Elon Musk is old enough to remember John DeLorean – and the car he (briefly) made. He apparently does not remember the lessons DeLorean learned.
The hard way.
First, about relying on government to float your business. DeLorean didn’t use regulations – and “mandates” – to rent-seek his cars onto the market, as Elon Musk’s Tesla operation has relied on. Most people have no idea that Tesla – despite its putative value on Wall Street – has made very little money selling cars and almost all of its money selling shares and “carbon credits” – an extortion racket set up by the government for the benefit of Tesla. The latter was able to “sell” these “credits” – for building “zero emissions” electric cars – to other car manufacturers that didn’t manufacture them but which were obliged to manufacture them, in order to comply with “zero emissions” vehicle manufacturing quotas. They had to either build a number of “zero emissions” electric vehicles themselves – or buy “credits” from Elon for building them.
Tesla’s much-touted value on Wall Street is almost entirely a function of its reliance upon government mandates, which have morphed into laws (or rather, bans) at the state level that decree only “zero emissions” vehicles will be legal to sell within not-too-many-years from now.
It’s nice – well, it’s profitable – when you can use the government to create demand for your product. The insurance Mafia bases its business on the same model.
But it’s not necessarily good business, as DeLorean – the man – discovered. His business depended heavily upon government funding, the ’70s-’80s era’s form of grift, to the tune of $21 million, which the government of the UK had promised to deliver – and then didn’t. This created a cash pinch for DeLorean, who based his business plan on having that cash on hand to keep his business afloat. DeLorean – the company – had also agreed to pay extortion to the British government – to the tune of $400 per car, which was a lot of money back in the early ’80s, equivalent to about $1,500 today – as the price of being allowed to make cars in the UK.
This made the already expensive DeLorean even more expensive, which made it both harder to sell and harder to make money selling. The base price was $25,000 in 1981 – rising (hugely) to just shy of $30,000 by 1982, a sum equivalent in today’s debauched “Federal” Reserve Notes to more than $80,000.
Interestingly, this just happens to be the anticipated/ballpark price of the Cybertruck – which isn’t even available yet and which Elon Musk says might be sometime in 2024.
Even more interestingly, the speculated price of the Cybertruck will be just under the $80,000 threshold below which the “buyer” is eligible for government grift, in the form of a $7,500 tax credit. Back in the early ’80s this probably would not have flown since, back then, umbrage would have arisen over the suggestion that people who can afford to spend $80,000 on a vehicle deserve to be paid by the government to buy it – using funds extorted from people who cannot afford to buy it.
But the corollary is most interesting of all.
One of the main reasons for the failure of DeLorean – the car – was that it was too-expensive a car. It is very difficult to make money selling a handful of such cars to the relatively few people in a position to buy them, especially when – as in DeLorean the man’s case – you cannot use the government to pay people to buy them.
But there is nonetheless a perverse – an artificial – incentive to make them anyhow.
In DeLorean’s case, it was the ephemeral backing of government money, which probably encouraged DeLorean to think less about what his car was going to end up costing and how that might affect his ability to make any money selling it.
In Tesla’s case, it amounts to the same – in that Elon Musk continues to rely on mandates and subsidies to make money selling his cars, as well as the new Cybertruck. This allows him to indulge a cost-no-object fantasy, because he assumes someone else will pay it.
Interestingly, one of these costs is the Cybertruck’s stainless steel body. DeLoreans featured the same. It looks “cool” – but it’s very expensive. Especially to work – as in, stamp into shapes other than planes. That is why the DeLorean was so angular. And it is why the Cybertruck is even more so.
And it is less flexible, which means it does not crumple as well. This latter is a big factor in terms of designing a car body that doesn’t impart impact forces to the people within.
This is why – until now – no other car manufacturer has used stainless steel to make car bodies. It makes the cars more costly and so less affordable – and thereby, less saleable. It also makes them less repairable – as stainless steel is harder to repair when damaged, which increases the cost of repairing a car with stainless steel panels. Also the cost of insuring one, too.
