Tesla Motors Just Needs to Keep Tracking the Ford Model T
There have been many comparisons of Tesla Motors to Ford Motor Company, but the parallel in the production data presented by Bloomberg is facinating. Tesla Motors achieved the 10,000 autos produced milestone in 2013, the same milestone Ford Motor Company achieved in 1909 with the Model T. By 1916, just seven years later, the Model T broke the half million mark with 501,462 autos. This is within the same time frame that Elon Musk has set as the goal for Tesla Motors.
With the Gigafactory ahead of schedule, could the Model ≡ be the first auto from Tesla to launch on time thus possibly aiding in an uncanny mirror of the Ford Model T?
While analysts continue to try and understand and deal with Tesla’s CAPEX bonfire, one such analyst questioned Musk on a conference call last week on whether he stood behind the forecast. “I do remain confident about half a million cars in 2020, and maybe being able to exceed that. That’s five years from now. If you go five years in the past for Tesla, we were producing 600 cars per year, now we can produce 600 cars in three days. So I think going from here to 500,000 cars a year is a much smaller leap.”
While the production ramp of Ford Model T and Tesla are uncanny, there are many major differences between the two companies. Some differences show where the money is going, of which CEO Elon Musk has declared as part of their capitol expenditure equation.
The success of the Ford Model T, largely came on the heavy investment of a new approach to manufacturing autos in the form of the first moving auto assembly lines, followed by integrated complexes like the River Rouge Complex.
Now imagine if Ford had also launched not only nationwide, but global dealerships? And what if Ford had also launched a global network of fueling stations owned and operated by Ford Motor Company?
In 1908, there were only 18,000 miles of paved roads in the US. A gas station did not exist on every corner. Now that they do, emerging technologies are expected to provide in kind, or offer an alternative solution. Tesla Motors has provided a network of superchargers in North America, Europe, and Asia Pacific to allow drivers to get a half fill in under 30 minutes. With most charging happening at home, Tesla owners by large part complete their remaining fueling through the company supplied network of superchargers. The cost of the fill is built into the price of the car for life. Imagine if Ford Motor Company had done that!
Another milestone for getting the Model T to market was building a network of dealerships to market the product. It was at this crossroad that Henry Ford, as well as all other major auto manufacturers to follow, sold part of their future to dealerships who took on the unknown risk. Right out of the gate, Tesla Motors plotted a path for direct sales. Not only has the cost of facilities and labor added to the cash burn, but they have also been met with extreme opposition by US dealerships banning the sale of Tesla in many states. While the directors of the Federal Trade Commission have voiced strong opinions in favor of Tesla Motor’s, the battle continues. How would Henry Ford have handled this undertaking and the confrontation?
And finally the most comparable to Ford, Tesla has launched state of the art manufacturing facilities with the highest levels of automation available today. In comparison, the up front cash burn is great, while the long term gains are considerable. From the advanced automation of the Fremont factory, to the $5 billion Reno gigafactory, the cost can seem overwhelming, but when comparing to Ford, it is hard not to make the comparison to the River Rouge Complex. A complex offering its own steel mill, glass manufacturing and more. A complex focused on handling its own energy. Sound familiar? There is one major difference. The River Rouge Complex began in 1917 after the Model T was established. Tesla’s $5 billion gigafactory is being launched prior to the start of the Model ≡.
Edison, Ford and Diesel favored renewable energy over fossil fuels
Ford, Edison, and Diesel agreed that fossil fuels such as oil and coal wouldn’t last forever. They saw the virtually untapped potential of renewable energy sources.
In 1931, the same year Thomas Edison died, Edison told his friends Henry Ford and Harvey Firestone: “I’d put my money on the sun and solar energy. What a source of power! I hope we don’t have to wait until oil and coal run out before we tackle that.” Even Rudolph Diesel envisioned renewables in the form of peanut oil as the fuel for his invention. In 1912 he stated: “The diesel engine can be fed with vegetable oils and would help considerably in the development of agriculture of the countries which use it” and that “The use of vegetable oils for engine fuels may seem insignificant today. But such oils may become in course of time as important as petroleum and the coal tar products of the present time.”
Some eighty years later, Elon Musk is envisioning autos that do just that. Did Ford, Edison, and Diesel envision the same for their manufacturing? Musk has laid out plans for Tesla Motors first gigafactory to be powered by renewables. BMW is also taking a serious approach to renewable manufacturing.
Other auto manufacturers are taking notice. Currently there are 27 PEVs – (plug in electric vehicles) to choose from in the US market, with even more on the global stage. This number is set to double to over 60 by 2017. In the early 1900’s, Ford’s Model T was met primarily by luxurious novelties opposed to affordable transport.
Clearly, most of the major players are investing a large portion of their R&D budget toward alternatives to ICE – (internal combustion engine). Companies like Nissan and BMW have also begun providing spotty deployment of charging stations, though pale in comparison to the Tesla Motors supercharger network. Many of the failed startups like Coda and Fisker failed to invest in the automation required to compete long term as Tesla Motors has today.
The single largest separator may be found in the decision Ford Motor Company made so many years ago, and that is the decision to turn over the marketing to independent dealerships. A decision that is now marked with legislation, at least in US markets.
So there are certainly as many differences as comparisons for Tesla Motors and the Model T, but following an uncanny track with the Model T production is very interesting. Can you see the launch of the Model ≡ falling in line on the Model T graph? If nothing more, it has to be seen as a good omen following the growth of the original game changer.