In the second part of Elon Musk’s interview in the Third Row Tesla Podcast, he revealed how Tesla turned disadvantages into advantages. One of the harsh criticisms about Tesla in the past—which probably still lingers to this day—is that the EV automaker doesn’t behave like a traditional car company. However, Musk's Third Row interview revealed how the next-gen EV maker turned its “naivety” into an advantage.
Designing the Modern Electric Car
Elon Musk talked a lot about Tesla’s beginning at the start of part two of his interview with the Third Row team. At one point in the conversation, Musk stated that the auto industry was slow in terms of innovation, mentioning that there wasn’t an EV on the market currently that had the capabilities of the 2012 Model S in its price range.
Omar Qazi—a member of the Third Row crew—compared the struggles legacy automakers face in their EVs now to the problems Tesla faced with the first Roadster and its Lotus-based body. In its early days, Tesla tried to fit the Roadster’s components into the Elise’s frame.
As a new automaker, Tesla faced a lot of challenges then, and the design of the original Roadster was the first. Musk admitted on the podcast that the founding principles of Tesla were “completely wrong,” and it would have been way easier if the company had started from scratch with the Roadster.
After reminiscing about Tesla’s struggle with the original Roadster, Elon Musk shared that the real test of any given startup was its reaction to adversity and how well it adapts. “Most things when they start out, they don’t make a lot of sense. But then as long as you adapt quickly, then you can make the company work,” he said.
Qazi inserted a great point after Musk’s comment and stressed the importance of Tesla’s naivety at the time. “You kind of need to be naive, though. If you had known as much about manufacturing, you might not have done it.”
In Tesla’s case, its struggles with the Roadster made the company rethink and reconceptualize the design and idea of a car, which just so happened to be all-electric. Qazi pointed out that the rest of the auto industry hasn’t—and isn’t—starting from the ground up with their EV designs like Tesla did years ago.
Making Tesla’s Manufacturing Line
After stepping outside the box and redesigning the modern vehicle with electrification and autonomy in mind, Tesla had to do the same to its production line. Musk stressed that manufacturing was “insanely difficult and underappreciated in its difficulty.”
Kimbal Musk agreed with Elon and talked about how fascinating a car assembly line actually is in real life. The thought of tens of thousands of parts coming together with the help of skilled workers and machines fascinates the two Musk brothers.
Musk told the Third Row team that at one point, top suppliers would not even work with Tesla since it wasn’t one of the big car companies. Even when the suppliers were willing to work with Tesla, it would still get the short end of the stick, since the supplier would usually send interns and its B-teams to work with them.
Qazi asked if Tesla’s history with suppliers forced the company to integrate vertically. “It was vertically integrate or die,” said Elon Musk. In retrospect, vertical integration has worked out well for Tesla. Once again, the startup EV company had to adapt and find a way to make everything work out, which eventually led to innovation.
Since the first Roadster, Tesla has continued to develop its operations, from its assembly line to its vehicle service system. The company seemed to hit its stride after the GA4 line was set up on the grounds of the Fremont factory during the height of the Model 3's production challenges.
Before GA4, Tesla had a penchant—and still does—for using buildings that traditional carmakers had abandoned. For example, the Roadster’s final assembly took place in an old Ford dealership. For the Model S and X, Tesla moved into the Fremont Factory, which was an old manufacturing complex jointly owned by Toyota and GM.
However, Model 3 production forced Tesla to move out of the Fremont building and into its parking lot, where it created the GA4 tent from scratch. Today, the setup inside that tent is reflected in Giga Shanghai. Elon Musk talked about Tesla's progress with GF3 in the first part of his interview with the Third Row crew.
Tesla Reimagines Car Services
Elon Musk talked about the traditional way car companies make money. He revealed that legacy automakers make more money from selling parts and offering services instead of actually selling their vehicles. Established companies are even willing to sell their cars at a loss because they know customers will eventually need to buy parts and pay for services.
Musk explained that new car companies can’t make money the traditional way because they don’t have a big enough fleet at the beginning, and they can’t afford to sell their vehicles at a loss. Tesla was in this boat at the beginning. Plus, Musk admitted that Tesla’s goal was to minimize service costs, like basic maintenance fees.
So, once again, the company had a blank canvas to play with, and it reimagined services for an all-electric vehicle. Now, Tesla’s services and offerings feel more like a software-as-a-service system, which other automakers don’t offer customers at all. Service is also done increasingly by mobile service teams, which provide a more personal experience to customers.
Conclusion
The beginning of Elon Musk’s part-two interview with the Third Row team revealed how much Tesla has turned its disadvantages into advantages. Again and again, the EV automaker was faced with adversity. Each time it adapted and flipped the situation to its benefit.
Now, Tesla’s vehicles are leading the way to a new kind of auto industry, and it is not so similar to the old one. Legacy automakers have yet to admit this. In the end, Omar Qazi sums up the main issue traditional carmakers face:
“It’s almost like…the economic factors you just mentioned have created like a complacency where there is no innovation because…you know, nobody can just start a car company.” If this is the case, then legacy automakers will likely have to start from scratch to succeed. Because this time around, they aren’t just making electric vehicles--they’re transitioning into EV makers.
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