices. And again, it's because they have businesses that could be put at risk.

And with Elon, everything could be at risk. And again, that's, you know, this is a difficult thing for regulars to get into, but I think that intent matters. And I think one of the things I worry about, about all these other car companies, I think they'll do a better job with level three than Tesla has done. I think they will take fewer like blatant risks, but I question what is the utility they're really selling their customers? Because I think a lot of it does come down to that selling a simulacrum of self-driving. And again, if people want to pay for that, I guess fine. But like,

you know, I don't think one person should die for someone to be able to say like, look how cool it is that my car kind of drives itself. You know what I mean? Like that's not worth anybody dying. No, I completely agree with you. And, you know, you talk about how self-driving was introduced at this moment when, you know, Tesla was having some issues, needed some investor cash to kind of flow in. And a lot of these big promises come at times when, you know, the company might be needing some money, might want to see the share price go up, might need to show investors that there's still reason to be excited about Tesla. Recently, Elon Musk was kind of on the stand in a lawsuit at the Delaware Chancery Court around a massive pay deal that he was granted in 2018 that came out to about $56 billion. And the terms of this deal were based on the share price hitting certain metrics, right,

increasing certain amounts. And if he saw the share price exceed these thresholds then he would be granted stock options that would come out to be worth a whole lot of money 56 billion dollars at the end of the day what did you make of what came out of that trial or what we learned in the course of this going on because it does seem that this sort of a deal is very linked to the sorts of things that you're talking about, where Musk is incentivized to hype the stock up, you know, rather than really deliver a company that actually works. Yeah.

So I feel like Ludacris, in a lot of ways, if there was a message to the board of Tesla, it was, you know, because one of the last things in the hardcover of the book, the softcover has an additional chapter, But was this compensation package? Because I say, I said, you know, look, like this company has done some amazing things. They've been almost all in the realm of hype and sort of, yeah, not entirely, but like a lot of it has been in the realm of hype. And to me, if I were, you know, imagine myself on the board of a Tesla at 2018, you know, to me, the move is, okay, we've accomplished some amazing things here. What do we do? What incentives do we put in place for Elon Musk to ensure that he turns what we've accomplished into something sustainable and lasting?

And they did the opposite. They doubled down on the hype and created incentives that were... I mean, Elon was already the biggest shareholder. So already he was more incentivized than anybody else to pump up that stock price. Like that was already, right? So they gave him even more and they tied it all to basically almost, I think there was one award that was tied to sort of like fundamental performance metrics, but basically it was all stock and hype based sort of metrics.

So listening and seeing some of the testimony from those board members, again, this is not how normal business works, right? And that's not to say that normal businesses are all perfect, but fundamentally, corporate governance has evolved for not just altruistic reasons. It's not just because society has demanded it, although that has been a factor. It's proven to be in the positive long-term interest of companies, right? Like we have enough history of business in this country to know that like dynamic, exciting figures can come along and create like amazing things, but then screw it all up because there

was not enough structure around them. And I think it's just amazing listening to how self-deluded these board members are. And look, they're getting paid insane amounts of money for going to one meeting, whatever, quarterly or whatever it is, right? And so I kind of get it, but it also really lays bare. And to me, the part that's wild is that the investors, that Tesla investors have never prioritized, okay, we've accomplished a lot. What do we do to make sure that we hold on to that? And I think that's especially important in the car business because the car business is a survival business.

And Tesla has never really experienced true cyclicality. The only downturn it's been in is it was 2008, which it almost didn't last. He had to pull a funding secure to do that, to get through that period twice, actually, once in 2008, once in 2009, with the preannouncing a federal government loan. So it was like he had to pull a funding secured to do that, to get through that period twice, actually. Once in 2008, once in 2009 with the pre-announcing a federal government loan. So it was like he had to do fraud. He had to get government help. And that was at a time when they were like making roadsters by hand in a tiny little facility.