DeLorean pursued his dream of making a sleek, stainless-steel-bodied sports car because he thought he could rely on government funding to make it happen. Elon Musk is relying on the same, with the money kicking back to buyers via the government rather than directly from the government, to Elon.
But it amounts to the same business plan and it may end up the same. Well, maybe not for Elon – the man – who has enough of his own money to not need a suitcase full of cocaine to keep his Cybertruck rolling.
. . .
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I still think it’ll never be produced in any meaningful numbers. There is no way that shape (and material) can meet the collision regulations. Tesla can’t afford a special assembly line for a low volume vehicle, especially in the current fiscal climate.
He announced this thing when it was peak Elon, he could do no wrong and was hailed as the genius of our time. I half think these things, like his robot, are just trolling us when he was at the height of his hubris (think 420 funding secured). He’s gamed the perceived product interest with “cheap” reservations. I know many that put reservations first on model 3, then the truck with no real intention of taking delivery. It did make them feel they sounded cool in circles when the subject of Tesla would come up.
Cybertruck vaguely resembles a Halo warthog, including looking like something rendered by a circa 2000 video game system with a year 2000 name to match. The majority of the hypnotized techbros would dare criticize, post Twitter purchase it is now OK to disparage him as the flimflam man he is.
I don’t get the purpose of this truck. I don’t think it would be very useful and certainly not competing in ‘King of Hammers’ so what’s the point?
Hi Manse,
To look “cool,” apparently. I don’t get it, either.
Wow—–80 g’s for a Cyber Truck and it doesn’t even come with a Flux Capacitor…..
Comments from classic cars uk….
Oh dear…but this doesn’t surprise me…if you listen to what the Federation of Historic Vehicle lot said about a petition that got 15000 signatures wanting to reduce the road tax cut off from a ridiculous 40 years to 30 years ( when it used to be 25 some years ago) for any car,one realises that all these venerable institutions and clubs dont really care about conventional fuelled cars and are just in it for the money.
They agreed with the government’s rejection…I think most modern classic cars are now likely to get scrapped, due to the government’s persistence in trying to make them too expensive to run ie high road tax, high petrol tax, rubbish E10 fuel, ULEZ springing up all round the country, banning manufacture of petrol and diesel cars from 2030
…meaning that spare parts for petrol / diesel cars will not be made as no firm will invest in ‘ dead ducks’ and this especially includes exhaust systems.
Nobody is seeking a career in the motor trade , especially garage repairs these days and they cannot recruit staff.
Well done our government , car clubs and societies.Just to think we were told to buy diesel cars and now I soon won’t be able to drive my 2008 Volvo V70 2.4D5 in any big city, then the town’s will chip in too…absolute chaos.
The EV residuals are incredibly poor dropping 33% in the last month alone on certain models whilst petrol and diesel values have risen on used. Used dealers now restricting how many they will take as used stock as they are plummeting fast and they don’t want to be caught with EV stock they can’t sell going negative.
They are failing the public based on on the ranges quoted and the network of charging them makes using them as a ice replacement other than short trips just near impossible.
They are becoming a laughing stock and I blame the government. But ridicule is aimed at the gormless buyers who were lording it up. Suddenly thing are changing and rapidly, so getting some digs in is natural “I told you so” stuff.
And rightly so, they are not the solution.. but more fool those who paid massive money for the latest over priced gimmick that has now quickly turned into a very bad long term decision.
The wife and I went to the actual Cutty Sark exhibit in London but it was so thronged with fucken people that we decided to pass. That was back in 2019 before the planet went insane.
I knew a guy that bought a used DeLorean. Was an absolute piece of shit.
I read about the EV tax credit. Indeed, unlike most “credits” it just lowers your tax bill directly (not your taxable income). If you’re in or near the bracket that I’m in, that’s the same as getting an old-fashioned tax credit (i.e., lowering your taxable income, not tax bill) to the tune of $26,785.
$7500 = 28% x N
I would love to have a tax credit of $25K+ for shit anything. Not possible for people like me unless you buy into the EV scam.
