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The meteoric rise of Tesla…

Ludicrous: The Unvarnished Story… by Edward Niedermeyer, BenBella Books, US $27.95, Pp 220, August 2019, ISBN 978-1948836128

A few years ago, Tesla Motors and its CEO suddenly emerged on the horizon of the automobile industry and became household names. The newly introduced electric vehicles shook the marketplace by defying conventional wisdom. Most people believe Tesla is the future of the automobile industry. It may be so, but will Tesla live up to the expectations remains a big question. There is no clear answer to this question. In Ludicrous, Edward Niedermeyer says that Tesla Motors has defied conventional automobile industry wisdom, taking its market valuation equal to its long-established rivals. Tesla has rejected the careful, zero-defects approach of other carmakers. Edward Niedermeyer argues that Tesla continuously focuses on the future but repeatedly misses commitments and deadlines which may test the patience of its buyers.

Edward Niedermeyer says that the 17-inch-long screen is a unique feature of the Tesla cars that dominates the otherwise spartan dashboard. It was instrumental in establishing Tesla as a technology brand. As Tesla has evolved into a unique cultural phenomenon, these enormous screens are seen as more than just screens. They are a symbol that crystalizes the strengths and weaknesses of Tesla’s entire approach to cars, and they help explain why opinions on the company are so polarized. Edward Niedermeyer says that, at first glance, Tesla’s giant screen communicates the brand’s values on an aesthetic level. It tells the customer that this is as much a device as a car, and that Tesla is as much a high-tech company as it is an automaker. The layout of the user interface recalls a smartphone or tablet, with menus and functions arrayed like apps on the periphery of the screen. It is as fast and graphically rich as many smartphones, and you can use the same multi-touch gestures you would with a smartphone or tablet.

Edward Niedermeyer says that at a time when a whole crop of electric car startups was peddling either vaporware or glorified Chinese golf carts, Tesla distinguished itself from the crowd by attacking the high end of the market with an electric sports car. Reports of the Tesla Roadster’s face-melting acceleration and popularity with green-conscious California celebrities suggested that this was one electric vehicle (EV) startup that at least had the potential to be something more than a flash in the pan. At the same time, the company’s situation was fraught: It was burning through cash, critical components needed reengineering, its founders were starting to feud, and the funding it would need to survive was drying out as the downturn took hold. Just like Tesla today, the Tesla of 2008 was a volatile mix of enormous long-term potential with intense short-term challenges.

One reason why Tesla became suddenly popular was its claim to be an environment-friendly vehicle. Edward Niedermeyer says that we should objectively assess Tesla’s environmental impact. The company claims that its cars have collectively offset about four million tons of carbon. The figure is on the generous side, considering that it is based on the assumption every Tesla vehicle is always powered by zero-carbon power when even the company’s own Superchargers aren’t all zero-emission. That’s a drop in the bucket, considering that the world emitted some 37 billion tons of carbon in 2018 alone.

Edward Niedermeyer says that the real problem with Tesla’s image as an environmental cause is the cost of that impact. To achieve that four-million-ton carbon reduction, Tesla has had to raise no less than $19 billion in capital from private and public markets. That put the price of its environmental contribution at $4,750 per ton of carbon, or an order of magnitude higher than the $417 per ton recently calculated as the “social cost of carbon.” It also makes almost every other form of carbon reduction look like a screaming deal, including carbon capture for fossil-fuel power plants (up to $600 per ton), building advanced nuclear plants ($59 per ton).

Edward Niedermeyer argues that if Tesla were a government carbon-reduction program, it would be indefensible on a cost-benefit basis. And unless it eventually generates enough profits to repay that $19 billion-plus a reasonable return, the traditional private market justifications don’t really work out either. Investing in Tesla might be reasonably seen as a long-shot bet on its autonomous-drive technology providing to be a moneymaker, but even that doesn’t fully explain the deep financial and emotional support that Tesla enjoys.

Ludicrous is a very revealing story of Tesla Motors and its meteoric rise – and possibly its meteoric fall in the future. Edward Niedermeyer tells us what is happening behind the scene in the company. It is fascinating and frustrating at the same time. He explores all the strengths and flaws of the Tesla Motors products in this nuanced study. Edward Niedermeyer has really worked hard in researching this well-balanced book. Ludicrous is not just for the owners of a Tesla but also for everybody interested in automobiles. If you are considering buying a Tesla, Ludicrous is a must-read.

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