And now they're opening factories all around the world. Their fixed costs are crazy. And so fundamentally, Tesla still has to prove the most important thing in the car business, which is you can survive a downturn and if they don't survive this downturn you know the board will be entirely to blame for it because all they've ever done is egged him on and put zero pressure or incentive on him to to again make something that that can survive yeah and i feel like that question of whether tesla can survive was a big one as we saw those significant declines in the share price, you know, toward the end of last year and into the early part of this year. And of course, the board is known to be very favorable to Elon Musk, you know, kind of packed with the Tesla board, packed with a lot of people who are close to him, who are kind of personally invested in what he wants to see happen, not the type of people who are actually going to challenge him and what he says and what he's trying

to do and all this sort of stuff. Yeah. But, you know, the stock price has been too high also for activist investors to come in. You know, I mean, activist investors just say like, oh, well, there's value that's not being and the problem with Tesla is not that there's not shareholder value being unlocked. The problem is they've created so much shareholder value that the company itself can't deliver the actual value to back what the shares represent. And so, yes, you don't. So, typically, you know, you often do get in the capitalist system these sort of countervailing forces that will come into

a company and say, okay, you know, you've had fun, things have been wild, but I'm going to take a board seat and I'm going to start demanding that you return more capital to investors or whatever, whatever, invest in certain parts of the company, you know, spin in certain parts of the company, spin off other parts of the company, whatever it is. Tesla has become too much of this Ponzi or something, whatever it is, right? It's too disintermediated from the fundamentals for that kind of value activist investor to come in and crack skulls. And so I get asked all the time, how is this all going to play out? And of course, I don't know.

And there's been a seven-year exercise in learning to accept that I don't know what's going to happen next. But I think one thing is definitely certain, which is, and I feel like I got this right at the end of the book, which is it's not going to just stop. It's not going to just slow down or be managed. And I think that that stock grant was the thing, one of the things. I think the full self-driving was another breaking point. But the stock grant was really the thing that was like, okay, there's no more illusions about what this is anymore. We're not building a car company. We're building a stock promotion enterprise. Enter ludicrous mode. You know, you talked about funding secure

moments back in 2008, 2009. Obviously, the one that we're most familiar with is when Elon Musk tweeted out that he had funding secured in 2018 on a deal to bring the company private. Now, that is also a lawsuit that is continuing in San Francisco. Elon Musk has been on trial, as well as, you know, people who are on the board of the company, investors, because in that lawsuit, he is being sued by retail investors who say that they lost money because this funding secured tweet was not really backed up by anything. You know, I guess, when we look at that trial, that lawsuit, I don't know, whatever you want to call it, what are you making of what is coming out of that? Because I know you've been following that one a lot closer. Basically, I guess the short story is that Elon Musk said the tweet did have backing

to it. The Saudis were supposed to help him kind of bring the company private and then they pulled out, but he never had a written agreement. So he can't actually prove it. So yeah, what are you making of what's coming out of this trial? Yeah, yeah. So I listened to most of his testimony in that trial. And it's a fascinating but puzzling trial because from the get-go, the judge has made it clear he's instructing the jury to assume that the tweets were false.

So that's like not, the fact that he lied is not debatable, really, in the context of this trial. It comes down to scienter, which is basically just like, what was he trying to do? And as you can imagine, right, like, like, if you just think about that, like this whole trial is not about whether he sent out a tweet that was a lie. Everyone has to accept those facts. The question is, why and what was he trying to accomplish and was that against the law? And so, you know, essentially, it's an attempt to litigate intent to a large extent. And so, it makes the trial both fascinating and incredibly frustrating to listen to because, you know, it really was reinforced listening to that trial and then this recent quarterly earnings thing because it's at a point now where with Musk, where when you listen to him, whether he's talking about the business right now or his past decisions or whatever else, like there's

no shame, there's no effort or need to be reasonable. The question really that I've been kind of grappling with, and I don't think I have a great answer right now because like so much of this, it gets to the heart of what's going on inside his head, is, you know, is he bluffing and just knows that he has no choice but to continue to bluff? Or, and like, you know, you get into some awkward territory here because Elon Musk's, you know, how he presents and how he speaks and how his thought processes are reflected in his public statements and stuff have changed a lot over the years. And, you know, I don't want to get into

speculating about all the reasons why. I mean, he brags about not sleeping enough, and I know from personal experience that that doesn't, you know, really help. But who knows what else is going on? The point is, is that I question one of my questions, is he even capable of self-awareness at this point? You know, he's also become super insulated by his wealth. He's been super insulated by this cult around himself. How much is nature? How much is nurture? And how does he off-ramp from this stuff?