Last summer while walking along the “main drag” of our wee village in Ayrshire, Scotland, was parked a DeLorean! First time I’ve ever seen one on the road. Everyone, including myself, had a stupid grin face as we ogled the machine.
So what’s an entrepreneur to do? On the global scale, every nation does it. So do you go it alone and compete with firms who have a well placed thumb on the scales, or do you play along? Even knowing that there’s a fishing line attached to the bundle of cash it is obvious that there will be firms who are going to consider crushing competition a priority and what’s one more failed start-up in the big picture? And will investors, who correctly are looking out for their own or fiduciary responsibility to maximize return, allow the executive the right to refuse when it comes to handouts? Even if the net effect doesn’t directly benefit the intangibles (those attached strings have overhead) might prove far more valuable in the long run.
And what about the nations supplying the capital? Since the age of exploration, mercantilist banking policy seems to be an effective shortcut to GDP growth. Today the number one and two economic forces in the world both subsidize favored industries. In the case of China through outright ownership of firms and free use of governement services (such as China Post franking for exports). As Amazon is discovering, this is quite a perk not available to US businessmen, but government run basic research and deficit spending for internal projects (and military spending) serve a similar purpose.
Off topic, my computer, which was created by the company that arguably is the model of entrepreneural spirit of our time, can’t autocorrect the word entrepreneur. Bad enough that I can’t spell the word which defines my life these days. But one has to wonder if someone deep in the bowels of Apple’s spaceship altered the dictionary to prevent entrepreneurfrom rising to the top of the correction database.
ReadyK,
“…Apple’s spaceship altered the dictionary to prevent entrepreneur from rising to the top of the correction database.”
That is an interesting possibility indeed.
This all reminds me of something touted as a victory in Uncle Sniffy’s muddled speech last night: The CHIPs Act. Seems to me, the whole thing was essentially Intel and others holding the country hostage and demanding taxpayer money to increase production, rather than just seizing the opportunity and increasing production themselves.
And, I reckon somewhere, there is something that makes it even more difficult for a microchip-manufacturing entrepreneur to launch such a business than it already is, which is to say, ancillary difficulties, such as ESG requirements etc.
Same with someone wanting to manufacture recombinant insulin, and sell for much less than is currently done. I’d be more than happy to launch such an endeavor myself, but am short of funds and time, and won’t be any kind of hypocrite by asking for a gov’t loan or grant. But, I’ll bet Big Pharma has installed significant hurdles for anyone interested in usurping the insulin market.
One big reason why chip production was moved overseas was due to the banning of CFC based solvents. Back when I fixed uMatic VTRs for a living we used this stuff called TF solvent to clean the tape path. Worked great, didn’t cause problems for plastic or rubber and was pretty cheap. Then it was banned and we switched to isopropyl alcohol. Worked about as well, but just the fact that CFC stuff was banned was reason enough to discount the new stuff. When Taiwan and South Korea welcomed chip fabs the US was abandonded, even if the overseas fabs had to work without CFC solvents they could update their processes easily because the new government was happy to bring them in.
The chip fabs owners aren’t dumb. If the US wants them to build they’re going to get something as an enticement. Especally if they’re expected to follow all the regulatory rules.
ReadyK,
So, as can easily be seen, the Big Guys are all their own Cosa Nostra, and if you want their manufacturing in your country, you will pay copious kick-backs, extracted from the asses of the little people. Good summary?
And I’ll bet you’ll get a visit from Uncle Lou, come to break ya legs, if you try and disrupt that model?
BaDnOn,
If Pharma loves anything, it’s a captive market.
I experienced it when I was diagnosed with rheumatoid arthritis. The pain was excruciating, and most would pay anything to stop it. The MD started me on some inexpensive drugs that didn’t work very well, and I asked what’s next? Biologicals, with a price tag of $60k per year, or more. I told the MD I would not be a party to such extortion, and fired her. I’ve since done much better by cutting all sugar out of my diet.
