What Happens to Tesla, If It Can Not Produce a Half Million Electric Cars Next Year?

In the Wall Street Journal (10/6/2017), we fin that "Tesla Needs to Pick Up the Pace of Production:" 7:00AM

Tesla's super automated car factory had to finish its cars by hand.  It produced 70% less than target. Elon Musk's electric-car company fell short of its third-quarter production goals. Is it too ambitious?

Tesla

How does Tesla wind up having a stock market valuation greater than Ford or GM?

The Wall Street Journal: Carlos Ghosn

Nissan CEO Carlos Ghosn spoke to Journal about "How I Work:" the true automobile of the future, the toughest period in his career, and whether he'd rather go on a road trip with Elon Musk or Mary Barra. The Wall Street Journal, 3/14/2017, Photo: Robert Libetti

For the Record: Harris Commented on the Auto Bailout.

Alex Johnson,  "For Dealers, Auto bailout Can't Come Too Soon." NBC News 12/4/2008, quoted Malcolm Harris, an economics professor at Friends University in Wichita, said: “If you have a half a million or a million people out of work, with retail sales in real terms already down 5 percent over a year ago, you’re taking what’s becoming a significant recession and making it a lot nastier.”

Swedish auto maker Volvo has as a key component of its strategy to gain a competitive advantage by providing a car safer than its rivals' offerings. Volvo reckons people, at least the more affluent ones,will pay more for a car preserving their human capital. Differentiation improves markups. 

In Australia, Rob Taylor tells us in the wall street Journal, the Swedish firm is developing a technology that could help minimize car collisions with kangaroos, a perennial nuisance:

Interview with Ford CEO Alan Mulally

Joshua Topolsky interviews Ford CEO Alan Mulally at Hotel on Rivington in New York City. They talk about Alan Mulally's time at Boeing, new alternative energy sources, and how space exploration inspired Mulally to become an engineer.

Alan Mullay on Successful Teams

In this Thirty Second MBA video, Alan Mullay tells what he learned about making successful teams:

Would Alan Mallay Use the Verb, "Witchhunt?"

Boeing's 787, the Dreamliner, has been grounded worldwide because to fire worries with the lithium ion batteries used in it. According to the Economist's Schumpeter blog, the grounding "follows a string of safety problems, including two fuel leaks and an electrical fire aboard a domestic flight that required an emergency landing. There is particular worry about the potential for the plane’s lithium-ion batteries to catch fire."  Moreover the blog also quotes Sandy Morris of Jefferies who "points out that Airbus’s A350 (a forthcoming rival to the 787 which is already more than a year behind schedule) uses lithium-ion batteries like the ones suspected of causing some of the 787’s problems. So if they are to blame, the A350 programme may suffer too."

Jon Ostrower and JoAnn S. Lubin wrote in yesterday's Wall Street Journal that two very high profile CEOs have their names very firmly attached to the Dreamliner: Ford's Alan Mullay and Boeing's Jim McNerney, chairman and CEO since July 2005.

They write that in the summer of 2005, Boeing "hired Mr. McNerney as CEO, succeeding an interim chief after Mr. Stonecipher, who had resigned suddenly because of an affair with a subordinate. A short while later, Mr. Mulally, who had also been a contender for the CEO job, left.
"Boeing soon stumbled as a string of supply-chain and design delays pushed back delivery of the Dreamliner by 3½ years. 'We are trying to witch-hunt the issues in this program right now,' Mr. McNerney told investors in October 2006 as the problems became apparent."

I find it hard to believe Alan Mallay would have said that.  "Witch-hunt" does not sound like a word in his vocabulary.  In American Icon: Alan Mulally and the Fight to Save Ford Motor Company, Mullay's biographer, Bryce G. Hoffman, describes how he used the same techniques to turn Ford around that he used in managing projects like the 777. He built teams with his weekly "war room" meetings that thrived on a culture of both trust and accountability.  Hard bitten, cynical Detroit executives took his "aw shucks" Midwestern manners for weakness.  That did not last long. Those veterans of cutthroat corporate politics soon learned to either cooperate and be up front or play their political games somewhere else.

It would be interesting to learn how McNerney's management style differs from Mullay's.  It would be interesting to learn which style works better across the teams of engineers and managers from Boeing and its suppliers.

Hiring McNerney from the outside was forced on Boeing by the Department of Defense after successive scandals.  Military work is the other half of Boeing's business.  Such government induced changes in management can have unforeseen consequences.  Think of AIG after New York State's Eliot Spitzer forced Maurice R. Greenberg out in 2005.  It is hard to imagine Greenberg letting his trading desk get as out of hand as his successor did.  The subsequent near collapse of AIG and its bailout are now history. 

In this video from January 24th, Ostrower tells the Journal why both McNerney and Mulally have much at stake:




Spirit, as a big supplier of the Deamliner, is of course vulnerable to the plane's troubles.  we here in Wichita hope for a speedy resolution.

Ford is in the Black

Matthew Dolan and Jeff Bennett reported on January 29th in the Wall Street Journal "Ford Posts First Full-Year Profit Since 2005." Ford earned $2.7 billion in 2009. Any number greater than zero is a miracle in Detroit. This despite the fact that Ford is burdened with a much greater debt burden than Chrysler and GM for whom the federal government rolled its bondholders.


The easy interpretation is that is one for capitalism as opposed to socialism.  Any student of the decline of American car making will realize that Detroit's inward focused culture and its willingness to run to Washington when in trouble are better. A deeper analysis shows that Ford, by bringing in an outsider, Alan Mulally, they committed themselves to remedying the root problem: Detroit's culture.

Chrysler Pulls out of the Clone Wars

Joseph B. White writes in today's Wall Street Journal that Detroit is rethinking the wisdom of selling three or four versions of the same car under three different brands. Why? "[I]n a market with more than 300 different models -- depending on how you count -- fielding two or three or even four of the same basic car can lead to some very thin slices of pie, especially when increasingly well-informed shoppers can figure out in two or three mouse clicks that a Saturn Outlook and a Buick Enclave and a GMC Acadia are just three different styling takes on the same large crossover wagon."

White continues, "Chrysler's senior management recently declared that it wants out of the clone game. The company, which has the advantage of being closely held and thus not as concerned about what outsiders think, has outlined plans to kill a flock of its slow-selling clones, and focus its efforts on selling more of each model that remains."

After all, "Customers don't care whether they buy a minivan from a Dodge dealer or the Chrysler dealer just down the street. They just want a good minivan. In these difficult times, Chrysler can't really afford the capital and marketing effort to promote two functionally similar versions of a three-row box on wheels."

Read "Send Out the clones."
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