And I don't see that off-ramp. And that's kind of what I've been looking for listening to this trial, listening to his more recent things. Again, with a lot of background knowledge about the state of other businesses. And by the way, we mentioned EV companies. But EV companies, all the EV startups who looked at Tesla and went to investors and said, look at what Tesla's doing, fund us. And Rivian was worth $150 billion not that long ago. Lucid was, I don't know, $80 billion or something like that. Lucid is going to need to raise money this year.

Rivian, I don't know. I'm not familiar enough. But all of these companies are sort of struggling. And so everyone is in the off-ramp finding business. And it's hard because Silicon Valley does not really cultivate that skill, which is why Elon Musk is this mascot. He's the mascot of that element of Silicon Valley culture that never questions himself, that never has to indulge in self-reflection or self-awareness of any kind, that through sheer force of confidence and rhetoric, brings new worlds into being by manifesting them effectively. And again, to go back to the beginning of our conversation, I think this is what we're wrestling with because Silicon Valley needs it and can't really off-ramp entirely from that. They're always going to need to have that need for wild optimism and let's take a moonshot

here. And capitalism, certainly in the broader capital markets, always needs some element of that. But Elon took it too far. And now Elon can't off-ramp from his extreme version of it. And everyone has built so much around his narratives and the assumptions that underlie that really a lot of it is just his bluffs. We've built so much of how we think about technologies and sectors of the economy and what's going to happen with cars and all these other things around one man's bluffs. And so now, maybe he's just going to keep bluffing and maybe he literally is not cognitively capable of off-ramping and backing down from it. But either way, it's all of our problem. And that's really the hard part. Having given him so much benefit of the doubt, how do we find a new relationship with

him? And it's always felt like it was an all or nothing thing. And Elon consciously made it an all or nothing thing. I think the reality is, I think this is what people are struggling with sort of high up in some of the quarters of power in finance and politics is like, how do we off ramp from this Elon trip? You know, it's a long, strange trip. It obviously is not going where we hoped it would go. How do we off-ramp from it in a way that doesn't really mess up, you know, our whole relationship with optimism and everything?

And I don't, that is going to be difficult. It's a problem of their own making, but it's still a difficult problem. Of course, and one of the reasons that Tesla's board was worried about getting rid of Elon Musk is how it would affect the share price and how it would affect the company because it's so tied up in him. And just to kind of build on what you're saying, if you're someone like Elon Musk, obviously we can publicly see the cult that is around him, right?

How he's surrounded by these people who just constantly praise everything that he's doing, and he'll respond to those types of people on Twitter. And then, of course, in the text messages that came out last year, we saw how even behind the scenes, the powerful people that he is in contact with are all trying to kind of boost his ego, are all trying to show that they're like on his side. They want to say the right things to him. They want to encourage him. They don't want to look like they're criticizing him. The only person in those text messages who dared to say like, hold on a minute, dude, was Parag Agrawal, who used to be the CEO of Twitter and, you know, now is not obviously because of a whole series of events that happened there. But then, of course, on top of that, Elon Musk has been in court many, many times over the past number of years. And virtually every single time, he manages to get away with

whatever he's done, whether it's, you know, calling that man in Thailand a pedo guy, or buying SolarCity in a deal that was, you know, clearly... Unseemly, let's call it. Yeah. Yeah, yeah, yeah, absolutely. And, you know, time after time, he is in court or he is facing potential issues from regulators or from the government. And he managed to kind of weasel his way out of all those things. Like, so if you're someone like him who has amassed all this wealth, who is constantly praised, is surrounded by people who just tell him what he wants to hear. Every single time he does something that looks like it breaks a rule, that does break a rule.