It’s the same for diabetes. The victim has no choice. Much less choice than I did. My son is one of those victims, of Pharma profiteering. What started when he was 12 years old in 1985 as a not too extraordinary expense has turned into a VERY high expense. It isn’t just a result of ordinary market forces. It’s by design. In other words pure evil.
Hey Mr. Kable,
I understand the captive market model, and agree that it’s by design and rotten. I just wonder how they keep out the little guys. Perhaps I’ll become one of those little guys someday and find out. It would feel good to sell people insulin at $10 a month and still make a profit.
BaDnOn,
The little guy is kept out by bureaucratic rule. You must get “permission” to even start up. Which means a bribery expense. Which will prevent you from even offering a low cost solution, much less delivering it.
Musk’s SpaceX Starship is made from stainless steel. He originally planned on carbon fiber but for whatever reason it didn’t work out. As for the cybertruck and Delorean –you can have any color you want as long as it’s stainless steel, right?
This column got me thinking of a question about the DeLorean re the appearance of one in a classic film series. With a DeLorean car as the time machine in the Back to the Future films, how many people wanted to buy one as a result of seeing one in movies? And will modern day Hollywood make a movie featuring a TESLA or maybe some other automotive company’s EV to try to increase EV interest among the masses?
‘Will modern day Hollywood make a movie featuring a TESLA or maybe some other automotive company’s EV to try to increase EV interest among the masses?’ — John B
But, of course! It’s already on tap for your viewing pleasure:
Netflix and General Motors announced today [Feb 2] that the streaming service will join the automaker’s “Everybody In” campaign that aims to accelerate mass adoption of electric vehicles. Netflix will increase the presence of EVs in Netflix-produced TV shows and movies, while also taking steps to enable more sustainable productions.
To kick off the new alliance, the two companies will air a new commercial during the Super Bowl on February 12 that will see Will Ferrell enter the world of some of Netflix’s popular shows and films, including “Army of the Dead” and “Squid Game,” in various GM EVs.
The automaker’s EVs will be also seen in select Netflix shows and films, including “Love Is Blind,” “Queer Eye” and “Unstable,” which will feature the Chevrolet Bolt EUV, GMC Hummer EV pickup and Cadillac Lyriq, respectively.
https://tinyurl.com/yckabfcc
“Everybody In” — it’s the latest iteration of “We’re all in this together,” that hokey-oldey meme from the vax era.
And, as you may guessed, compliance is compulsory.
Chevy is running an obnoxious lying-ass commercial now “EV’s for EVeryone EVerywhere”, all whilst playing a pop-song to the same tune.
If they keep this stupid shit floating long enough, it’s gonna be EV bricks littered everywhere, and the homeless, mental druggies will be living in those, instead of tents.
P.S. Someone in the comments, yesterday I believe, said something about the expensive cost of making gasoline & diesel? The answer is NO, they are both free bi-product of refining crude oil into lubricants, plastics, etc. Fact is, before the I.C.E. both were literally dumped on the ground as waste. Natural gas requires NO refining, only the addition of odor to be able to detect leaks before a catastrophic explosion occurs. The Carter administration dictated the consumer would have to pay for any energy source by the BTU, in 1977-78. There will be NO “free” energy for anyone, anywhere, ever, except for those that continue to dictate our lives in response to every asshole that utters the words “They outta make so-and-so do such-and-such.”
‘stainless steel … makes cars more costly and so less affordable’ — eric
Forty years ago when the DeLorean was made, other cars made of regular carbon steel offered poor corrosion resistance. The DeLorean’s 0.8 mm Type 304 stainless (18% chromium, 8% nickel) body offered a longevity advantage.
Not so much today, when galvanized steel not only has greatly improved automotive corrosion resistance, but also is cheaper and easier to work than stainless. What was Eeeeelon thinking when he specified stainless for the Cyber Truck?
Sounds to me like one of those riveting cool notions that seize you while you’re one toke over the line, and frantically scribble down only to find your writing illegible in the morning.
