How Tesla defined a new era for the global auto industry via EdTaylorJourno Norihiko Shirouzu JBWEyesonroad
) rapid rise to become the world’s most valuable carmaker could mark the start of a new era for the global auto industry, defined by a Silicon Valley approach to software that is overtaking old-school manufacturing know-how.
That investment gave Mercedes engineers an inside view of how Musk was willing to launch technology that wasn’t perfect, and then repeatedly upgrade it, using smartphone style over-the-air updates, paying little regard to early profitability. “Elon Musk has been walking on the edge of a razorblade in terms of the aggression with which he pushes some technologies,” said a former Mercedes engineer who worked on the partnership.
The collaboration expanded. At a joint press conference in the Mercedes-Benz museum in Stuttgart in May 2009, Tesla said the partnership would “accelerate bringing our Tesla Model S to production and ensure that it is a superlative vehicle”. Before starting production of a new car, Daimler engineers specify a “Lastenheft” - a blueprint laying out the properties of each component for suppliers. Significant changes cannot be made once the design is frozen.“This is also the way you can guarantee that we will be profitable during mass production. Tesla was not as concerned about this aspect,” the second Daimler source said.
“We certainly need those that do advanced engineering to be innovative,” Musk said. “The incentive structure is set up ... such that innovation is rewarded. Making mistakes along the way does not come with a big penalty. But failure to try to innovate at all ... comes with a big penalty. You will be fired.”
“No one is going to give an OEM a five-year window to say ... you can totally retool your business, and I am going to buy in and fund this journey,” said Mark Wakefield, co-leader of automotive and industrials practice at consulting firm AlixPartners.Investors are betting on Tesla’s ability to scale up manufacturing just as they once backed Toyota Motor Corp , which defined the auto industry’s last era with its mastery of highly efficient, high-quality lean production.
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