He never is held to account for it. I think it's natural that you end up the way that he is. So, and one of the really interesting things that I've been hearing more recently from people who work in Wall Street and in DC as well, is that when you get down and, you know, you see this in the online discourse as well. Five years ago, there was no shortage of people who wanted to debate the substance of Tesla. And I've learned over the years that those debates oftentimes would quickly devolve into name-calling, right? A lot of the people who wanted to engage in those debates did not understand the subject

matter particularly well. And so they would... But over time, there's less and less substantive debate online about Tesla and what it is and what it's worth and where it's going and what the risks are and things like that. And what I've been hearing is that when you get to the staff level of Wall Street banks or federal regulators or things like that, the people who deal with the substance of this stuff and have to just deal with the nuts and bolts, the picture is just more and more obvious.

It's been obvious. I think the smartest people in a lot of these, whether it's regulation or finance or whatever, have been wise to Elon for many years now. Also, by the way, this has been happening in journalism as well, where you have newsrooms that are divided and certain people figure it out really early what the deal is with this guy and other people take a long time. And one of the things that I've been hearing lately is that sort of his support is kind of getting stuck up at the top. And I think it's what's happening is that if you deal with the substance of the stuff, and like, if you listen to, you know, his testimony in these trials, and certainly his board's testimony, I mean, the things that these people say, and like, the ways that

they're trying to have it both ways, oh, we're so precarious, and yet we're taking over the world. And it's, we're manipulating the quarterly numbers, but we're also, it's all about going to the moon or like Mars, like, it's just, It's so incoherent and so unconvincing to an open-minded, reasonable person that I think at the staff level of a lot of these organizations, the consensus has been becoming increasingly clear. I think the Twitter situation has done a lot to help clarify some of that, push people off the fence. The problem now is as you move up the hierarchies of these institutions, you get to people who are – they're not really engaged in the substance of the material anymore. For them, their core professional interactions and dynamics are sort of with each other, you know what I mean, in this elite circles at the top. And there, you know, this idea of Elon's mythic heroism is dying very, very hard.

And I think you saw it at Davos, you know, a number of, you know, banks, CEOs of these big Wall Street banks. And I know there are people at these very banks who are like on the front lines. And like, these are banks that are sitting on $14 billion, $13 plus billion of debt for this Twitter deal that they know is completely screwed. There's all kinds of merger and acquisition deals that they would love to make happen that the capital literally isn't there for. So we're kind of getting down to the holdout. The problem is that the holdouts are at the top. And it really reinforces something that I felt for a long time, which is that Elon Musk's,

it's very much an elite phenomenon. It always has been. And if you look at the cars, right, you buy that car and you're like, I'm a good person now. It doesn't matter how many flights I take. I have an electric car. You know, it's kind of ultimately winnowing down to the core, which is this elite, feel-good, vibes-based phenomenon that is like, you know, been propped up by all these narratives and some real accomplishments. But it's really like the last thing to let go is the importance as a status thing within sort of elite circles that we all agree that this man's a genius and that he's going to take over everything he touches. And so, again, we have this whole thing where there's all this technology and economics and macroeconomics and a relationship with tech and all these things. But it all ultimately seems to kind of boil down to

the psychology of a few people. And I think that that's when you deconstruct all of that, then you start to really understand like, okay, this is how things actually work. Absolutely. And we talked about a bit of that with Wendy Liu at the end of last year. It's not just that these people kind of buy into the Musk way of seeing things and what he's allowing them to believe about themselves. But of course, now, as he takes over Twitter, and how he's been managing that company has kind of served as a model for a lot of these kind of tech billionaires who want to slash workers and gut benefits and all these sorts of things, right? It's a different way of approaching what it's like to lead one of these companies than it was in the past decade or so when the workers were

valued, when they were paid a lot of money, when you had all these perks on campus in order to draw them in and all these sorts of things. A shift that he is helping them all make by being the very forceful picture of what a tech CEO is going to be in this next phase of where things are going. And so you definitely don't want to throw him out at the moment where he is trying to legitimize that for you. This has been a fascinating conversation. And I want to end it by looking at the EV industry more broadly. You know, we've been talking, you know, high level about Tesla and about how Elon Musk has used a lot of these promises in order to pump up the share price of the company, because that was what worked for him. It's what