When you’re drunk in the alley, baby with your clothes all torn
And your late night friends leave you in the cold gray dawn
Whoa, just seemed too many flies on you
I just cain’t brush ’em off
— Rolling Stones, Shine a Light
good points Jim H, however I don’t think materials in vehicles will matter anymore. Maybe in the rust belt, but I doubt it. I believe that all the electronics and electro-mechanical devices in our vehicles will be bricking them long before they rust out.
In my biz, we’re already seeing circuit boards and small plc’s not avail. after 5 years. 10 yrs? forget about it. The systems can usually be modified but at a larger expense than it was to buy in the first place or close to it.
There is a reason our in-house designed relay logic-only systems are selling better and better every year, to smart people. They cost 2-3 times up-front, but will out last the junk by 5-10 times. Basically old school, Eric would like it.
Which brings up a good question. Eric, with the numbers above, would you buy our system?
Example is our competitors cost 4K and use proprietary circuit boards, etc… Ours is $8-10K but no proprietary anything (parts off the shelf, avail at any electrical supply house).
And we’re working on larger ‘old-school’ systems. We’ll see how it works out.
Hi Chris,
In re “would I buy it” –
Yes, absolutely. In a way, I already do. For example, I would rather spend more on real wood furniture that will last a lifetime (and longer) than buy some POS particle board/veneer item for “cheap.” Because it is exactly that.
me too. Thanks Eric. there aren’t many of us left.
I do however draw the line at cars/bikes. I do indeed buy all the new stuff, and I know they won’t last like the old bikes did. but boy are they fun, and there’s the rub. My justification is I don’t need them too, cause I’ll be dead anyway, might as well enjoy them with the remaining years I have left to do bike things (5-15yrs).
‘in-house designed relay logic-only systems are selling better’ — ChrisIN
Not sure what industry you’re in, but fully agree that simple relay logic is better for long-term maintainability — just as the electrical systems and components of pre-chip era vehicles are not difficult to keep working indefinitely.
>galvanized steel not only has greatly improved automotive corrosion resistance, but also is cheaper and easier to work than stainless.
Aluminium does not rust, and is much lighter than steel. Tell me again why airplanes are made of aluminum. Can you say “strength to weight ratio?”
eLoon hasn’t the professional background or competence to specify materials.
Aluminum is one of the most reactive metals and most assuredly does corrode. How many boats are made of aluminum?
>How many boats are made of aluminum?
Quite a few (mostly small fishing boats, AFAIK).
Google “aluminum boats” and see how many hits you get.
You are correct, and that is one of the dumbest things I’ve posted in a while. Mea Culpa- must be the hangover.
Nevertheless aluminum is highly reactive and does corrode- though usually via contact with another metal. It is so reactive it forms oxides almost instantly which inhibits further corrosion.
> it forms oxides almost instantly which inhibits further corrosion.
Yes, that is the key feature. Unlike iron oxides, Al oxide has a structure which excludes oxygen from the underlying metal, which inhibits further corrosion.
Also, to my knowledge, Al does not work harden to anywhere near the extent that SS does, which makes it easier to form, and re-form (think, collision damage repair). Al can also be routinely painted. I don’t know anything about SS & paint, but perhaps someone here does.
Anyhow, it seems to me if you are designing an auto which is *already* paying a huge weight penalty in terms of battery pack, you would want to save weight wherever possible, not saddle yourself with extra weight *plus* severe manufacturing challenges.
I repeat:
eLoon hasn’t the professional background or competence to specify materials.
‘I don’t know anything about SS & paint, but perhaps someone here does.’ — Adi Heidler
With proper prep, SS can be painted. We used to acid etch patterns into stainless, then paint fill the etched areas whose chemically distressed surface was ideal for painting.
But for sure, if you chemically etch your brushed-stainless Cyber Truck for painting, it’s gonna be a massive craftsmanship job to ever restore it after painting.
Elon wept.
What an epic ride the stainless business was in the Nineties. We told customers: “It’s called stain-less, not stain-never.” AH HA HA HA … we didn’t lie!
But would I want a stainless-skinned car? HELL BLOODY NO.