worked for his investors. It's what worked for his board. And so, you know, it also played into these larger narratives about Tesla taking over the world, right? But when we actually look at the fundamentals of the company, which is an electric car company, as we were talking about at the beginning, that is competing with a number of other vehicle companies trying to sell its vehicles into the market, have people buy them, have people interested in buying them. It seems like there are a number of challenges that it is increasingly facing in its actual business, where it is supposedly going to actually make money and grow into the future, where you have these traditional automakers who didn't have electric cars for a long time, or very few of them,

rapidly expanding the options that are available to people. And then on the other hand, you have, of course, these changing views on Elon Musk and what he represents to the public, and then also what Tesla represents to the public. Because if you buy a Tesla, you're saying something about your relationship to Musk or what you think about him, because that is the way that it has been sold for a long time. And you can't just immediately kind of break that connection, especially when he's still the CEO of the company, when he's still controlling, when he's still the one who is the public face of it, you can't just divorce from that. And then the other final piece I want to add to this is that, you know, through last year, we saw price increases to these vehicles again and again. And now we begin this year with price cuts from Tesla, from Ford. I'm sure there's other automakers doing that as well. So, you know, those are just a lot of kind of pieces to throw into consideration there to throw to you and say, you know, what do you make of where this is going and what it's going to look like for Tesla as the EV market enters a new phase? Yeah. Okay. So I'm going to focus

mostly on like the U S North America briefly, but before I get into that, like, cause China has been a big China has been where a lot of Tesla's growth has come from. And I think one of the things that people don't understand is that they got a totally unique deal in China that we still don't know the terms of. And I think that, you know, when you look at how much, right, you take away that China market growth, Tesla would be in a very different position with regard to the stock market and everything else. So the fact that we don't know what that deal is, and yet it's been clearly so important to their ongoing sort of viability, certainly as a stock promotion endeavor, is really interesting. Also, though, I think where China

and the US sort of start to match up is that Tesla has fundamentally never been good at making affordable cars. And again, this was like one of the biggest points in Ludicrous, right? Is that, you know, if they just want to be a premium, if they just want to be BMW or whatever, like, that's always been the option. But from the very beginning, it had to be more, right? It had to be, oh, no, no, no, you buy this expensive car and it's going to allow the poors to someday have their own Tesla. And so in China, they've had no choice but to really try and dramatically reduce the cost of cars.

And they've done that by basically blowing up very quietly their entire narrative, which is that we have this unique special sauce in our partnership with Panasonic on the battery level. Panasonic has dropped to, I think, the number five battery supplier to EVs because Tesla's had to go and buy from CATL and BYD, especially these lithium iron phosphate cells, which are lower energy density, but much more affordable. Tesla avoided these, like never developed this technology. BYD did way back when. BYD was laughed. I mean, for years and years and years, everyone was like, what are you doing wasting your time with this technology? Especially

when Tesla came out and the performance was so much more. But like, again, that makes sense for premium. Now Tesla has to go to totally new suppliers it doesn't have relationships with in order to get those costs down, in addition to whatever else is going on in China. Can I add to what you're saying there around China just briefly as well? Because I think that this is really important for people to understand. Like, you know, Tesla is pushed as kind of the leading electric vehicle automaker in the world. Tesla sold 1.3 million cars in 2022.

BYD, which is, you know, an electric vehicle maker in China, a Chinese company, sold 1.8 million EVs in China alone last year. You know, they produce at a much lower price point. You know, it's a very different kind of narrative than what Tesla is selling. And I was reading in Bloomberg recently that this is particularly important, not just because of what it means for the Chinese market, but sure, right now, there are growing restrictions on Chinese companies from the United States. But BYD and these other kind of Chinese electric vehicle companies are in the process of going international, of embarking on an international expansion, kind of pushing out Korean and Japanese automakers as they push into European markets and other markets around the world. And one of the things that they're doing as this kind of electric vehicle race heats up is they're saying,

we have gotten better at creating cars, they're more reliable, these Chinese cars than they used to be, you can also get them much cheaper than the Western automaker cars that you're used to buying. And so, you know, look at us as an option, as we look at making this transition, and our vehicles are also being sold in a slightly different way as well, where they might be a bit smaller, they might have slightly smaller batteries, you know, but this allows it to be a much lower price point and maybe fit in a bit better with the actual lifestyle that you're living. Yeah, no, that's exactly a bunch of really, really good, important points there. So the global car industry, but every market has always been a little bit different. But with EVs, because EV markets are so dependent on policy, we see much more divergence between the European market,