The same reason copper used to be common for roofing. It’s “rust” prevents further “rust”. With a very appealing green patina as a by product.
Stainless steel will corrode too. But very slowly. Usually involving contact with a corrosive substance, acid or alkali.
The Cybertruck will be the EV vendors’ Waterloo. Even selling an $80k model will be tough, and Elon sold a bunch of reservations on the premise of $40k being possible.
At $80K I agree. Especially since it is obvious it will cost WAY less than that to build once Austin is up and running.
You obviously don’t live in Austin and deal with the rapidly inflating living costs and grossly inept city government which cannot keep clean water and electricity flowing even at third world standards.
According to city council’s announcement last night, “most” Austin Energy customers should have power restored by Sunday following the one day freeze event at the beginning of the month which knocked 120,000 homes off of the grid in the city’s utility service area.
For those who don’t know, Austin Energy is a government utility. Established in 1895, it’s a department of the City of Austin and returns its profits to the city’s general fund to finance other city services.
My homeys scattered around Austin were dark for two to three days. Fortunately none of them depend on EeeVees for transport.
There are only a few things governments do reliably. Lie, steal, and kill top the list. Depending on them is like depending on an axe murderer to show up on time, and not kill you. The US government has been bankrupt for some time, and does not have the money they promise. They have to order it up from the Fed. Which makes what “money” they do deliver worth less. And less. Until it becomes worthless.
Oddly enough, the market was only willing to punish Tesla for Elon buying Twitter.
The other interesting effect of the Inflation Recreation Act was that Tesla slashed prices here in the US in order to meet the price caps in the legislation and the slacking orders doubled. It also pushes the legacy OEMs into lower prices they can’t yet match.
While I agree the subsidies are evil, Tesla is actually making a profit and the credits you refer to were only 12% of those profits. With $21 Billion in the bank, they don’t need to go to the market when they want to expand. And, surprisingly, they haven’t yet engaged in the stock buyback fraud that is all the rage at other companies.
The angular features of that ugly stainless steel duckling is what draws me to it. There is also the Tesla Super Charger Network which is the lone infrastructure play of any of the automakers that can be taken seriously for travel cross country.
Last I heard, they will have onboard charging as fast as the Semi potato-chip hauler. That suggests the deployment of liquid-cooled supply cables from there V4 MegaChargers which should be fun to watch them keep running.
Until then my trusty Volt will have to do. Most days 10 kWh is all I need to handle local business.
HablaCarnage,
Tesla can create all the Super Charger Network they want. There’s no grid capacity to power it. Nor any attempt to build it. You may be able to get by with your Volt, but most people can’t. Even if they could afford it, or any other EV. It’s a very limited market, which won’t support any expansion to speak of. I suspect it is very close to market saturation already.
If the market is already saturated then clearly the existing charging network and supporting grid is fine and expansion will increase throughput.
The issue is that no other OEM is serious about the issue and therefore the poor customer experience, not lack of power, will slow adoption.
I do agree they have the cart before the horse if widespread adoption is what they desire.
Myself I see some upside still in Tesla’s eventual auto share, as the market-share of other OEMs craters.
I don’t see GM living through any such transition though without them getting bailed out again.
HabiaCarnage,
“the existing charging network and supporting grid is fine”
Tell that to those who are being told NOT to charge their EV because the grid is under stress. Or those who might have the charge sucked out of their EV to maintain the grid. Many grids can’t keep up with air conditioning.
Don’t be an idiot. Of course the grid isn’t fine. Especially in California where they are actively sabotaging it. But your claim was that the EV market was saturated or nearly so. That means the number of EVs would not increase and that a moderate improvement in the grid would allay your concerns by definition. Get your story straight. The grid sucked before the EVs came along and no one was doing a damn thing about it.
The grid is a creaking ancient mess that would have to be upgraded based on population alone.
Just look at the self-inflicted and entirely predictable water crisis based on drawing from the Colorado River for agriculture but nixing desalination because of harm to smelt. That state is run by a death cult.