the characteristics of the European market, the Chinese market, and the US market than we saw in sort of the legacy auto industry. So that's a really, really important point to understand. And I think this is why when you start to look at our market and you realize like, oh, this is like the average transaction price for DV is over $60,000, like $65,000. That's a policy failure, right? We are rewarding people for buying expensive cars that are already cool and that we can't produce enough of them. It doesn't make sense at all. But more importantly, it's not sustainable. And again, so yeah. So if you look at BYD, you'll see they have vehicles like the Seal and the Dolphin.

And these are like low-cost cars. They're like – some of them – I want to say it's the Dolphin. One of them is like literally designed for like ride-hail drivers, which have their own special incentives to get to buy electric vehicles in China, but they cannot afford expensive vehicles. So like, again, you see how policy is part of this. But BYD is also capable as a company that started out as, by the way, a supplier of batteries to Nokia. They were like a cell phone battery supplier. So the exact opposite approach to this business from Tesla in that they started as a supplier, as an industrial company, and have grown into this EV business, whereas Tesla was always about the product, the EV product and the

premiumness and the appeal and the targeting the tech sector demand. And so they worked from opposite ends. And I think that if we learn anything from auto industry history, it's the people who are rooted in the fundamentals of the tastes and fashion come and go in any product, but especially in the high end of the car market. But figuring out how to industrialize things is how things really change in broad sort of meaningful ways. I feel like it makes sense to see BYD do that because of how, you know, the Chinese model, the efforts that it's been doing is to move up the value chain, right? So it's a battery maker that supplies Nokia and cell phones, and then it kind of moves

up to electric cars and electric car batteries and things like that over time. Yeah, yeah, absolutely. And so I think Europe is a little bit of like kind of the middle ground, you can think of it, between China and the US. And in the US, you know, we have less regulation than both Europe and China. And as a result, we've kind of allowed our EV market to become, again, sort of this elite phenomenon where it is very much about status. And initially, it was more about the environment.

I think over time, it's become much more about signaling in-group status in this sort of tech elite. Yeah, not to interrupt you too much, but look back at the EV1 and the RAV4 and the Nissan Leaf and these kind of vehicles that were smaller, that were geared toward a more kind of environmental lens. And then we entered this new stage where kind of the defining vehicle is the Tesla sports car that, you know, it has this large battery with the massive kind of range and is very expensive to buy. And that kind of models what you're chasing as an electric vehicle maker. I'm really glad you brought this up. Okay. So the predecessor to the Model S was actually the Prius. I think you have to be of a certain age

to remember these days. I think at Silicon Valley at the time, I think there was this beginning of awareness that we are this economic elite that does not have a car made for us or a car brand for us. I think the Prius was definitely the most techie car on the road, both in terms of the hybrid drivetrain was incredibly technically sophisticated. The very first generation lost money, which, of course, tech people are like, this is a tech project. But even the interior was very minimalist. And I love driving the second generation Prius.

It changed how you thought about driving. It made you want to drive efficiently, which is not how normal cars made you. So it was this very different thing. And I think at the time in Silicon Valley culture, there was this thing of like, okay, so no one's making cars for us. We can buy BMWs or Porsches like the stock guys do or whatever. But like with this, it tapped into this one of the threads of Silicon Valley culture, which is sort of like, screw you guys. We don't need material things. We'll drink our smoothies and we'll just code all day and we'll transport ourselves in these little super high tech, but kind of anonymous boxes. And I think people forget that that's sort of the substrate on which the Model S was grown. And the Model S took that and it took that and said, no, no,

you can have a bigger, more powerful, sexier, whatever, more techie car. It took that and pumped it full of steroids. But at the same time, one of the reasons the business has stayed viable is that for a decade, it also had that Prius appeal where it was sort of like the uniform. It was the Allbird shoes. Everyone kind of drives the same. So it was this hybrid point between that sort of uniform conformity, kind of we're rejecting the world of cars. And it was sort of the gateway drug to the world of cars. Now, after a decade of that,

what you have is all of these, right, finally, the Germans and the Japanese and the Koreans are all waking up to the fact we completely snoozed on the fact that Silicon Valley and tech people were this massive premium car market that we didn't understand and we didn't see coming. And Tesla, that is where Tesla just absolutely kicked the car industry's butt. And now they get that. And now all of a sudden you're seeing this flood of new products in. And the Tesla people are going to say, oh, well, it doesn't compete on this. This isn't as good as that. Tesla beats all of them. That doesn't matter. What's happening is that we're evolving from this Prius kind of mentality into just another premium auto market segment. And now all of a sudden, you know, if BMW has a hot new model out right now, like the i4 is just hitting and people are like, oh, oh, like that's a, you know, and you've got the Rivian.

And if you're a certain type, you've got the Hummer. And that's just going to continue. And like, I think for us at a zoomed out broader level in this country, I think there's a huge question of like, don't we want our EV market to be more than just this? But I think within that, you know, the reality of the EV market that we have, I think very clearly Tesla is, if you look at their product pipeline, right? Like the Model S has had one refresh in a decade now. It's over 10 years old. And the Model 3 is very slow to, and Model Y looks just like the Model 3. And the only thing in the pipeline is the Cybertruck, which I have a lot of questions about its viability. Yeah. And the Roadster update that was promised years ago and is still nowhere to be seen. So Tesla, it's not that the competition are going to beat them on all these metrics that people think are important. It's the fashion show aspect of it, right? It's like in the 20s and 30s when we went from the Model T, which just absolutely, I don't even know what the market

share of the Model T was, but basically they put hundreds of companies out of business. I mean, everyone had a Model T. It was ubiquitous. And then all of a sudden General Motors came along and said, what if we had eight different brands and consumer credit, and you find the brand that reflects you and your social status, and then you take out a loan and completely transform the car business? And I think that's kind of what we're going to see here. And honestly, you can have whatever ideological response to that that you want. But I think for me, what's important is that we're going to finally start seeing this phenomenon for what it really is, right? Because the narrative has been, yeah, this is for rich people or elites or whatever right now, but this is this thing

that can scale and be driven down in cost. And what we're seeing is that the top secret master plan blog post came out in 2006, right? And the average transaction price for a Tesla is basically $70,000 in 2022. It was a lie, right? And so we can all finally just drop the pretense that we're saving the planet or transforming everything and just say like, yeah, EVs are the big new premium market trend in the US. It is what it is. And may the hottest car win. And let's not put more onto it than that. Because meanwhile, the business of actually electrifying the miles that we do at scale in the most pragmatic way, we're not going to do that by just sort of saying, oh, let's just take Tesla and somehow multiply it and make it cheaper without it losing its Tesla-ness. Like, these are illusions.

And we need to drop that. We need to say Tesla created a premium car market segment. Now it's got real competition in that. That can be what it can be. But we need to reset our entire approach to proliferating electrification in the most pragmatic and impactful way because we don't have all the time in the world. Absolutely. And I think that we can clearly see that a lot of these kind of premium electric vehicle

models are not the most sustainable in the world, especially when you're looking at, you know, a Hummer EV or something like that. Ed, you know, I'm sure we could go on and talk forever. You know, it's great to speak to you again. It was great to go over all these aspects of Tesla and the broader EV market and how it connects to so many of these important topics that we talk about all the time on the show. Thanks so much for taking the time. Yeah, of course. It's always so much fun chatting with you. Edward Niedermeyer is the author of Ludicrous, the Unvarnished Story of Tesla Motors and a co-host of the Autonomcast. You can follow him on Twitter at at Tweedermeyer or on Mastodon at at Niedermeyer at sfba.social. You can follow me on Twitter at at Paris Marks or on Mastodon at

at parismarks at mastodon.online. And you can follow the show on Twitter at at Tech Won't Save Us. Tech Won't Save Us is produced by Eric Wickham and is part of the Harbinger Media Network. And if you want to support the work that goes into making the show every week, you can go to patreon.com slash tech won't save us and become a supporter. Thanks for listening. Thank you.